Malawi: Chikadya resigns as chairman of Mera after its board was accused of incompetence over the recruitment of CEO Henry Kachaje
Following the government’s decision to sack the entire board of directors of the Malawi Energy Regulatory Authority (MERA) due to the “mismanagement of recruitment” of the chief executive, Henry Kachaje, chief executive of the Times Group, Leonnard Chikadya tendered his resignation as director of the board. President.
A letter from the President and Cabinet Secretary, Zanga-Zanga Chikhosi – dated February 18, 2022 – said the sacking of the council was based on an investigation by the Parliamentary Public Appointments.
Chikhosi said the Public Appointments Committee had been asked to approve the removal “for incompetence” under Section 8 of the Energy Regulation Act.
MERA’s Board of Directors was appointed in September 2020 by President Lazarus Chakwera who had Chikadya as Chairman followed by Thokozani Chimkono, Pemphero Likongwe, Lameck Ntchembe and Alexandr Kalanda.
The ex officio members were the Secretary of Energy, the Director of Energy Affairs, the Comptroller of Statutory Companies, the Secretary of the Treasury and the CEO of MERA.
In his February 26 resignation letter addressed to the Comptroller of Statutory Companies, Chikadya said he was very grateful to Chakwera for trusting him to lead MERA’s Board of Directors and that it was also a privilege of to be appointed to this post.
He said the Chairman of the Public Appointments Committee sent him a subpoena to testify on Monday, February 21, 2022 under Article 60(3) of the Constitution and Article 9 of the National Assembly Act. (powers and privileges).
“The notice stated that the Office of the President and Cabinet (OPC), through the Secretary to the President and Cabinet (SPC), had requested the Public Appointments Committee to confirm my removal as a member of the Board of administration of MERA for incompetence.
“The CPS had informed the Committee that the decision to dismiss me followed my mismanagement of the recruitment of the Chief Executive Officer (CEO) of MERA.
“Following this communication from the Public Appointments Committee (PAC), I saw a leak on social media of a letter from the SPC addressed to the Chairman of the PAC confirming to me the convening of the PAC.
“I find it disturbing that PAC invited me to attend a second investigation into a matter which PAC conducted a similar investigation into in October 2021 and made a decision which was duly communicated to the MERA Board of Directors on November 17 2021.
“PAC’s investigation was very comprehensive and involved all stakeholders involved in the recruitment process, including the President’s office and the firm itself through the Comptroller of Statutory Companies who provided services secretarial support during the recruitment process.
“PAC has informed the MERA Board of Directors that it has found no reason to remove the MERA Board of Directors, and importantly, PAC has determined that the MERA Board of Directors is not incompetent in the recruitment of the CEO of MERA.
“It is therefore inconceivable that I would be invited to attend a second investigation into the same matter. I am aware that the OPC sought good reasons to withdraw counsel from MERA due to the professional manner in which counsel from MERA has addressed various strategic issues in the interest of protecting the economic and social well-being of Malawians, as provided for in MERA’s mandate as the regulator of energy services in Malawi.”
Chikadya cites two examples that have caused strain in relations between the MERA board and the SPC, including:
1. There are premium fuel contracts from NOCMA that have not been approved by the MERA Board of Directors to date, yet NOCMA receives fuel supplies with premiums that remain unapproved. The MERA board refused to grant such approval due to uncompetitive premiums, which would unduly burden Malawians with frequent price hikes at the pump; and
2. During the MERA board investigation, PAC was able to establish that having the SPC as chairman of various public company boards, including NOCMA, EGENCO and Power Marketing Limited, constitutes a serious anomaly of governance. It would be extremely difficult for the board of MERA to provide regulatory oversight of an institution chaired by the SPC, which also heads the civil service. The PAC’s recent report to Parliament, in which they recommended the removal of the SPC, is blamed on the MERA board as the source of the PAC’s recommendations.
“MERA, through the Ministry of Energy, is a signatory and member of regional regulatory bodies including the Regional Energy Regulatory Association (RERA), the Regional Association of Energy Regulators for Eastern and Southern Africa (RAERESA) and the African Forum of Utilities Regulators (AFUR).
“All of these bodies advocate for the independence of local energy regulators from political influence or any other source. It is unfortunate that events affecting the MERA Board of Directors have the potential to degrade MERA’s credibility among its regional peers.”
After carefully considering all these issues which he highlighted, Chikadya said he had “concluded that the best decision was for me to step down as director and chairman of MERA with immediate effect.”
“I have invested a lot of effort in building my professional career over many years, and I would not want a non-executive position leading a public institution that operates on the basis of political influence to destroy my professional reputation. .
“I have held many trustee positions in various organizations including serving as president of some of the major institutions in Malawi. Someone incompetent would not have such public trust.
“Going forward, I would like to conclude with a recommendation to the PCB. The Committee could consider and initiate a process to amend the energy regulatory legislation governing the appointment of MERA directors.
“The energy laws in Zambia, for example, provide for professional bodies to recommend members of their professional bodies for appointment as directors of the regulator.
“In our case, the directors of MERA would come from the Law Society, the Institute of Chartered Accountants, the Economic Association of Malawi, the Council of Engineers and the Confederation of Chambers of Commerce and Industry of Malawi, etc
“I wish good luck to all my fellow directors. God bless MERA and our country, Malawi,” reads the letter, copied to the Public Appointments Committee, Principal Secretary of the Ministry of Energy and MERA CEO Kachaje himself.
The Kachaje saga followed the resignation of MERA board member Pempho Likongwe shortly after Richard Chapweteka dragged Likongwe’s name in the Kachaje case during the hearing before the mediator.
It emerged that Chapweteka – who had attended interviews for the post of CEO of MERA – had testified before the Ombudsman accusing Likongwe of revealing the results of the interviews before they were officially announced.
Prior to the publication of the results of the interviews, Chapweteka was nominated by President Lazarus Chakwera to serve as Commissioner of the Malawi Electoral Commission (MEC), prompting Likongwe to inform Chapweteka not to turn down his nomination as he was not going to not be chosen as CEO of MERA as he “had not performed well and was not going to be appointed”.
In his resignation letter to the Comptroller of Statutory Companies dated November 15, 2021, Likongwe confessed that he revealed that Chapweteka failed interviews and tried to save his ‘friend’ because at that time Chapweteka was unemployed. .
After several testimonies received by the Ombudsman, including that of Chapweteka, the Ombudsman ruled that the appointment of Kachaje as CEO of MERA was irregular and ordered its cancellation.
But the ombudsman’s report also said Chapweteka lied during the hearing, saying he deliberately received low grades despite performing well in interviews.
MERA’s Board of Directors plays a crucial role in determining fuel prices in the country under the recommendation of MERA’s Liquid Fuels and Gas Pricing Advisory Committee after evaluating trends in the automatic pricing mechanism.
The committee meets every first Tuesday of the month to review the automatic pricing mechanism before submitting its recommendations to the MERA board and within 48 hours the board is expected to take a resolution on the recommendations of the committee, as provided for in the Liquid Fuels and Gas (Production and Supply) Regulations, 2009.
The law provides for a price stabilization fund (PSF) at 5% of the landed cost in bond (IBLC) in which prices are revised upwards if the variation in the IBLC is greater than 5% and downwards if it is less than 5%.
Then, when the variation is less than 5%, the difference is directed to the Price Stabilization Fund to cushion fuel prices in the event of an increase within the limit of -5%.