The Millennium Challenge Corporation (MCC) has engaged a consultant to determine the financial, legal and policy issues that should be addressed under the Malawi Power project.  The financial and management review of the power sector was officially launched in Lilongwe on Monday, 17 May 2010.

The consultants will among other things assess and review options available in the design of the Malawi power sector industry and develop recommendations on the most effective power industry structure in the country.

The consultancy is being carried out jointly by Ernst and Young in South Africa and Malawi. Ernst and Young is one of the largest professional services firms operating in a hundred and forty countries in the world. The contractor will work together with a legal services consultant to review and appraise the legal, regulatory and financial environment of the power utility ESCOM and Malawi’s power sector in general.

Ernst and Young will assess and review options available and recommend on the most effective industry structure for the power industry. In the review, the consultants will look at the industry structure, quality and affordability of electricity supply and supply of electricity in rural areas. They will further consider technology, ownership and investment funding during the assessment and review of options that are currently available.

On the Malawi power sector effectiveness, the consultants will critically look at the power utility’s governance, financial and procurement structure, organizational effectiveness and capability, operational improvements, revenue requirements, capital structure and funding.

On private sector participation, the consultants will look at investment motivation and incentives and the areas and sustainability of investment. Issues under the legal and regulatory environment will include the regulatory effectiveness and the legal and regulatory amendments required to create a conducive environment for private sector investment that will enable enhancing the country’s generation capacity.

Speaking during the launch, Principal Secretary in the Ministry of Natural Resources, Environment and Energy, Randson Mwadiwa said government is also trying to come up with initiatives on ESCOM reforms and hoped that the consultancy will address all issues raised in the past. Mwadiwa urged all stakeholders to provide the necessary information so that the final report will enable Government to make the requisite decisions and take the necessary action to contribute to economic growth in the country

Six tasks will be delivered at the end of the consultancy. The tasks include, inter alia, a financial review of ESCOM for year ending 2009, the development of a power sector reform agenda, promotion of private sector investment and the development of a re-organization plan for ESCOM.