Preparing this project paper would not have been achievable devoid of the support of various contributors. Numerous individuals aided the author in diverse ways through countless phases of this study work. Even though it is unfeasible to state them all by designations, the author believes it is ideal to recognise a few. Therefore, the author desires to show appreciation and gratefulness to the following individuals for their positive impacts towards the writing of this Project Paper.
The Module Lecturer Mr Caiphas Chekwoti for the direction to gain knowledge and for his great assistance during the study of the module; and the respondents of the survey and interviews in both private and public organisations.
The stratification of the respondents was done to successfully elicit information from different individuals with diverse background in the society who are acquainted and have good understanding of the subject of economics, energy and electricity mechanisms.
Miss Chifundo F. Kamugundu for her unwavering encouragement and generosity; and coaching activities of morals, self-sacrifice and dedication;
Similarly, the author would like to thank the officers from the Electricity Supply Corporation of Malawi (ESCOM), and Ministry of the Energy and Mining. Without their attention and support, this project paper would not have been achievable in the first place. It was enthralling to experience a glimpse of the procedural mechanisms of the diverse institutions and to share knowledge on the energy and electricity subject.
A unique honour is that the author had the opportunity to obtain support from the Principal Secretary (PS) in the Ministry of Mining and Energy, Mr Patrick Matanda. The author would like to express appreciation for his help in finding contacts in the energy industry and significant data.
The author would like also to thank the Energy Generation Company (EGENCO); which made it possible for the attendance of the symposium on Energy supply in the month of March 2018. It gave a platform for the author to gain first insights into the topic but also listened to various participants operational in the field, imparting knowledge and sharing proposals.
The author declares no conflict of interest.
The author affirms that this Project Paper is his own product and it is being
submitted in partial fulfilment of the requirements of ESAMI’s degree of Masters of
Business Administration (MBA) program.
The author, therefore, is accountable for the views and ideas stated therein and consequently do not necessarily denote those of the Institute.
o ADB – Africa Development Bank
o AU- African Union
o CBO -Community Based Organization
o DFID -Department for International Development
o EGENCO -Energy Generation Company
o ESCOM -Electricity Supply Corporation of Malawi
o EU -European Union
o GDP- Gross Domestic Product
o HDI -Human Development Index
o Kv – Kilovolt
o KVA – kilovolt-ampere
o kWh- Kilowatt Hour
o kWh -Kilowatt-hour
o MDGs- Millennium Development Goals
o ME -Micro – Enterprise
o SWOT – Strengths, Weaknesses, Opportunities and Threats
o U.N – United Nations
o WHO -World Health Organization
• Acknowledgements 1
• Abbreviations 2
• Abstract 4
1. Introduction 5
2. The Background to the Problem 6
2.1. The Statement of the Problem 7
3. The Objective (s) of the Study 8
4. The Research Questions 8
5. The Significance/Justification 9
6. The Scope of the study 10
6.1. The Study area: Lilongwe City’s CBD. 10
7. Literature Review. 10
7.1. Characterising Interruptions 11
7.2. Quantifying Power Interruption Costs 11
8. Proposed Methodology and Data Collection 12
8.1. Case Studies 12
8.2. Consumer Surveys 12
8.3. Ethical Considerations 12
9. Proposed Structure/ Outline of the study 13
10. The Conclusion 14
10.1. Possible constraints of the Study 14
11. Bibliography 15
12. Appendices 17
12.1. Appendix I: Map of Lilongwe showing the Study Area 17
12.2. Appendix II. Photos depicting some of Micro-economic enterprises 18
12.3. Appendix III. The research Onion 19
12.4. Appendix IV. Project Paper (Question Paper) 20
The Nation Newspaper of Malawi previously presented an editorial on energy and electricity subject and in this article, the publisher questioned one of the energy officials concerning the effect of electricity on the economy. The official replied that the blackouts possess no huge effect because the current loading shedding system gives each commercial entity to make use of energy in accordance to the electricity supplier’s program. Obviously, this officer’s opinion did not reflect power outage effect for people living in the rural and peri-urban regions, where outage periods are known to overextend into many weeks. He has not had to sprint to his car to power up his smartphone in order to communicate with the outer world, neither was he reliant on the internet to perform his regular labour routines.
The author was at first tempted to express notion without even reasoning, the effect of electricity on the economy does be existent but then thought again that this would not be any different to telling a six-year-old, under the web of a starry night sky; the existence of a building size snake eating the village elder’s food on the African thorn tree. Consecutively to understand the true impact of the electricity supply problem on socio-economic environment, an inclusive investigation requires to be performed and assessment of the assembled data accomplished to draw final decree on the subject.
The enormous interruption supply of electricity has turn out to be a frequent incidence all over the nation of Malawi. Even though the significance of the so called blackout crisis is indisputable; to our understanding, a detailed assessment of the associated economic and social effects is absent in the current literature. The purpose of this project paper is, therefore, to introductory make ready for an all-inclusive research on how to seal the gap by researching the economic and social costs of power outages by means of composed survey data in Lilongwe the capital city of Malawi (Orcher, L. (2007)
The precise objectives of the study are; to construct a comprehension of the demographic and socio-economic effect of the power outages on the Micro-enterprises; to understand the problems, they encounter and set a platform for the authorities to grasp on how to develop their situation based on the discovered factors and causes of power outages in Lilongwe, Malawi.
Research depicts that the deficiency of electrical energy supply is a main obstacle of poverty alleviation in developing nations. Malawi is at present undergoing the worst electricity crisis in its lifetime, which has caused enormous day-to-day blackouts.
The availability of energy supply is one of the essential element in the planning and policy formulation of the energy system. Nevertheless, the value the community consider on the energy system might not be easily identified. The evaluation of the socio-economic costs of power outages is a significant initial stage towards verifying the socially ideal levels of blackouts. This type of evaluation demands to go beyond an authentic emphasis on economic damages alone but requires to embrace the inconvenience costs for the customers (Bose, R. K., Shukla M. ; Yaron G. 2006).
The possible approaches to quantitatively and qualitatively assess the impact of power outages are estimated to be examined and contrasted in this project paper. The significance of taking into account particulars of geographical locality and period of blackouts is emphasised by means of case studies. Guaranteeing a constant energy supply is critical for any progressive nation to perform in social, political and economic areas (United Nations 2013b). The demand for endeavours to make certain of adequate levels of viable electricity in the future is growing, mostly for the reason that the production and supply of energy are at present experiencing substantial restructuring. Despite the fact that fostering the essential procedures to safeguard the energy grid and prospect supply is predominantly a task for the engineering professionals, it is the role of economic enquiries to espouse the advancement of a scheme of inducements to offset conceivable market drawbacks and consequently empower the application of societally optimum procedures.
One significant necessity for emerging a proficient governing system is the capability to compute the cost of energy supply security. Considering that energy supply security comprises of a non-economical asset, which may be obtained only together with the physical product (to form electricity), the cost of electricity supply security cannot be easily established. This is the reason why frequently the collapse of energy supply, and in precise terms the cost of blackouts, is utilised to evaluate electricity supply security’s value. By means of contingent valuation technique, this project paper gives evidence that Lilongwe residents are prepared to pay more on top of their monthly power utility bills, to make certain of service consistency.
2. The Background to the Problem
Malawi’s energy utility supplier, the Electricity Corporation of Malawi (ESCOM),
articulates that the commercial and production industries must prepare themselves for further power failures as it appears to be no instantaneous remedy to resolve the electricity supply problems presently impinging on the southern African nation of 17 million ((Simon J.S., Zimmerman R., Restrepo C.E. et al. 2005)
Malawi is being subjected to an energy generation decline of about 69 percent making ESCOM’s production volume remain at 361 Megawatts (MW) emerging from all its electricity generation stations and diesel plants. ESCOM cautions that blackouts will prolong with projections of being at worse by the month of December on condition that water levels do not rise in the Shire River and Lake Malawi.
The water levels have hit their lowermost levels and at their worst in the past 15 years, causing it problematic for ESCOM to produce energy as about 90 percent of its energy is produced on the Shire River, the solitary outlet of Lake Malawi. ESCOM’s former chief executive officer John Kandulu elucidates that the water flow in the Shire is set to get worse in anticipation of the having adequate rainfall.
Most of the massive functioning problems are in the months of September and December as the lake levels are at their lowest and the nation is only capable to produce 153 Megawatts. This is turn relates to the 165 Megawatts of electricity production, which is a decrease of 67 percent from the overall volume. This is a serious state of affairs which might make it unfeasible for the nation to provide any basic service to the residents and industry for their production. Entrepreneurs and business executives express that the blackouts are costing them enormous amounts of money. The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) articulates that ever since ESCOM decreased energy production levels, businesses may be generating about 40 percent to 80 percent of their ideal capability. The MCCCI claims that decreased production implies lessened products on the market giving rise to diminished turnover.
Decreased business production with a constant fixed costs, and decreased profits, have propelled some companies to reorganise themselves by reducing on staff, and even moving geographically out of the country. This is a critical matter that requires to be resolved urgently because it is essential for the big production industry to have constant supply of electricity power. Substitute energy sources are proving to be costlier and unsustainable over extensive periods of time (Yin Y., Guo J., Zhao J. ; Bu G. 2003)
In spite of ESCOM commencing several interventions to resolve the problem comprising of load shedding programmes for industries, the utilisation of power saving bulbs, electricity connections from other nations and the fitting of fuel generators; the country has not encountered progress in the energy supply. Research further depicts that the government of Malawi is again presently contemplating energy interconnector programme with the country of Mozambique – a development which was frozen by the former state president the late Bingu wa Mutharika. Apparently, he observed the interconnector as a very costly scheme that might not profit Malawi from a long term perspective. However, the ESCOM officials declares that the Mozambique-Malawi interconnector venture shall be implemented and it is anticipated to support the nation of Malawi to have access to the Southern Africa Power Pool (SAPP) industry via the Mozambique linked power network with the nations of Zimbabwe and South Africa.
It is likewise whispered that the nation of Malawi is also inclining its courage on the 22 number of Independent Power Producers (IPPs) such as Fichtner supposed to have engaged in an MOU with the nation of Malawi to generate a projected overall production capability of about 566 Megawatts through Hydro and Solar measures.
2.1. The Statement of the Problem
Access to up-to-date reasonable power services in third world countries is necessary for the accomplishment of the globally recognised development objectives, such as the Millennium Development Goals, and for attaining viable development (United Nations,2013a).
Malawi is presently experiencing the worst power or electricity catastrophe initiating a huge demand-supply gap. In addition to the unstable security circumstances, the insufficient provision of power services is one of the foremost difficulties that citizens and businesses are encountering. On a daily basis, the country is undergoing power outages with some districts having blackouts up to 18 hours. Subsequent to several years of declined government administration and high rise of corruption at public-sector parastatals, one may assume that it appears there shall be no immediate solution for the energy difficulties, and that electricity provision will persist to be severely limited into subsequent years and beyond.
3. The Objective (s) of the Study
The general objective of this study is to explore the experiences of energy consumers specifically the Micro-economic enterprises (see Appendix II) concerning power interruptions in Lilongwe, the capital city of Malawi using diverse methodologies, contribution ideas and theories from numerous sources. The particular SMART objectives of the study are:
? To explore the foremost factors and causes of power outages in Lilongwe/Malawi using a widespread analysis research.
? To build an understanding of the demographic and socio-economic effect of the power outages on the Micro-economic enterprises in Lilongwe, Malawi.
? To comprehend the challenges, they face and how they live to enable the engagement of diverse stakeholders and authorities to understanding how to improve their situation.
It is significant to observe that each of the above exclusive objectives will have a methodology to attempt to attain it as will be depicted in the later sections. The author’s enthusiasm and motivated of research are based on an understanding of how these small business consumers are coping up with prevailing blackouts and also his residing personal experience in Lilongwe, an area with higher power blackouts.
4. The Research Questions
The author’s motivation and interest led to the emergence of asking the following question; amongst rampant electricity interruptions “Does the current electricity power outages problem have a socio-economic cost on Micro-economic enterprises in Lilongwe, Malawi? which further led to the derivative of the following research questions guiding this overall study:
? What is the extent of the power outage problem in Malawi?
? how do the Micro-enterprises manage to run their production activities with no electricity and no alternative power sources?
? and if blackouts have a negative impact on ME’s, how may the problem of power outages be addressed from a long term and sustainable perspective?
5. The Significance/Justification
Selection of the perfect level of reliability to target for involves a comprehensive perception of the socio-economic costs of power provision disruptions, which may be extremely diverse contingent on the timing and nature of the consumer. For instance, despite the reality that a home may possibly not become aware of a power disruption for the duration of office hours, a business corporation incapable to electronically send a tender document in due course may possibly lose millions in Kwachas. The same may be valid to a functional malfunction of the hospital’s oxygen machine on a dying patient attributable to power interruptions.
There is limited detailed research while many suppositions on how ME’s in Lilongwe are coping with power outages; this study, therefore, seeks to contribute knowledge of the nexus between the electricity interruptions and the socio-economic impact on the Micro-economic enterprises (Reister D B. (1987).
Furthermore, it is anticipated that the study will impart useful information to the Ministry of Energy and Mining; The Ministry of Health, ESCOM and EGENCO Parastatals on the perceptions of ME’s on electricity interruptions. The insights may aid the government of Malawi to comprehend where the foremost drawback is and learn how to improve the status quo. It should be perceived that ME’s are the one of the crucial consumers of electricity and a key element to economic growth in Malawi and therefore they ought to not be disregarded. Every citizen may not need other professional involvement such as a lawyer or a blogger in their line of business but they shall definitely need to conduct business with ME’s once or several times in their lifetime hence the relevance. The government of Malawi may also utilise the information from this study and distribute resources to advance generation, diffusion and provision of power to the Lilongwe City, therefore, assisting the Micro enterprises in the line of business.
In addition, it is anticipated that the outcomes of this study would offer positive recommendations to the government of Malawi to permit more competition and privatisation in the power generation, diffusion and provision. ESCOM is the main producer and supplier of electricity in Malawi which sets a monopolistic atmosphere and complacency to supply their service. Consequently, in advancing the power service to the consumers, the nation might engross additional corporations in the energy sector (Smith J.C. 1985).