World Bank Invests in Malawi's Electricity Supply System

June 28, 2011

US$84.7 million to also finance grid upgrade and prepare for new power generation

WASHINGTON, June 28, 2011 – In line with the Government of Malawi’s plans to develop domestic sources of electricity generation, the World Bank today approved US$84.7million in funding for an energy sector project that will help improve the capacity of the systems to transmit and reach consumers using improved technology.

Malawi’s current national generation capacity is 286 megawatts (MW), 20 percent of which is lost in the transmission and distribution processes, yet peak demand is currently estimated at about 330 MW. Demand is expected to grow at about five percent annually over the next decade. Only about seven percent of the population has access to electricity, mostly in urban centers.

“The existing system is greatly strained and the frequency of both scheduled and unscheduled electricity supply interruptions is increasing, affecting businesses and households,” says Sandra Bloemenkamp, Country Manager for the World Bank in Malawi. She added that there is therefore a need to rehabilitate the system to improve the quality and reliability of electricity in Malawi, in the face of increased demand and consumption.

The Energy Sector Support Project which is expected to be effective from December 2011 to October 2016 will concentrate on rehabilitating, upgrading and expanding the existing distribution network. It will also finance feasibility studies for possible new hydropower stations at different locations in Malawi, as well as support efforts at the household level to balance the supply and demand for power at peak times.

Quality and reliability of supply will be improved through installation of increased transformer capacity, and construction of new distribution substations to take the load off those substations that are currently overloaded. The new substations will cater for the growing load demand and bring the supply sources closer to the load centers. This will reduce network losses arising from long, radial overhead lines and will also improve voltage stability for customers. Four new substations will be constructed, together with new 33kV and 11 kV distribution lines. In the Dwangwa area in Nkhotakota a new substation will be constructed to also serve the growing sugar industry. In Lilongwe, a new substation will be in the Kauma area with lines to supply the developing Area 43, Area 12 and Kauma. In Mzuzu, a new substation will be established to improve supply capacity to the greater area of Mzuzu city and the new nearby residential area of Katoto. In Blantyre, a new sub-station will also be established in the Bangwe area to cover the rapid electrical load growth from business and residential development activities.

In addition to new substations, existing ones will be upgraded. These are Golomoti, Chinyama, Fundis Cross, Nkula, Balaka, and Chingeni. The upgrade will help support economic activity. For example, uprating the existing Golomoti substation will strengthen the 33 kV system around the Salima, Balaka and Ntcheu districts and improve reliability for the mining activities at Chipoka in Salima district, as well as the new cement works at Kasinje in Ntcheu district.

Overhead lines will be constructed to enhance operational flexibility, fault discrimination, and supply reliability in such districts as Karonga, Mzuzu City, Chiradzulu, and Blantyre. These ‘end-of-the-line’ investments in the low-voltage distribution grid will reduce electricity losses in the grid and help improve reliability of supply.

To increase the hydro generation plants efficiency, the Bank will finance spare parts for Kapichira, Nkula B and Tedzani I, II and III power stations. These will include spare parts for turbines and generator coolers, most of which have not been replaced or overhauled for a long time affecting efficiency of the generation plants.

In line with the Government plans to develop internal sources of electricity generation, the project will finance generation feasibility studies at Lower Fufu on the South Rukuru river and Mpatamanga on the Shire river each of which could have a potential capacity of over 100MW. One site of less than 50 MW potential capacity will be explored at Chimgonda on the Dwambazi River. Another feasibility study will be for a new ‘inland’ transmission backbone line that would run north from Lilongwe via Kasungu to Mzuzu. This will complement the single lakeshore backbone line currently in place which connects the northern region to the rest of the country. The component on feasibility studies will costs about $15.2million.

About $10million will be used to finance demand-side management and energy efficiency activities, and capacity building and technical assistance for the Ministry of Ministry of Natural Resources, Energy, and Environment (MNREE) and the Electricity Supply Corporation of Malawi (ESCOM). The energy efficiency activities will focus on reducing household energy consumption from hot water geysers to save an estimated 11MW. Technical assistance for the Ministry will include studies to accelerate the exploitation of renewable energy resources in Malawi.

The World Bank’s support to the Energy Sector Support Project complements efforts by both Government and other development partners to improve availability of electricity in Malawi from internal sources. The Government has committed to finance Kapichira II from its own budget. The Millennium Challenge Corporation recently signed a US$350 million Compact with the Government to provide support to the energy sector. Among its activities, the Compact will finance a program of grid rehabilitation and upgrade, investments in natural resource management, support policy reforms, including improvements in the financial management, operational management and corporate governance of ESCOM, and improvements in the regulatory framework for private sector participation in the sector. JICA is also supporting Malawi’s Rural Electrification Programme (MAREP) being implemented by Government. The goal of the program is to improve the rate of household electrification through the extension of distribution.

The $84.7million World Bank support comprises $65.4million as a grant and $19.3million as a credit. The Ministry of Natural Resources, Energy, and Environment and ESCOM will be the main implementing agencies. The Project Manager for the Bank is Rob Mills.

Media Contacts
In Lilongwe
Zeria Banda
Tel : (+265-1) 770 611
In Washington
Francois Gouahinga
Tel : +1 202 473 0696