The US Embassy in Malawi says Millennium Challenge Corporation (MCC) compacts are not extended in any country. The MCC’s compact with Malawi comes to an end in September 2018.
In November last year, MCC released its 2018 scorecard which rates a country’s performance in a number of indicators for the successful implementation of the compact.
In the report, MCC said “Malawi continued to pass MCC’s scorecard by meeting the requirement of passing at least half of the 20 indicators overall, including the hard hurdles of Control of Corruption and Democratic Rights.”
The September closure therefore has nothing to do with corruption.
Speaking this week following a review meeting of the MCC Board of Directors in December, Edward Monster, Public Affairs Officer at the US embassy in Lilongwe, said “all MCC compacts are subject to a strict five year clock, and MCC’s current partnership with the Government of Malawi will end in September 2018.”
“Compacts are not extended in any country, which is why it is critical that the Government of Malawi successfully completes compact projects in this final year,” he said.
Monster added: “Selection for a second compact is not automatic. Second compacts are very competitive and subject to higher expectations and greater scrutiny for MCC funding eligibility.
“When considering a second compact, MCC’s Board of Directors looks for successful implementation of the first compact; a commitment to sector reforms; and continued improvement on MCC’s scorecard, especially on issues of Democratic Rights and Control of Corruption,” he said.
He said there is a need for demonstration of a strong and successful close-out to the current compact, including adoption of an electricity tariff in line with the costs of maintaining and expanding the national system; conclusion of independent power purchase agreements; and sound corporate governance and financial stability of the electricity utility, ESCOM.
“The Government of Malawi must be focused on implementation of current efforts, including completion of infrastructure investments and necessary reforms in the power sector.
“Implementing these investments will not only help move the Government toward its commitments to expanding economic opportunity, but successful implementation will also be important to MCC’s Board in considering future partnerships.”
The US$350 million compact is being implemented under Millennium Challenge Account-Malawi.
Under the programme, Malawi has implemented several reforms in the energy sector.
These include the unbundling of ESCOM. Until the split, ESCOM was responsible for generation, transmission and distribution of electricity in the country.
To bring in efficiency in the sector, government established Electricity Generation Company (EGENCO) which has taken over the generation responsibility from ESCOM.
Other reforms include the liberalization of the sector, which has opened the door for Independent Power Producer who will also supply power to the national grid.
The compact has been helping Malawi to also rehabilitate and upgrade transmission lines so that they have a higher carrying capacity.
Government is currently investing in a number of power projects to increase the current installed capacity, hence the need for stronger and higher capacity transmission lines.