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UK-Malawi Trade & Investment Forum March 20, 2013 Energy Sector Perspectives Rob Mills World Bank.

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Presentation on theme: "UK-Malawi Trade & Investment Forum March 20, 2013 Energy Sector Perspectives Rob Mills World Bank."— Presentation transcript:

1 UK-Malawi Trade & Investment Forum March 20, 2013 Energy Sector Perspectives Rob Mills World Bank

2 Energy in Malawi: into the light? Challenges –System under strain –Financial challenges Responses –Government-led reforms –Extensive external concessional financing –Regional interconnection Opportunities –Contracting –Investing: energy & economy-wide

3 Years of under-investment has resulted in a difficult energy situation…

4 …Not least due to tariffs among the lowest in Africa… Malawi tariffs remain below economic costs Insufficient funds to: - Maintain existing infrastructure - Build new generation & transmission - Connect customers Undermines financial position of power utility (ESCOM).

5 …But like much of Africa, extensive energy resources are available Hydro Wind Geothermal ? Biomass

6 The Government has ambitious plans, starting with a reform agenda… Tariff reforms –A new round of tariff increases & monthly review of Automatic Tariff Adjustment Formula –Implementation of a feed-in tariff & associated regulations Reform of the electricity legal framework –Addressing legal uncertainty around licensing –Review de facto single-buyer model –Improved framework for unsolicited IPP bids Turnaround of ESCOM –New management –Turnaround facility

7 .. Backed by extensive external financing commitments... Energy Sector Support Project –Backed by US$85 million of WB financing (of which US$65 million grant) –Priorities: Upgrading & expanding the distribution system Feasibility studies for a new generation of hydropower Demand side-management and energy efficiency Institutional strengthening & sector studies Millennium Challenge Corporation (MCC) Compact –US $350 million grant (including set-up & administration costs) –Now back on track –Priorities: Transmission system upgrades Hydropower rehabilitation (including dredging) Support for ESCOM & policy reform process

8 Phase 1 Phase 2 (possible route) Phombeya Matambo.. And a renewed commitment to interconnect with the Southern African Power Pool

9 Assuming good progress on the reform agenda, this represents a significant opportunity-set for investors Significant T&D contracts Investing in IPPs Development via IPP default approach Significant interest already expressed Investing in Off-Grid Grid access at ~7% plenty of customers… Good potential for solar PV, mini-hydro, biomass Reduced load-shedding Fewer unscheduled outages Improved energy quality Faster connection times Contracting Significant T&D contracts to be bid out WB, MCC & GoM Improved Investment Climate

10 Chaka chino ndi chaka chamayankho Final thought on 2013…


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