It is too early to objectively assess the performance of the Tonse alliance administration within a short period, especially where to turn around strategies. To borrow the State President’s Lazarus Chakwera’s own phrase, it is a period one can characterise as that of rubble-clearing to pave the way for effective implementation.
There are, however, quite significant developemnts that have been chalked in the nergy sector towards enhancing a conducive environment and restoring operational stability in the 100 days of the Tonse Alliance administration with Chakwera at the helm.
My discussions will focus of the power component of the enrgy sector from the regulatory to the operational planes.
Malawi Energy Regulatory Authority (Mera)
One of the issues that had to be tackled was to do with the management authority itself. There were alleged cases of mismanagement and gross abuse of office. Such management malaise increases operational expenditure which has to be financed in one way or another. they said they are no such thing as free lunch.
What must be appreciated is that Mera is simply a regulator on the nergy sector. It drives its income or revenue from levies on the productive institutions in the sector which it regulates. Any mismanagemnt of the authority is likely to to result in a negative rippleeffect throughout the sector.
The appointment of the new board of Mer led by an accomplished corporate leader and the cleaning of the management are positive developemnts. And the hope should be that the authority is going to confine itself to regulating which it will undertake proffessionally and not cross the line to become an unwelcome burden to the institutions under its regulatory ambit.
Energy Generation Company Limited (Egenco)
Egenco is the successor of the generation business unit of the Electricity Supply Corporation of Malawi (Escom) Limited. Almost all the good intentions behind the elevation of a semi-autonomous business unit to a fully independent incorporated comppany were negated by gross mismanagement of the sector as a whole. Egenco’s main, if not the only customer, is Escom. Any operational problems in Escom are likely to negatively impact Egenco and vice versa.
A case in point is the huge bill for electricity supplied which Escom was failing to honour before government intervention. The Government took action to resolve the trade debt issue. This is highlycommendable.
Electricity Corporation of Malawi (Escom)
It is a fact that in the enrgy sector, Escom was one of the most abused State owned companies. If the reports in the media are anything to go by, the procurement function of the company was abused at the behest of politicians and the company’s board of directors. This abuse included unnecessary procurement and alarming levels overstocking with the attendant high risks of obsolescence.
Well qualified and experience staff were forced to leave their employment directly or indirectly by making their working environment untenable. Then, there was the recruitment of people at all levels without following procedures and such recruitment were not being driven by organisational needs, but by political expediency. It has been alleged that some of the company’s institutional houses were actually occupied by party functionaries not in the employment of the company. Whether these party functioneries were paying commercial rent or paying at all for the houses, I do not know.
Then, there have been revelations of how fuel paid by and meant for the company was diverted reportedly through withdrawing cash equivalent at service stations. How can a company survive with such a litany of abuse?
What Escom went through is abuse gone mad. I am mentioning all this to indicate the extent of mismanagement at Escom and the magnitude of effort that must be taken to normalise the operstional environment and stability of the company.The appointment of the new board for Escom-led by successful professional of undoubted credentials and which comprised of professionals and technocrats is more than welcome. It is my expectation that the new board willbe allowed to make necessary bold decisions.
Conclusion
The Tonse Alliance admnistration has started well with regard to the power sector. The actions taken so far point to goodintentions for the sector.
I must add, however, that Escom was corporatised in 1998 when it converted from a special Act of Parliament statutory company to a company incorporated under General Companies Act. The intention for doing that was to make Escom operate as a commercial entity expected to make profits and pay dividents to share holders which in this case is the Government of Malawi.
Escom only managed to operate as commercial entity for a few years after corporatisation and it indeed paid dividends to the governemnt at one time. The board and the managemnt at that time insisted on operational autonomy.
It is lamentable that hitherto there has been no iota of political will to allow the board and management of Escom to operate as a commercial entity should.
The abuse bordering on fraud that went unabated for years on end at Escom was because of government interference through its officials amfd the board not in spite of their extensive involvement in the operations of the company. The managemnt team of Escom was so intimidated, paticularly after it was amply demostrated that members of senior management could so easily be forced out of employment for doing what is right, that it became no more than a lap dog of an abusing board and an abusing cadre of the government officials.
Now that both Escom and Egenco have new professional boards in place, th shareholder, the Government of the Republic of Malawi should now give the new boards the benefit of the doubt by granting them more operational autonomy. They must be given performance targets which must include regular dividend payments under a revived payments transparent dividend policy developed by the board and management of Escom and approved by the shareholder.
By the way, soon after corporatisation, Escom quickly developed a dividend policy, as a guide for dividend payment to its shareholder. Once government officials at the department of statutory corporations got wind that Escom had developed such policy, a circular was issued that the department would developa dividend policy for for all State owned companies.
A uniform policy for all State owned companies! Really? Am not surprised that such a policy has not been developed to date.
President Chakwera and the Tonse Alliance administration have clearly demostrated a penchant for doing things differently for the better of the country. The political will of real reforms inthe management of the power sectro, particularly in resisting the temptation to interfere in the operational decisions of the State owned companies in the power sector by government officials or civil servants which has eluded previous administrations seems to have the best chance of being realised under the new administration.
The author is United Democratic Party (UDF) general secretary but writes in his personal capacity.
Source: The Nation_ October 7, 2020_Tonse 100 Days in power_Kandi Padambo-Contributor