The board of directors of the US govern- ment’s Millennium Challenge Corporation (MCC) has voted to lift the suspension of a $350.7-million compact grant for the revamp of Malawi’s power sector.

The MCC placed a hold on compact assistance to Malawi in July 2011 and formally suspended the compact in March 2012 owing to actions by the Malawi government under the late President Bingu wa Mutharika that were inconsistent with the democratic governance criteria that MCC uses to select its compact partners.

MCC CEO Daniel Yohannes says that, since President Joyce Banda’s inauguration in April, the Malawi government has taken concrete steps to reverse the actions of the previous administration.

Says Yohannes: “These steps have included efforts to improve the human rights environment and to ensure that laws and institutions support democratic rights and processes. The government of Malawi has also demonstrated a commitment to providing accountability for the violent police response to demonstrations in July 2011. These steps and the resumption of sound economic policy restore the MCC’s confidence in Malawi as a compact partner.

“In lifting the compact suspension, the MCC board recognises that the government of Malawi has taken decisive action to restore democratic accountability, to demonstrate respect for the rights of individuals and to implement sound economic management. As a result, I am pleased to move forward with this critical investment in Malawi’s energy sector. The MCC expects Malawi to continue to demonstrate its clear commitment to strong democratic and economic governance.”

He says the $350.7-million Malawi grant is expected to provide about $2-billion in bene- fits for an estimated five-million Malawians by reducing power outages and technical losses, enhancing the sustainability and efficiency of hydropower generation and improving service to electricity consumers.

Besides others, the grant will be used to improve the availability of reliable power in Malawi through the rehabilitation of existing hydropower stations, the installation of meters and the rehabilitation, strengthening and upgrading of the transmission system.

It will also increase access to power for unserved users through the rehabilitation of the distribution systems in all regions of the country. The distribution network in periurban areas will be extended, while renewable off-grid power sources for rural communities will be developed.