LEGAL FRAME WORK

Legal Framework for the Energy Sector

Following Goverment of Malawi's (GoM's) adoption of the Energy Policy, 2003 this Department developed an associated legal and regulatory framework for regulating the energy sector; these were enacted by Parliament and acceded to by the State President in May, 2004.  The legal and regulatory framework comprises the following Energy Acts:

Energy Regulation Act, No. 20, of 2004;

An Act to establish an Energy Regulatory Authority to regulate the energy sector, to define the functions and powers of the Energy Regulatory Authority, to provide for licensing of energy undertakings, and for matters connected therewith and incidental thereto.

Rural Electrification Act, No. 21 of 2004;

The Rural Electrification Act, 2004 makes provisions for the promotion, funding, management and regulation of rural electrification and for matters connected therewith and incidental therefore.  The main gist of the Rural Electrification Act, 2004 is the desire by GoM to rationalize rural electrification implementation arrangements so as to ensure objectivity in site selection (based on economic rationale), equity among districts, and speed in rural energization in support of poverty reduction.

Electricity Act, No. 22, of 2004;

The main feature of the Electricity Act, 2004 is the liberalization of the Electricity Supply Industry (ESI) and how the resultant competition is to be governed to ensure fair play, private investment, as well as efficiency and effectiveness in service delivery.  This Act repeals the Electricity Act, 1998 (Cap.73.01) and in its place puts a new legal framework for the regulation of the Generation, Transmission and Distribution, Sale, Importation, and Exportation of electricity, and also use and safety of electricity in line with the Energy Policy, 2003.

Electricity (Amendment) Act, No.12, of 2016;

This is the ammendment act which povides an enabling environment for private sector participartion in the electricity supply industry in the country  by allowing restructuring of the electricity market.

Liquid Fuels and Gas (Production and Supply) Act, No.23, of 2004; 

The Liquid Fuels and Gas Supply Act, 2004 has its jurisdiction over downstream operations only and covers activities in petroleum, ethanol and gas importation, wholesaling, transportation, distribution and retailing.  A separate Act known as the Petroleum Exploration Act, 2004 governs upstream activities.  The main feature of the Liquid Fuels and Gas Supply Industry is the further liberalization of the industry and establishment of mechanisms for governing the resultant competition to ensure fair play, expanded private investment, as well as efficiency and effectiveness in service delivery. more +

 

 POLICY GUIDANCE AND MANAGEMENT STRUCTURE

Role of Ministry of Natural Resources, Energy & Mining

Because of their strategic importance to the smooth operations of the national economy, Petrol, Diesel and Paraffin, have always been protected products under the Laws of Malawi.  As such, although the economy has since 1999 been liberalized, petroleum prices are still regulated by Government.  GoM’s involvement is achieved either directly or indirectly through the following structures/parastals which report to the Ministry of Energy and Mining through the Department of Energy Affairs: 

Electricity Supply Corporation of Malawi  (ESCOM)

ESCOM is responsible for power supply in the country. Currently the total installed capacity of ESCOM is 287MW against a suppressed demand of 350MW. The shortfall make ESCOM to load shade a number of consumers during peak periods. Major challenges of ESCOM include blackout because of both technical and non-technical issues. Kapichira Phase 2 will add 64 MW to the grid once completed. more  +

National Oil Company Of  Malawi  ( NOCMA)

The National Oil Company of Malawi is enshrined in the Malawi Energy Policy which was approved by Government in 2003. NOCMA’s mandate is to construct and manage strategic fuel storage facilities at strategic locations in the country. NOCMA is also mandated to work with foreign companies on oil exploration; construct an oil pipeline and build and manage a refinery should it be necessary to have one. However, due to foreign exchange problems, NOCMA is currently buying and selling petroleum products on daily basis because it cannot keep the product in storage while there is nothing on the market. It is hoped that once the fuel market stabalise, NOCMA will construct strategic fuel storage facilities in identified sites in Blantyre, Lilongwe and Mzuzu with fund provided through the line of credit from the Indian Government and start keeping fuel in these strategic storage facilities.

The Malawi Energy Regulatory Authority (MERA) as regulator of the Industry

The Malawi Energy Regulatory Authority is responsible for regulating the entire Energy Industry in Malawi. All players in the sector need a license from MERA for them to produce and sale energy services and products. MERA is governed by Malawi Energy Laws and is established under the Energy Regulation Act of 2004. more + 

 

ENERGY POLICY FRAMEWORK

 

Government adopted the first ever Energy Policy on 22nd January 2003.  The Policy is expected to achieve the following three long term goals:

1. Make the energy sector sufficiently robust and efficient to support Government of Malawi’s (Gom) socio-economic agenda of poverty reduction, sustainable economic development, and enhanced labour productivity;

2. Catalyze the establishment of a more liberalized, private sector-driven energy supply industry in which pricing will reflect the competition and efficiency that will have developed through the reform process; and

3. Transform the country’s energy economy from one that is overly dependent on biomass (93%) to one with a high modern energy component in its energy mix.

To support these goals GoM has six strategic objectives for the energy sector as follows:

1. Improve efficiency and effectiveness of the commercial energy supply industries;

2. Improve the security and reliability of energy supply systems;

3. Increase access to affordable and modern energy services;

4. Stimulate economic development and rural transformation for poverty reduction;

5. Improve energy sector governance; and

6. Mitigate environmental, safety, and health impacts of energy production and utilization.

One of the central pillars of the Policy is the liberalization of the Energy Sector to allow for greater private sector participation and investment.  The policy proposes to achieve this overarching goal through the implementation of a range of reforms whose aim is restructure energy markets, commercial operations, ownership patterns and institutional arrangements and establishment of an appropriate regulatory regime.