The projects being proposed for investment under the Millennium Challenge Corporation (MCC) Compact agreement are extremely urgent for Malawi, says Darius Teter, the MCC Acting Vice President in the Department of Compact Development.

Speaking during a four day visit to Malawi, which started on 18 May 2010, Teter commended the Government of Malawi for prioritising investments in the power sector.

”I would say it is accurate to describe the situation in the power sector here as entering a crisis, there is very low access to electricity in the country and the power is not entirely reliable,’’ said Teter.

During his visit, Teter who was visiting Malawi for the first time met senior government officials, the private sector, and civil society and development partners in the country. The purpose of the meetings was to come to an understanding about the scope of MCC’s investment in the power sector.

Since 2007, Malawi has been working with the US Government to develop a Compact programme, and the two parties are in the process of finalizing plans to implement a major investment in the power sector. Activities in the power project include the rehabilitation of Nkula A and B power plants and improvements in sub-stations and transmission lines. The project is also looking at the potential for peri-urban network expansion and small scale mini grids and Natural resource management in the Shire River basin.

The MCC Acting Vice President also visited the Malombe catchment area near the Liwonde Barrage, and the Nkula power stations in order to appreciate the challenges the sector is facing in generating and distributing power. “I think that the needs are great in Malawi, our projects cannot solve all problems but I think it will be a substantial start,’’ said Teter.

At the moment, teams of consultants are in the field doing technical feasibility work on the engineering and technical side of the project. Some of the teams are also undertaking a financial and management review of the utility provider ESCOM and the legal, institutional and regulatory structure of the power sector in the country.

A feasibility study on the development of public-private partnerships for mini-grids based on renewable power to increase access to electricity in rural areas is also being undertaken. The current analysis and feasibility study work is necessary to inform MCC’s investment decision on the power investments and setting the stage for private sector involvement in the future.

MCC anticipates that the preliminary feasibility work will be ready by the end of June, 2010. After this, there will be more detailed discussions with key government ministries and agencies with a goal to have an investment proposal that will be taken to the MCC Board in December, 2010. If all works according to the plan, it is hoped that MCC and the Government of Malawi will sign the Compact Agreement after the board of MCC approves the proposal at the end of the year.