Announcement of Five Million Two Hundred Fifty Thousand Dollars Credit for Electric Power in Malawi on January 30, 1970

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET. N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 70/4 ?ubjeci: $5.25 milli~n credit for January 30, 1970 electric power in Malawi The International Dev~lopment Association (IDA) and the African Development Bank (ADB) are together providing $8.25 million for the expAnsion of electric power facilities in Malawi. This marks the first time an agency of the World Bank Gr0u:r:, and the African Development Bank have joined in finaricing a develop- ment project. The financi.ng wHl cover the for~ign .~xchaugc costs of a three-year $12.4 million program of th~ Electricity Supply Commission of Malawi (ESCOM), which • provides for the installation of 19 megawatts of new generating capacity, the construction of 198 miles of transmission lines, and distribution and substation expansion in the Southern and Central Regions of the country. Both the IDA credit and the ADB loan will be made to the Government of Malawi. The IDA credit, in an amount of $5. 25 mil lion, wil 1 be for a tenn of 50 years, including a 10-year grace period. It will be interest-free but a service charge of 3/4 of 1% will be made tc cover IDA's administrative costs. The Government will relend the proceeds of the credit to ESCOM for a term of 29 years, with interest at 7%. The ADB loan of $3 million will be for a term of 20 years, with interest at 7%; the proceeds will be relent by the Govern- ment to ESCOM on the same terms. Malawi is a land-locked country of about 48,000 square miles, with a popu- lation estimated at 4 million~ The greater part of the population and economic • activity is centered in the Southern Region which contains m~st of ESCOM's generating capacity of 39 MW and accounts for 95% of its sales. Demand for power in the Central Region should begin to grow, however, with the pr,,.:>spective move of /more  • IDA P.R. No. 70/4 - Malawi-Electric Power - 2 - the capital from Z"Wlba to Lilongwe. Demand for electricity has been very high in Malawi averaging an annual increase of more than 20% since 1954. It reached a peak of 34% in 1966 and fell to 21% in 1968. It is expected to average 10% during the next 5 years. The installations now being financed sh~uld cover the country's requirem,ents until 1973. The IDA credit will be used for the construction of a hydroelectric power station at Tedzani Falls on the Shire River, 4.\ miles downstream from a 2lJ-MW power station at Nkula Falls, with an initial capacity of 16 MW; the installa- tion of a 3-MW diesel unit at Lilongwe to avoid a shortage prior to the com- missioning of Tedzani; and assistance to ESCOM's program of managerial, admini- strative, professional and technical training for its staff. The ADB loan will be applied to the cost of transmission and distribution facilities. They in- clude the construction of 198 miles of 66-kv transmission lines from Tedzani to Nkula Falls and thence to Lilongwe and from Tedzani to Blantyre, a town in the • Southern Region; substation extensions and imp·!'ovements, and other items which ESCOM needs for its general development. ESCOM has engaged two consulting engineering firms to design and supervise various aspects of the project, which is scheduled for completion in 1973. The Shire River drains the country's largest lake, Lake Malawi, which is a natural reservoir. The river flows through the southern part of the country and has a large hydroelectric potential along its middle reaches. It also offers considerable scope for irrigation. The Government will undertake a study of the potential uses of the water resources of Lake Malawi and the upper Shire • River so that the water can be allocated as soon as possible between competing claims for electric power, irrigation and domestic utilization. - 0 -