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Situation
Malawi’s power sector comprises three government-owned companies that are mandated by government policy and legal framework to carry out activities in the power sector. Following the re-arrangement of each company’s mandate between 2016 and 2018, there was a need for a legal review to ensure that Malawi’s laws provide for the production of power in a cost effective and fair fashion, both to the companies involved in the power production and distribution, and to its ultimate consumers.
Energy Growth Hub and the Electricity Supply Corporation of Malawi (ESCOM), a government-owned company with the mandate to distribute power to users in Malawi, requested a legal review of ESCOM’s obligations under power purchase agreements (PPAs) and assistance with codifying the standard operating agreements under which it operates. They also requested a review of Malawi’s current electricity laws to ensure they create the proper framework for ESCOM’s work in the sector, and capacity building for ESCOM’s staff to enhance their understanding and ability to draft the agreements and implement Malawi’s electricity laws.
ILP’s Action
ILP engaged a team of volunteer lawyers to review publicly available information on Malawi’s PPAs and other electricity-related laws to ensure sustainable growth for ESCOM. The volunteer lawyers also provided ongoing capacity building to strengthen ESCOM’s roadmap to implement competitive and transparent power sector procurement.
Impact
The ESCOM staff members trained by ILP are now better equipped to negotiate PPAs that are transparent, competitive, and create incentives to improve power sector governance, reduce project transaction costs, and scale up delivery of affordable and sustainable power for the benefit of the public. Greater transparency in power project contracts also enables citizens to hold their own governments accountable for the contracts they sign on public behalf. This helps accelerate energy market development while minimising the risk of overpayment of electricity costs, corruption from opaque deals and government bailouts.