MERA Moderates Implementation of a New Electricity Base Tariff
The Malawi Energy Regulatory Authority (MERA) has approved a new electricity base tariff regime. The average tariff will be adjusted by 50.8% segmented into four annual tranches of 18%, 16%, 12% and 9% to be implemented from 2023 to 2027.
In the first year, the allocated 18% increase has moved the average electricity tariff from K104.46/kWh to K123.26/kWh effective 1 September 2023. Implementation of subsequent tranches will be based on the electricity licensees’ performance against Key Performance Indicators (KPIs)
Speaking during the briefing held at the Central Office of Information in Lilongwe, MERA Chief Executive Officer Henry Kachaje described the move as necessary enabler for revenue growth of the power sector for increased investments, system maintenance and performance. According to Kachaje, the MERA Board believes that the tariff increase coupled with commitment from the electricity industry players will improve and sustain the provision of services to customers.
The determination follows a detailed scrutiny of the 69.7% proposed adjustment submitted by Electricity Supply Corporation of Malawi (ESCOM) The application covered electricity generation, single buyer, transmission, system market operator and distribution activities. The review was also informed by feedback collected from public hearings and written submissions from stakeholders.
The tariff increase has been met with mixed reactions from consumers. Some consumers have expressed concern about the impact of the increase on their household budgets, while others have said that they understand the need for the increase in order to improve the power sector and the country’s economic growth.
To ensure accountability and effective implementation of the 2023-2027 base tariff, MERA has committed to intensifying monitoring of performance of the electricity licensees. The KPIs focus on technical as well as financial/economic aspects and have further been attached to individual licensees within ESCOM and separate ones for Electricity Generation Company (Malawi) Limited (EGENCO).