Star Report: Malawi Compact | Updated June 2021 | April 2020

Beyond the Compact

Compact initiatives to strengthen the performance of the power sector have spearheaded a significant amount of activity in Malawi’s power sector, particularly by international donors and other US government entities (see Coordination and Partnerships section). This includes additional work on utility strengthening, market restructuring, and the introduction of new processes to add generation through private investment.

Prior to the compact, Malawi’s approach to development of the power sector was driven by the Government, which was expected to bring resources to bear to add new investments in generation, transmission, and distribution. This approach was a significant factor in the poor condition of the sector that prevailed at the compact development stage with Government unable to finance new investments resulting in limited growth prospects. Through the compact’s consistent focus on private investment—especially through independent power producers—there has been a change in mindset across Malawi’s power sector stakeholders. It is now widely recognized by stakeholders in Malawi that private investment is the only way the sector can develop and achieve Malawi’s developmental goals. While challenges have been encountered moving from principles to actually adding new generation capacity, the trend is clearly moving towards a more sustainable model for power sector growth. During the compact period, this trend took the form of a competitive procurement for solar power IPPs with negotiations and additional development activities still underway at the time of compact closure. ESCOM has also developed a generation expansion plan, which relies on an appropriate mix of private sector projects, PPPs, and Government-sponsored strategic projects.

With regard to continued power sector infrastructure expansion in Malawi, there are a number of additional developments that should be pursued to support and build on the impact expected from the compact investments. One of the key objectives of the compact’s transmission upgrades was to enable integration of Malawi’s network into the regional network. Provisions were made in the design of the 400 kV transmission line for future connections with Zambia, Mozambique, and Tanzania. With the 400 kV line as a “backbone,” financial feasibility and economic impact of constructing new power stations in Malawi is also expected to improve. Current prospects include solar and wind power stations, additional hydropower developments, and a coal fired power station that would use coal from Mozambique. These projects could utilize the improved grid and potentially provide Malawi with the opportunity to export power in the future.

Throughout the compact period, the MCA-Malawi monitoring and evaluation team led efforts to continuously review, assess, and improve on the quality and reliability of data used for monitoring results. Building on a robust Data Quality Review (DQR) conducted by a firm with significant expertise working in the power sector, MCA used the findings and recommendations to develop a ‘DQR Action Plan’ that prioritized investments in metering and other equipment that would enable ESCOM to collect and monitor data on the network, such as data on technical losses and outages. Many investments were subsequently costed out and resources allocated by either MCA or by ESCOM itself. The Action Plan also highlighted training requirements for ESCOM staff involved in recording and processing data, and procedural enhancements to ensure greater consistency and reliability in methods used by field staff in the data collation process. The outputs were used to provide guidance for ESCOM on how it should enhance its own capacity to use monitoring and analytics more fully to improve its performance. A key result of this was that ESCOM ultimately created a new Monitoring & Evaluation Department, and recruited a Director for the department to take on duties and help further elevate M&E practices within the utility.

  • 1. Transmission refers to the bulk movement of high-voltage electrical energy from where it is generated (such as a power plant) to an electrical substation. Distribution refers to the local wiring from substations to consumers.
  • 2. This activity was also supported by complementary funds from the GOM.
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  • 6. Taulo, John L; Gondwe, Kenneth Joseph; SEBITOSI, Adoniya Ben. Energy Supply In Malawi: Options And Issues. J. Energy South. Afr., Cape Town ,  V. 26, N. 2, P. 19-32,  May  2015
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  • 8. For more information on MCC’s Suspension and Termination Policy, please visit our website here:
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  • 11. Under MCC’s country ownership model, governments receiving MCC assistance are responsible for implementing the MCC-funded programs. Partner governments establish units known as accountable entities, referred to as MCAs, to manage implementation for compact projects.
  • 12. The unit cost of electricity from petrol/diesel generators is far higher than that of grid-supplied electricity in Malawi, a landlocked country whose fuel is imported from afar.
  • 13. According to the Integrated Household Survey (2004-2005), fewer than 6 percent of households nation-wide were supplied with electricity.
  • 14. While data on female employment in the construction industry is difficult to find in Malawi, the World Bank ILO reported that the percentage of female employment in industry (which includes mining and quarrying, manufacturing, construction, and public utilities) in Malawi was 6.1 percent in 2018.
  • 15. GSI Implementation Report Malawi Compact, November 2018
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  • 17. At the time of the trainings, ESCOM had a total of 2,036 employees (1,825 men and 211 women), and EGENCO had 509 employees (465 men and 44 women).
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  • 20. For details on how MCC is incorporating these lessons in current and future programming, see here:
  • 21. Percent deviation from the target is calculated for this indicator, as well as others noted in this table, instead of percent complete. Progress for this indicator is best tracked by percent deviation from the target, because the actual should be as close to the target as possible. A percent deviation of 0% implies the target has been reached, and percent deviation closer to 0% implies better achievement than a higher percent deviation. Percent deviation is calculated using the following formula: 100*|Actual-Target|/Target. Because this indicator is a ratio of Total Revenue / Total Costs, a deviation above or below the target may reflect either a stronger financial position (a positive result), or a failure to effectively meet their maintenance and capex (spending) targets.  A target close to 100% indicates that ESCOM is effectively balancing available revenue with effective execution of core functions to operate the grid.
  • 22. A baseline for this indicator is unavailable, due to the fact that ESCOM did not have a reliable estimate for its long-run costs at the start of the compact, a key input to this indicator. The Project provided support for a Cost of Service Study which informed the development of the 2018 tariff application, with projections of costs through 2022.
  • 23. The cost-recovery ratio is the ratio of a utility’s revenues to cover its costs, including operating expenditures, depreciation and capital costs.
  • 24. These two segments of the Shire River Basin are upstream from Malawi’s main hydropower plants.
  • 25. In coordination with the World Bank, MCC prioritized five of the 10 hotspots in the Middle Shire, and the World Bank program worked in the other five.
  • 26. REFLECT was developed by ActionAid in 1993 and first used in El Salvador (South America), Bangladesh (Asia) and Uganda. REFLECT is now used in over 60 countries to tackle problems in agriculture, HIV/AIDS, conflict resolution and peace building. It is based on the theory pioneered by the Brazilian educator Paulo Freire Link
  • 27. ENRM Grantees guidance questionnaire for the GSI Implementation Report Malawi Compact
  • 28. ENRM Grantees guidance questionnaire for the GSI Implementation Report Malawi Compact
  • 29. Payment for Ecosystem Services are programs where a beneficiary or user of an ecosystem service (such as hydropower use by electricity users) make a direct or indirect payment to the provider of that service, which is then used to maintain the natural resource. PES programs can also benefit the conservation of the ecosystem being used.
  • 30. Infrascope has several uses for various audiences. For project sponsors, it can assist in and lower the cost of market entry by providing country research. For donors and governments, it can assist in the policy dialogue around PPPs. Other donors may also be able to use the indicators from Infrascope for their own M&E purposes, while academic researchers may also find Infrascope to be a useful tool.