Electricity Supply Corporation of Malawi (Escom), has quietly hiked the electricity tariff by seven percent as consumers await the approval of a 60 percent electricity tariff hike.
This means that K1,000, which was buying 18.5 units as at July 14 2018, is now buying 17.6 units.
Escom Public Relations Manager, Innocent Chitosi, confirmed the hike but was quick to say it was not a silent hike.
“Mera approved a 23 percent adjustment in November 2017.
This was on condition that we were to generate an additional 78MW.
But we could only effect a 16 percent hike which corresponded to 55MW realised from diesel generators which were commissioned at Chichiri.
“This time around, the balance was affected following the commissioning of another set of diesel generators, which yield 23MW, at Chinyama in Kasungu,” Chitosi said.
Economic experts and industry captains last week warned that allowing Escom to raise electricity tariffs by 53 percent this year could fuel inflation and choke the economy.
University of Malawi’s Chancellor College economics professor, Ben Kalua, last week said allowing Escom to implement the tariff hike as requested could have disastrous consequences to the economy.
Kalua said the increment could have a cost-push effect on inflation as commercial and industrial customers are likely to pass on the increased tariffs to customers through ballooned prices.
He said the most interesting part is that the tariff hike is not expected to bring power overnight, which would mean firms would continue to rely on standby generators to sustain production.“That will be a double blow to companies because they will be using expensive electricity and diesel to produce their products,” Kalua said.
Malawi Confederation of Chambers of Commerce and Industry Chief Executive Officer, Chancellor Kaferapanjira, said raising electricity charges by a whopping 53 percent would crash both industry and consumers.
He said such an increase would significantly raise the cost of living for the poorest of the poor.
“What this simply means is that, if you are using K20,000 on power, the 53 percent hike would see you spending above K30,000 from September [onwards], which is too much,” Kaferapanjira said.
The industry chief said the development would leave industry players with no options but to induce a sudden jump in commodity prices.
“And if industry decides to pass [the cost] on to the consumer, the impact of the increased cost of operation will be disastrous,” Kaferapanjira said.