Egenco wary of K97bn Escom debt write-offs

The Electricity Generation Company (Egenco) has warned that government’s decision to write off debts owed by the Electricity Supply Corporation of Malawi (Escom) is weakening its ability to invest in new power plants and rehabilitate ageing infrastructure. Speaking in Lilongwe yesterday when Egenco appeared before the Parliamentary Committee on Commissions, Statutory Corporations and State Enterprises, chief executive officer William Liabunya said the company is financially viable and capable of funding power projects through internally generated resources but is constrained by limited policy support. Liabunya said the Treasury has written off about K97 billion owed to Egenco over the years, including roughly K30 billion cancelled in 2019 and another K67 billion in 2024.

He said the funds could have been invested in critical electricity generation projects. “If we are serious about power development, the electricity we generate should provide the revenue needed to expand capacity,” Liabunya said. “But we are working in reverse.

We make the money, it is cancelled from our books and we start from zero. Tariffs are adjusted and you expect consistent payments, but the money does not come.” Despite the write-offs, he said Escom has accumulated a fresh debt of about K30 billion, which it is failing to service, raising fears that government may again cancel the obligation at Egenco’s expense. Liabunya questioned what he described as preferential treatment accorded to Escom, arguing that the utility has the capacity to meet its obligations.

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“Escom continues to pay independent power producers at higher costs, even though Egenco invests heavily in electricity generation and also supports power supplied by the same producers,” he said. He further noted that Egenco’s tariff remains below the cost of production, placing additional strain on operations and expansion plans. Liabunya disclosed that Egenco currently owes creditors about K16 billion, including K14 bi l lion owed to foreign suppliers for spare parts that require foreign exchange.

He said the company services its debts without government cushioning. Despite the challenges, he said Egenco plans to increase generation capacity from the current 444.67 megawatts (MW) to 2,434.5MW by 2040 through partnerships and other support mechanisms. make their own proposals in terms of remuneration.

We are all service vice-chairperson John Jackson Bamusi said lawmakers will engage relevant authorities to establish why Egenco is facing persistent financial challenges. “As a public institution, Egenco requires adequate support to expand capacity and ensure reliable electricity supply,” Bamusi said. Meanwhile, economic governance expert Jimmy Lipunga has warned that growing debt tensions between Egenco and Escom could undermine power sector reforms and electricity expansion plans. He said the sustainability of the sector depends on whether the debt relates to unpaid electricity supplied by Egenco, stressing that Escom has a commercial obli@gation to settle such arrears.

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