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Monday, July 15, 2024

O LORD HAVE MERCY: Mera approves 50.8% electricity tariff hike

KACHAJE: This increase will be implemented in four phases

Malawi Energy Regulatory Authority (MERA) has announced a 50.8% adjustment of electricity tariffs for the next 4 years from 2023 to 2027.

Speaking during a press briefing held at the Ministry of Information and Digitalization Central Office of Information today, MERA CEO, Henry Kachaje said this increase will be implemented in four phases: from 2023 to 2024, the maximum allowed is 18%; in 2024 to 2025, the maximum allowed adjustment is 16%; in 2025 to 2026, the maximum allowed is 12%; and the last phase, from 2026 to 2027, is 9%.

He added that based on the total revenue requirement calculation for the tariff period at K1.720 trillion, coupled with an estimation of 9.928 billion units billed to end-user customers, the average end-user tariff is K157.50/kWh.

With the current average tariff at K104.46/kWh, this translates into an average tariff increase of 50.8%.

Kachaje continued to explain that the first tranche of the 18% adjustment, moving the tariff from K104.46 to K123.26 per kWh, will be implemented effectively from today, September 1st, 2023.

A revised base tariff application by ESCOM was submitted in April 2023, resulting in a decrease in the requested tariff increase from 99.9% to 69.7%.

As mandated by the Energy Regulation Act of 2004, the MERA Board undertook a review and analysis of the application to determine the appropriate increase in the base tariff.

This fourth Base Tariff has been prepared in line with the tariff methodology, with some exemptions, and the recently concluded tariff and cost of service study.

The Authority believes that granting this tariff adjustment will enable the power sector to generate sufficient revenues for investments, system maintenance, operations, and other appropriate costs, thereby improving and sustaining the provision of customer service.

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