Malawi government signs US$170m energy deals with World Bank

MALAWI – The government of Malawi and the International Development Association (IDA), an arm of the World Bank Group, signed two financing agreements worth US$170m (K127 billion) towards the country’s power sector.

The two Agreements are the Malawi Electricity Access Project and the Mozambique-Malawi Interconnector Project

According to The Nation, the signing took place at the World Bank Headquarters in Washington D.C, United States of America (USA), on the sidelines of the 2019 annual meetings of the World Bank Group and the International Monetary Fund (IMF).

Minister of Finance, Economic Planning and Development and Development Joseph Mwanamvekha and World Bank country director for Tanzania, Malawi, Burundi and Somalia Bella Bird signed the two agreements on behalf of Malawi and World Bank, respectively.

Mwanamveka said, among others, the two projects will provide technical advisory services and building technical, planning and operational capacity of Electricity Supply Corporation of Malawi (Escom) and Ministry of Natural Resources, Energy and Mining and other relevant institutions.

“Given that reliable electricity service delivery remains a challenge majority of Malawians living without access to electricity, these two projects are indeed important for Malawi’s development and are coming at the opportune time,” said Mwanamvekha.

The minister said the two projects complement each other as one focuses on increasing access through the grid and the off grid while the other project will contribute to diversification of external sources of power.

The Malawi Electricity Access Project agreement is in form of a grant worth US$6.28m (K4.6 billion) as well as a credit amounting to US$150m (K110 billion).

The Malawi- Mozambique Interconnector project is in form of a credit amounting to US$r14.7m (K10.9 billion). Once implemented, the Malawi Electricity Access Project is expected to more than double Malawi’s electricity access from the current 11 percent to 26 percent.

Through the interconnector project, Mwanamvekha said Malawi will diversify its energy sources through connection into Matambo, a major substation in the South African Power Pool (Sapp) system, which collects a substantial part of current and future power generated in Mozambique.

On her part, Bird said the Bretton Woods institution is pleased to have signed the agreements with Malawi, saying increasing access to electricity among Malawians would be crucial as it means powering more households, businesses as well as public institutions such as hospitals and schools.

He, however, urged the Malawi Government to implement the two projects in accordance with the provisions of the financing agreement and IDA’s general conditions as well as Malawi’s own Public Finance Management Act.

The use of renewable and clean energy through solar facilities is in tandem with Malawi’s 2019/20 National Budget measures as government has removed value added tax on solar facilities.

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