Lesson Learned

Compact programming must recognize the challenges inherent in utility turnaround and dedicate sufficient resources and time with appropriate methodologies to achieve sustainable results.

Compact programming must recognize the challenges inherent in utility turnaround and dedicate sufficient resources and time with appropriate methodologies to achieve sustainable results. Achieving a utility turnaround is extremely difficult, requiring sustained efforts over many years across key dimensions, including operations, financial management, regulatory relations, and governance at all levels from Board to senior management to line staff. According to the final evaluation, the Power Sector Reform Project fell short of its stated goals in terms of Electrical Supply Corporation of Malawi (ESCOM) operations and governance. Financial improvements resulting from increased tariffs (leading to pay down of commercial debt ESCOM owed) and conversion of debt owed by ESCOM to equity were relatively easy for ESCOM to achieve. However, initiating and sustaining operational improvements in more transaction-intensive activities proved much more complicated and challenging for a variety of reasons, including absorptive capacity challenges, resistance to behavior change, and continued deficiencies in corporate governance. An example of this is the low maintenance and capital investment budget execution, stemming from shortcomings in inventory planning and poor procurement delivery. Similarly, the final evaluation noted that initial gains in ESCOM’s financial performance gradually eroded.

Compact programming must recognize the challenges inherent in utility turnaround and dedicate sufficient resources and time with appropriate methodologies to achieve sustainable results. This means providing technical assistance in ways that moves from analysis and recommendations to actual implementation support, including skill development in employees through training and mentoring. These activities should take place over a period of time sufficient to support multiple rounds of implementation of new procedures, identification of challenges, and opportunities to adjust approaches.

MCC is applying this lesson by, for example, focusing the technical assistance heavily on introducing a framework for improved utility management and process engineering upfront, with longer duration support for change management paired with more focused capacity building in specific technical areas that palpably improve the ability of the utility’s line staff to perform their day to day tasks.