PRESS BRIEFING BY HONOURABLE BRIGHT MSAKA, SC MINISTER OF NATURAL RESOURCES, ENERGY AND MINING ON THE STATUS OF ELECTRICITY IN THE COUNTRY AND THE
- STEPS GOVERNMENT IS TAKING TO ADDRESS THE ENERGY CONSTRAINTS DELIVERED AT
THE CENTRAL OFFICE OF INFORMATION, LILONGWE ON THURSDAY, 23RD SEPTEMBER, 2016
The Chairperson of ESCOM, Mrs. Jean Mathanga;
ESCOM’s Director of Generation, Mr. Evans Msiska;
The representative from Malawi Energy Regulatory Authority;
Government Officials present here;
Members of the Media;
Ladies and Gentlemen.
1.0 Opening Remarks
On behalf of the Government of Malawi, I feel greatly honoured to be here to preside over this Press Briefing, in which I am going to talk about a topic that is of utmost importance to all of us gathered here, and is also at the heart of development in the country: Electricity. That the country is going through serious energy challenges and electricity blackouts is now a matter of common knowledge.
2.0 Global and Regional Phenomenon
As our colleagues at the Electricity Supply Corporation of Malawi (ESCOM) have said before, we are all at this stage of our lives because of no one’s fault but a pure act of nature. Effects of climate change have affected countries globally.
Due to climate change, the Southern African region has experienced a major shift in weather patterns over the past couple of years resulting in delayed onset of rainfall, short rain seasons and low amounts of precipitation. Countries in the region such as Zambia, Zimbabwe and Botswana are experiencing the same problem of load shedding because of low water levels and flows in their lakes, dams and rivers. For example, man-made Lake Kariba is at its lowest level since it was constructed thereby affecting hydropower generation for both Zambia and Zimbabwe. The same is also true for most hydropower generation dams in the region.
3.0 The Malawi situation
Malawi is no exception. This situation is exacerbated by environmental degradation of catchment areas of Lake Malawi and major rivers as well as degradation of several river banks including the Shire, which is the major source of hydroelectric power in the country. This has been aggravated by the increased demand for electricity by both domestic and industrial consumers as ESCOM connects more customers to the system. On average ESCOM connects 6,000 customers every month and there are currently about 350,000 connected customers on the system. Currently there is a backlog of 26,897 applicants awaiting connection to their businesses households.
The country continues to register increased growth in demand, and this is projected to reach 430MW in 2016/17 and 860MW in 2020, against the current installed generation capacity of 361MW. However, in the short term, new investment in generation to meet the growing demand remains a major challenge. Presently, the country faces severe capacity challenges to meet the demand. This situation usually worsens at peak time. As a result, ESCOM is frequently forced to load shed its customers, besides being forced to operate the system without the required reserve margin, which is very risky to the operation of the system. Recently, added to insufficient generation capacity, the country is faced with severely dwindling flows on the Shire River, which have reached a 15 year record low. However, members of the press may wish to note that before March 2015, we had no situations of load shedding despite low Lake Malawi levels and low Shire River flows. The current situation is as a result of the environmental degradation of catchment areas and river banks as I have mentioned earlier on. Preliminary estimates, based on the 2015/16 Lake Malawi level profile, indicate that with the available flows, the available power plants will only be able to generate up to 50% from their capacity.
Distinguished Members of the Press, what I have just said, no doubt, paints a picture of a country going through hard times. But hard times should teach us hard lessons for lasting solutions. Driven by that quest to find lasting solutions we have, as a Government, come up with a number of short to long term steps to employ in the energy sector aimed at addressing the challenges before us.
4.0 SHORT TERM STEPS
4.1 46MW Diesel Peaking Plant
A total of 46MW will be out-rightly procured by ESCOM, by June, 2017 and these were already approved in the 2013-17 base tariff application. The purpose of the investment in Diesel Powered Generation projects is mainly three-fold: first, to provide standby plants as a quick fix solution to the current capacity deficit, especially at peak periods. Secondly, to improve voltages in the Central & Northern regions and optimize transmission losses on the network. Thirdly, to provide standby capacity for smooth planned and emergency plant maintenance.
4.2 Phase I of Procurement of 10MW (Kanengo) and 6MW (Mzuzu) Diesel Peaking Plant
Currently, 10MW diesel peaking plants were procured, installed and commissioned in March, 2016 at Kanengo in Lilongwe. These machines are being run for 4hours each day for five days in a week during peak periods as per the tariff agreement with the Malawi Energy Regulatory Authority (MERA). We have engaged the regulator to extend the operational hours of the diesel units to make up for the demand. During the same Phase I, 6MW of diesel plant is being procured and to be installed at Luwinga in Mzuzu. The offer letter has been provided to the Supplier. It is planned that these units will be commissioned in February, 2017.
Once these units are operating at optimal level, we expect our valued customers to experience reduced load shedding and improved voltages in Lilongwe and the Central Region.
4.3 Phase II of Procurement of 30MW
In Phase II of Diesel peaking plants, 30MW will be installed and commissioned as follows: additional 10MW at Kanengo in Lilongwe and 20MW at Mapanga in Blantyre. These units are scheduled to be commissioned by June 2017. This will have an impact on additional capacity, improved voltages and reduced load shedding.
4.4 78MW Emergency Power Plant
A total of 78MW of Emergency Power Plant is to be acquired by ESCOM on lease basis for an initial estimated period of 18 months, subject to the severity and duration of the capacity problem. This is being expedited and all things being equal, commissioning is expected end of December 2016. This, again, will result in availability of reliable power supply and reduced load shedding. It is envisaged that realisation of the project will, among others, help to minimize economic losses or costs to households and industrial production which is estimated to have gone down. These anticipated gains will, consequently, help to reduce cost of doing business which, in turn, will improve the country’s competitiveness in the regional market.
This initiative will assist in closing the generation gaps, restoring supply to industries and stimulate economic activities across the manufacturing sector.
4.5 Procurement of 70MW of PV Solar power from Independent Power Producers (IPPs)
As you are aware, distinguished members of the Press, Malawi has opened up the power market through the ongoing power sector reforms. This has seen a wave of applications from Independent Power Producers (IPPs) interested to join the country’s power sector. Currently, a number of IPPs have expressed interest to invest in power production using solar technology. Considering the nature of solar power and system stability, a study was done to determine the initial capacity uptake of this technology. The study concluded that with the base load of 351MW, the electricity grid can take up another 70MW of power from solar plants. Currently, the process of getting participation of first PV Solar (70MW) into power generation from IPPs is quite advanced. Bid documents for procuring the first four IPPs have been submitted to all PV Solar IPPs that have already signed Memoranda of Understanding (MOUs) for them to submit their Proposals which will be evaluated based on tariff, speed of implementation and reliability of equipment amongst other criteria. It is expected that by the end of October 2016 Power Purchase Agreements (PPAs) with the four successful bidders will have been signed. The entire procurement process is being carried out in line with the Public Procurement Act of 2003.
5.0 LONG TERM STEPS
5.1.0 Generation, Transmission and Distribution Expansion and Reinforcement
Ladies and Gentlemen, as the system gets reinforced through government interventions supported by funding from the Millennium Challenge Corporation (MCC), the World Bank, Japan International Cooperation Agency (JICA) and ESCOM itself, the carrying capacity of the Transmission Lines will increase to about 1,150MW by 2018.
5.1.1 GENERATION EXPANSION
The new determination of various power generation technologies (including more PV Solar and other renewable technologies), sizes and timing to take up the 1,150MW system capacity is being done through the Integrated Resource Plan (IRP). This plan is being developed and will be in place by April 2017. The plan will, among other issues, look at diversification of technologies to mitigate against climate change effects. In the past investments ranking was based only on least cost which resulted in over reliance on hydro technologies.
(i) Hydro Power Projects
Among other technologies the IRP will include hydropower projects at Lower Fufu(170MW) on South Rukuru river in Rumphi District to be commissioned by 2021; Kholombizo (200MW) on the Shire River to be commissioned by 2022 and Mpatamanga (350MW) also on the Shire River to be commissioned by 2021. Feasibility studies to full designs and tender documents for these three major hydropower projects are at an advanced stage and are scheduled to be concluded by June 2017. In addition to these three hydropower projects, Government is sourcing financing for the Songwe hydropower project. Feasibility and detailed designs have already been completed and proven viable. This project has the potential to generate 180MW to be shared equally between Malawi and Tanzania. The project will be completed in 2022.
Nkula A Rehabilitation and Modernization Project will add 12MW by September 2018; Tedzani III Rehabilitation and Modernization project will add 10MW by October 2017; Tedzani IV Power Project (18MW) will be commissioned by end of 2019.
In addition to the above hydro power projects, Mbongozi Hydro Electric Power Site on Bua River (41MW) is being developed by HE Power, an IPP. The project is scheduled to be commissioned by 2020.
(ii) Sustenance of Power Generation on Shire River
For Immediate measures, and through Government and ESCOM intervention, dredgers have been deployed at Nkula and Kapichira Power Stations to manage siltation.
Liwonde Weed management facility is operational and additional weed management plant is being installed under the Liwonde Barrage Upgrade project. Trash diversion barriers are being designed to be installed at Nkula and Tedzani by mid 2017.
As long term measures there are serious interventions to manage Shire River catchment areas by involving local communities and other stakeholders. In addition, Shire River Basin Authority has been instituted to oversee the Shire River catchment area.
(iii) Coal Fired Power Projects
As part of power energy source diversification, the Government is pursuing a coal fired power station project at Kam’mwamba, which is expected to add an extra 300MW to the grid. Everything being equal, it is envisaged that the first fruits of this project will be realised by mid-2019, when the country will be able to tap 100MW of power from this unit and the rest by the end 2020.
In addition to Kam’mwamba, there are three other private sector investors who are in discussion with Government to develop coal fired power plants; Mchenga Coal Mine (80MW) by CPL Mchenga Coal Mine Limited and expected to be commissioned by end of 2019; Near Mwanza Boma (250MW) by Millenium Energy to be commissioned by 2020; Chipoka in Salima (120MW) by Intra Energy to be commissioned by 2020. When these coal fired power plant projects are fully realised they will add 750MW to the system.
(iv) Heavy Fuel Oils (HFOs) by IPPs
Government is in discussion with InfraCo Africa Energy who have shown interest to develop (80MW) in Salima. The Power Plant is expected to be commissioned by end 2017.
Other discussions have also advanced with Greenheart Energy to develop 100MW of HFO as a joint venture with ESCOM; 45MW in Blantyre, 40MW in Lilongwe and 15MW in Mzuzu.
(v) Other Renewable Power Generation
Additional PV solar shall be procured using competitive tender process before 2018 in readiness for the expanded grid capacity and demand growth.
Further, there will be opportunities to develop geothermal and wind. Capacities of these technologies will be informed by the resource assessment studies currently underway and scheduled to be completed by 2017.
5.1.2 Transmission Expansion and Reinforcement
In this regard, a 400kV Transmission Line is currently being constructed from Phombeya (Balaka) to Nkhoma. The Line is expected to be completed by September 2018. The Phombeya Sub-Station will be the landing point for the Malawi-Mozambique Interconnector. In addition to this, feasibility and detailed design studies are currently underway for upgrading the Transmission System from 132kV to 400kV and construction of the 400kV Western Backbone Transmission Line from Nkhoma (Lilongwe) to Karonga via Kasungu and Mzimba as well as Nkhoma to Chipata (Zambia) via Mchinji as part of Malawi-Zambia Interconnector. These studies are scheduled to be completed by May 2017 and the project is expected to be commissioned by 2019. The landing point for Malawi-Zambia Interconnector will be at Nkhoma Sub-Station. In addition to the two Interconnectors, Malawi-Tanzania Interconnector will be completed by 2021. This Interconnector will complement the Songwe hydropower project. These projects have already attracted interest from the World Bank, African Development Bank and the European Investment Bank among others. These projects have also been listed as priority regional projects under Southern African Power Pool (SAPP).
The Transmission Network will further be reinforced through construction of a double circuit 132kV Transmission Line from Nkhoma to Nanjoka (Salima) and replace the wooden line from Nanjoka through Nkhotakota to Chintheche (Nkhata Bay) and join the Chintheche to Bwengu (Mzimba) new line.
5.1.3 Distribution Expansion and Reinforcement
The Distribution Network is being reinforced through interventions by upgrading Sub-Stations and lines. These include: –
Karonga substation, Bwengu, Luwinga and Katoto in the North; Dwangwa, Nkhotakota, Kasungu, Kauma, Area 48, Bunda Turn Off, Kamuzu Barracks, Kanengo, Area 25, Lilongwe City Centre and Golomoti in the Central Region; Monkey Bay, Chingeni, Bangwe, Chigumula, Limbe A & B, Zomba, Thyolo A & B, Fundi’s Cross (Mulanje) and Nkula (Mwanza) in the Southern Region. These interventions will assist to reduce system losses from the current 25% to the target of 16%, provide reliable supply and room for expansion to meet growing demand.
6.0 Cross-Border Power Imports from Neighbouring Countries
The purpose of this initiative is to get quick assistance of power through distribution networks at the border town of Mchinji from Chipata in Zambia. Negotiations are at a very advanced stage and power supply agreements are nearing conclusion. With the current situation in Malawi, a request was made to tap supplies at distribution level through Mchinji, where Zambia’s ZESCO have extended their network and reinforced it through a new substation at Chipata West. It is envisaged that ZESCO can supply Malawi with power of about 10MW to 12MW.
Similarly, negotiations are well advanced with Mozambique to get supply through border towns of Mangochi (Chiponde/Mandimba) and Mlangeni (Villa Ulongue) from Mozambique. Close to 8MW of power has been negotiated. Currently, both countries are vetting power supply agreements, which are expected to be concluded by the end of October 2016. When this power starts flowing, this initiative will ease the demand on border towns.
These arrangements are part of other existing quick interventions which, in the past, have enabled Malawi to supply power to border towns of Zambia in Lundadzi and Chama through Mzimba District; Zobue in Mozambique through Mwanza; Milanje through Mulanje; Villa Ulongue and Lizulu through Mlangeni in Ntcheu; and Mandimba through Mangochi. In the same spirit, Mozambique’s power utility, EDM, has now extended its networks to most of the towns except Zobue (Mwanza) and are willing to assist Malawi with supply to some of our border towns.
7.0 Power Interconnectors with Neighbouring Countries
Malawi and Mozambique entered into an agreement to interconnect their networks and also allow the country to be connected to the Southern African Power Pool (SAPP). Currently, Feasibility and Environmental and Social Impact Assessments studies are in progress. These studies will be completed by May 2017. The activities’ time lines indicate that the project will be completed by 2019. Through this line the country will be able to trade a minimum of 5OMW. The design of the line is to the maximum line capacity in the range of 250 -300MW.
Similarly, Malawi and Zambia entered into an agreement to interconnect their networks and also allow the country to be connected to the Southern African Power Pool (SAPP). Currently, Feasibility and Environmental and Social Impact Assessments studies are in progress on Malawi side. A request has been sent to the World Bank to extend the studies to the short extension in Zambia between Chipata and Mchinji. The studies will be completed around May 2017. The activities’ time lines indicate that the project will be completed by 2019. The design of the line is also to the maximum capacity in the range of 250 -300MW.
8.0 Energy Saver Bulbs (LEDs)
This is intended to reduce demand by installing energy efficient lighting. The procurement of energy saver bulbs is in progress. These bulbs are more energy efficient by using a new technology in form of Light Emitting Diodes (LEDs) lamps. Installation of these lamps will reduce energy consumption and free an extra 40-50MW of power, thereby creating a virtual power station. A total of 1,200,000 lamps will be procured by October 2016. This will be followed by another lot of 800,000 lamps in February 2017. These will be complimented with other demand side management interventions such as power factor improvements, and off peak use of power in industries to reduce pressure on the system. This will be achieved by offering incentives in form of low tariffs to the industry.
Distinguished Members of the Press, as you can see, the Government is not sitting down on its laurels waiting for Mother Nature to decide our destiny, we are taking the bull by the horns. In conclusion, I would like to assure the nation; through you the media that we intend to turn our challenges into stepping stones to an efficient and effective energy sector that will be a stimulant of national development.
Thank you for your attention. May the Almighty God bless you all.