Update on Trends in Economic Fundamentals and Their Impact on Electricity Tariffs under ATAF as at 26th January 2017

 MERA granted an implicit tariff increase to ESCOM on May 3, 2016 based on the automatic tariff adjustment formula (ATAF) by deferring the tariff reduction of 6.71%. At that time, the exchange rate and inflation were at MK693.50/US$ and 22.1%, respectively. As at 26th January, 2017, these fundamentals were at MK733.5/US$ and 20.0%, respectively. These changes resulted into ATAF outcome as below:-

 

 

 

Exchange Rate (MK/$)

Inflation Rate (%)

New Rate (January 26, 2017)

733.50*

20.0**

Old Rate (May 3, 2016)

693.50

22.1

Absolute Change

40

-2.1

Percentage Change

5.45%

-9.50%

Weighting Factor (%)

80%

20%

Weighted Percentage Change

4.36%

-1.90%

Weighted Average % Change

2.46%

 

 

Note:  *MK/$ Exchange Rate as at January 26, 2017 as provided by National Bank of Malawi

**Inflation rate for December, 2016 as provided by National Statistical Office

 

As at 26th January, 2017, the weighted average ATAF outcome was 2.46%. Electricity tariffs are adjusted when the ATAF outcome is beyond the ±5% statutory trigger threshold.