Millennium Challenge Account Contracts Signed

News Release

September 30, 2015                       Email: zilani.khonje@mca-m.gov.mw

US$148.1Million (MK84.2 Billion) Contracts Signed for Construction, Rehabilitation, Modernization and Upgrading of ESCOM’s Power Infrastructure

Lilongwe, Malawi. — The Millennium Challenge Account – Malawi (MCA-Malawi), with funding from the United States Government through the Millennium Challenge Corporation (MCC), has signed five (5) contracts with five (5) firms for the construction of the 400kV and 132kV power lines and substations, and the rehabilitation, modernization and upgrading of Nkula A Hydro Power Plant. The $350.7 Million Millennium Challenge Account Compact Agreement between the Governments of Malawi and the United States of America is the largest single Malawi has received for the energy sector ever.

With the signing of these 5 contracts, MCA-Malawi has committed a total of $148.1million (K84.3b) of the Infrastructure Development Project funding, which is allocated a total of US$257.1Million (MK146.3b) of the Compact Budget.

Through the Malawi Compact, the Government of Malawi is investing in improving efficiency in power generation, expansion and upgrading of the transmission backbone and transmission and distribution networks under the Infrastructure Development Project.

 The construction firms are as follows:

  1. A joint venture consortium comprising Andritz Hydro of Austria and Mota-Engil of Portugal for the rehabilitation, modernization and upgrading of the Nkula Hydropower Plant at US$45million ( K25.6 Billion)
  2. Larsen and Toubro of India for the construction of 400 kV Phombeya and Nkhoma substations at $34.2 Million (K19.5billion).
  3. Kalpataru Power Transmission Ltd of India for construction of the 132 KV Transmission line from Chintheche in Nkhata-Bay to Bwengu in Mzimba, construction of new 66 kV New Bwengu – Old Bwengu – 1.5km single circuit self-supporting steel tower, construction of the new 66kV Lilongwe Ring – 32km (partly monopole –to avoid vandalism – and partly single circuit self-supporting steel tower and Construction of new 132 kV OHL Nkhoma to Bunda Tee-off in Lilongwe – 30km single circuit self- supporting steel tower at US$23.0 Million(K13.1b). Kalpataru Power Transmission Ltd also signed a US$30.9 Million (K17.6b) contract for construction of the 400 KV transmission line from Phombeya in Balaka to Nkhoma in Lilongwe.
  4. Chint Electric of China US$15M (K8.5 Billion) for the construction of the new Bwengu substation in Mzimba and, rehabilitation and upgrading of three substations at Bunda Turn-Off in Lilongwe, Chintheche in Nkhata-Bay and Luwinga in Mzuzu City.

The construction firms will soon be accessing specific project sites for development of final designs for these works.

“With the signing of these contracts today, MCA-Malawi has reached a significant milestone in the Compact timeline and is on time for works implementation,” says Mr. Simon Itaye, Chairperson – MCA-Malawi Board of Trustees, adding that the grant will be fully utilized by MCA Malawi within the five year period of the Compact Agreement.

The Malawi Compact is focusing on investments in infrastructure development, power sector reform, and environmental and natural resource management to mitigate the impact of aquatic weed infestation and sedimentation affecting hydropower generation in Malawi.

 “These five contracts, which will transform Malawi’s electricity supply landscape and increase the delivery of reliable electricity to an ever-growing number of Malawian businesses and homes, are a clear sign that the Compact Agreement between the Governments of the United States and Malawi, is beginning to bear fruits,” says Her Excellency Madam Virginia Palmer, United States Ambassador to Malawi.

The Malawi Compact aims to benefit nearly one million Malawians; significantly increase transmission and distribution capacity, thereby reducing outages and total system losses; and through investments in power sector reform, help both rebuild ESCOM into a financially strong, well-managed company and develop an improved regulatory environment that attracts private sector investment.

The Compact, through the implementation of the Infrastructure Development, Power Sector Reform, and Environment and Natural Resources Management Projects, will stimulate economic growth in Malawi, reduce the cost of doing business, expand access to electricity for the Malawian people and businesses, and increase value-added production in the country.

This investment will thus support the Malawi Government in:

(i) Improving the availability, reliability, and quality of the power supply by increasing the throughput capacity and stability of the national electricity grid and efficiency of hydropower generation.

(ii)    Creating an enabling environment for future expansion of the power sector by strengthening sector institutions and enhancing regulation and governance of the sector.

(iii) Mitigating the growing problems of aquatic weed infestation and excessive sedimentation in the Shire River Basin to reduce the costly disruptions to Malawi’s hydropower generation.

The US Government, through the MCC, supports developing countries in development initiatives aimed at reducing poverty through economic growth. The Malawi Compact will run for a period of five years from September 20, 2013 to September 19, 2018.

Since Entry Into Force, MCA-Malawi has committed US$212,853,663 representing 61% of the Total Compact budget, and has disbursed US$ 64,555,717, representing 18% of total Compact budget.

The Government of Malawi (GoM) and the Millennium Challenge Corporation (MCC), a US Government Development Agency, signed the Millennium Challenge Account Compact in April 2011. In October 2012, the Government of Malawi designated the MCA-Malawi as a Public Trust to oversee the management and implementation of the Compact.

For more information, please contact:

MS. ZILANI KHONJE

Communications and Outreach Director

Millennium Challenge Account – Malawi

P. O. Box 31513 | Lilongwe | MALAWI | (O) +265 (0) 177-4304

(F) +265 (0) 177-4301/302 (C) +265 (0) 888 797 118

Or visit our website: www.mca-m.gov.mw or mcc.gov.