Malawi‘s ESCOM overpaid by US$34,494 to Zambia Electricity Supply Corporation (ZESCO) as capital contribution towards Malawi–Zambia interconnector project
Malawi‘s ESCOM overpaid by US$34,494 to Zambia Electricity Supply Corporation (ZESCO) as capital contribution towards Malawi–Zambia interconnector project
By Staff Reporter
MALAWI‘S power utility company ESCOM overpaid US$34,494 to Zambia Electricity Supply Corporation (ZESCO), for a capital contribution towards the Malawi–Zambia interconnector project, at a time when ESCOM was nearly insolvent.
In April 2018, ESCOM requested a bailout of K53 Billion from Government after undergoing a period of financial distress from around 2016.
The request was not granted because Government had earlier on bailed out ESCOM in 2011, 2012 and 2013.
In response to Government’s position, the Board of Directors of ESCOM established a Task Team to look into the root causes of the financial deterioration of ESCOM and make recommendations to the Board that would assist in building and unleashing ESCOM’s potential in the new unbundled environment.
A Task Team to look into the root causes of the financial deterioration of Malawi‘s power utility company ESCOM uncovered continuing inadequacies in the office of the current Chief executive officer, Dr. Allexon Chiwaya.
according to the report the C.E.O could not ensure that all expenditure is incurred with due regard to economy, efficiency, effectiveness and the avoidance of waste, on the one hand; and that all necessary precautions are taken to safeguard public resources, on the other.
Specifically, the Task Team found the following incidents as manifestations of weaknesses in the office of the current CEO:
(i) He failed to notice and prevent an overpayment of US$34,494 to Zambia Electricity Supply Corporation (ZESCO), for a capital contribution towards the Malawi–Zambia interconnector project, at a time when ESCOM was nearly insolvent.
The initial quotation from ZESCO was BUILDING AND UNLEASHING ESCOM’S POTENTIAL IN THE NEW ENVIRONMENT February 7, 2019, 15 US$783,000 on which ZESCO offered a rebate of 30%4, the settlement of which was agreed to be staggered but ESCOM paid US$817,494 (having instructed the Bank to pay K600, 000,000 converted at the May 2018 Telegraphic Transfer rate of US$1 = K733.95) at once, resulting in the US$34,494 overpayment.
The staggering of the payment was agreed with ZESCO in order to allow ESCOM to meet other financial obligations within its constrained cash flow.
