African Trade Insurance Agency (ATI) transparency tool records impressive ESCOM payment record to Malawi’s only operational PPI



African Trade Insurance Agency (ATI) transparency tool records impressive ESCOM payment record to Malawi’s only operational PPI

ESCOM, Malawi‘s national electricity utility, made timely payments to the Ruo-Ndiza hydropower plant for 22,578 MWh of electricity supplied to the utility throughout 2020; Payments were collected and recorded by the Transparency Tool, a joint initiative of ATI (www.ATI-aca.org) and KfW; This is the first report published by the Transparency Tool since its launch in 2019.

The Transparency Tool, an online platform that collects and provides information on payments from national electric utilities to independent power producers (IPPs) in sub-Saharan Africa, has recorded an impressive payment trend within of the Electricity Supply Corporation of Malawi Limited (ESCOM). The utility payments were for the Ruo-Ndiza hydroelectric project, the only operational renewable energy IPP in the country.

The Ruo-Ndiza Power Project is an 8.2 MW run-of-river power plant in southeastern Malawi at the foot of Mt. Mulanje. Owned and operated by Mulanje Hydro Limited, it was designed and built by Nyangani Renewable Energy (Pvt) Ltd, Zimbabwe‘s largest PPI. The IPP has been supplying electricity to the grid since reaching its Commercial Operation Date (COD) in May 2019 and delivered 22,578 MWh to the national grid in 2020. This represents 1% of Malawi’s electricity production, or the equivalent of about 40,300 households. Electricity consumers in the Mulanje region commented strongly on improving grid stability due to the location of the project adding diversity to the national electricity grid. The project was developed on the site of an existing small power plant, first installed in 1934, which supplied electricity to a tea farm and its surroundings.

ESCOM payments to Mulanje Hydro, for electricity produced and supplied between 1st January 31st December 2020, were carried out on average 28 days after the invoice date – within the 30-day credit period provided for in the Power Purchase Agreement (PPA) concluded between the two institutions. This is particularly noteworthy given the challenges facing electric utilities in the region in the wake of the COVID-19 pandemic and will hopefully send a positive message to potential investors in the electricity sector. in Malawi.

Launched in June 2019 at the African Energy Forum (AEF) held in Portugal, the main objective of the transparency tool is to tackle perceived poor payment behavior of electricity utilities Africans. Along with the Regional Liquidity Support Facility (RLSF), the Transparency Tool is a key initiative in the ongoing partnership between the African Trade Insurance Agency (ATI) and the German Development Bank, KfW, to encourage additional investment in renewable energy projects on the continent. The tool is developed and hosted by Dun & Bradstreet (D&B)p>

ATI and KfW, with funding from the German Federal Ministry for Economic Cooperation and Development (BMZ), launched the RLSF in 2017. The facility was created to help tackle climate change and attract investment by supporting renewable energy projects in Africa. The installation is accessible to IPPs located in countries that have signed the RLSF Memorandum of Understanding (MoU). To date, seven countries have signed up: Benin, Burundi, Côte d’Ivoire, Madagascar, Malawi, Uganda and Zambia.

In addition to the potential access to the RLSF, operational PPIs in these countries can enroll in the Transparency Tool as the Memorandum of Understanding between ATI and the respective host governments and utilities allows ATI to ” record and occasionally publish payment information without breaching confidentiality. agreements in PPAs and / or government support documentation. PPIs wishing to use the transparency tool are not billed.

QUOTE from Manuel Moses, CEO, ATI
“We are delighted to be able to publish the first national report of the Transparency Tool. The Government of Malawi‘s considerable efforts with various external stakeholders to improve the investment climate in Malawi’s power sector are bearing fruit, as evidenced by ESCOM’s track record in meeting its obligations. timely payment and the number of PPIs in advanced stages of development and construction. Going forward, we are confident that the publication of similar reports in Malawi and our other member countries will encourage greater investment in renewable energy projects by correcting a long-held perception that African national utilities do not pay operational PPIs on time.

QUOTE from Mr. Clement Kanyama, Acting Director General, ESCOM
“Recent power sector reforms in Malawi have opened up the participation of private investment in power generation, and Mulanje Hydro Limited (MHL) was the first IPP to become operational with a long-term PPA. ESCOM is delighted to be part of the success story when it comes to timely payment of invoices to MHL. We intend to maintain a good payout record at MHL and other PPIs to come. As a buyer, we appreciate the contribution that the MHL plant makes to the Malawi power grid. The positive impact of the MHL plant on the local network, with an extended contribution to the entire national network, is quite significant. The MHL plant contributes to reducing system losses, as it supplies the distribution network directly, close to consumers. Its contribution to the national GDP is increased tenfold, including taxes, wages and expenditure on goods, services and local works. Malawi’s power industry is open!

QUOTE from Ian McKersie, Managing Director, Mulanje Hydro Limited
“Mulanje Hydro Limited has found ESCOM to be a very competent and reliable counterparty. The Ruo-Ndiza power plant is the first PPI to be commissioned in Malawi and for ESCOM it is the first renewable electricity generator to have been commissioned on the national grid for many years. ESCOM has worked hard to minimize transmission failures. ESCOM complied fully and on time with all of its payment obligations as set out in the PPA. As an operator of other renewable generators in the region, it is gratifying to have a buyer at ESCOM who fully understands and adheres to the terms of the agreed business contract. “

ATI will host a virtual energy workshop that will focus on Malawi’s renewable energy sector, on Tuesday April 20, 2021 from 3:00 p.m. to 4:30 p.m. (CAT). A panel of private sector experts and representatives of the main government entities active in the sector has been set up to discuss and explore the renewable energy space of the country. Please email press@ati-aca.org to receive registration details for the virtual event.

Short Link: https://wp.me/pcj2iU-3yKe

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