Malawi Rejects World Bank-Backed Mozambican Electricity Plan as Too Costly

Malawian President Bingu wa Mutharika rejected a World Bank-backed plan to source power from neighboring Mozambique and said the southern African nation should build hydropower plants to meet its own requirements.

Finance Minister Ken Kandodo announced in January that the World Bank would fund a project to source electricity from Mozambique to increase Malawi’s power capacity to 485 megawatts from 285 megawatts, according to the Daily Times, a Blantyre- based newspaper. The Washington-based lender gave the country until March 15 to sign the deal or lose the funding, it said.

“The deal highly favors Mozambique,” Mutharika told reporters today in the Malawian capital, Lilongwe. “The agreement is that Malawi should be paying a monthly fee of $1 million per month whether we use the electricity or not. This is not feasible and a waste of the country’s resources and as long as I am president of this country, I won’t allow it to happen.”

Erratic electricity supplies are the main obstacle to doing business in Malawi, according to the Millennium Challenge Corp., a U.S. government agency that works to reduce poverty. Power outages cost the country 36 billion kwacha ($238 million) annually, an equivalent of 4.4 percent of total national income based on the country’s $4.9 billion economy, MCA economist Alex Gomani said in March.

Mutharika said Malawi should make use of the country’s water resources to generate its own power.

“Instead of us tapping power from Mozambique, we should invest in power plants to be built in our rivers across the country,” he said.

Malawi, a nation of 15.5 million people, is the world’s biggest grower of burley tobacco and Africa’s second-largest tea grower, after Kenya.

To contact the reporter on this story: Frank Jomo in Blantyre at fjomo@bloomberg.net.

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