The extra funds from the PSF have been realized as a result of the drop in world oil prices over the retail prices.

But Consumers Association of Malawi (Cama) has reacted negatively to government’s plans to use MWK2.5 billion fuel levy to fund Electricity Supply Corporation of Malawi Limited’s (Escom) Kapichira II power station project.

Cama Director John Kapito said that his organization was against using the fuel levy to fund Kapichira II hydro power project.

Kapito further continued that it would be better to use the funds in the oil industry to subsidise the poor not to “bail out” Escom.

“Escom must generate its own resources, not paying off salaries. We paid through the pumps, it’s our money and not Escom’s, we paid when overcharged,” Kapito said.

Kapito suggested that the government should bring outside investors for the project and funds assigned should be transferred to other areas like hospitals and education.

Because of these excess funds, the Minister of Finance Goodall Gondwe and Minister of Energy and Mines Ted Kalebe said that it was decided that Escom should use domestic funds to immediately embark on the project.

“Government believes that this decision is vital in order to allow economic development to continue and that growth rates should not be undermined by an inability to meet our future electricity needs,” reads the statement in part.

The statement also said that creation of additional generating capacity would address the problem of severe power shortages.

“Discussions have taken place with donors over several years about investing in means of enhancing power generation capacity at Kapichira but it became clear that donor funding would not be made available in time,” it added.

Escom has shortage of 30 megawatt and an additional 25 megawatt per year brought about by rapid economic growth.

“Therefore, regardless of the rehabilitation of the existing capacity, we must have this project operational within the coming two years,” reads the statement.

Tendering for the turbines already started on February 13, 2009.

Malawi is facing a power crisis with frequent load shedding that is affecting businesses.