The Citizen (Dar es Salaam)
Miki Tasseni
3 January 2008
opinion
There is something of a "last hurrah" outlook in the carefully orchestrated results of the presumed consultation on electricity tariff hikes that the power utility and the regulatory agency have of late concluded.
Technically, it was a ruling by Ewura, the power and water charges regulator, as to what is proper or right for the company to charge, but in actual fact it constitutes a government affirmation as to what level of tariff hike is feasible at the moment.
The question is how this position realises its other requirements, that after such consultation is made, the rest remains constant.
It would follow that Tanesco shall be perfectly at ease with that decision, and thus render its services as expected under the terms of that arbitration, and without the use of other methods to extract more payment from customers, or economize on its own resources.
That doesn't look like it's about to happen, given the strength and even ferocity with which Tanesco had stated its case for a 40 per cent rise, or how it moved to put to effect the level of charges for connection, without interest or regard for Ewura arbitration on the matter.
Whether by fiat or negligence, costs will remain.
Chances that all this pressure and contention will be contained and absorbed into the structure of approved tariffs would rely on at least one condition, that this was a commercially viable tariff setting permitting the company to make a profit.
That doesn't seem to be the case at the moment, in which case there isn't a reason that can be figured out in a commercial sense, why the company should privilege the provision of service, in the basis of the ruling. Chances are _ it goes for extraction.
That is why the ruling about tariffs begs a familiar question that historians say was once asked by the Emperor of Russia to an envoy of the Pope, having listened to the papal diplomat painstakingly. The cardinal was apparently seeking to convince His Imperial Majesty not to carry out a well_known plan to invade Poland, which was a regular battlefield for Russia and Germany.
The emperor listened without obvious exasperation, and then asked: Envoy, did you say the Pope has how many divisions? The cardinal was stunned, trusting in an application of "moral pressure."
So let it be with Ewura, that it has a minimum of authority to ensure that tariffs rise to a certain extent and not beyond, but it cannot control Tanesco behaviour, in the sense of how far it will subjectively relate to the tariffs regime.
How does Ewura put to effect its ruling on connection charges, such that anyone not ready to pay the new charges which are far less the level Tanesco started applying or otherwise it was demanding, will be offered the same priority as another who is ready to pay?
In the absence of a capacity to check on conduct thereafter, is the ruling worth it?
That is why the whole effort of substituting privatisation with regulatory control is by and large a non_starter, unless it can also reflect the commercial requirements of the company, on the basis of cost_expansive and contract profligate parastatal managements.
When one moves to regulate the cash it can get from consumers, and obviously this is inadequate for its needs _ as even the 40 per cent was a worn down version of what Tanesco really required _ and doesn't change the managerial structure or ownership as such, it is a non_starter. So long as the ownership and the consequent managerial mode or capitalisation remain the same, so do its methods.
Various stakeholders like the Tanzania Confederation of Industries (CTI) realise this point quite well, in urging the government that it should hasten with unbundling the power firm.
Yet it is unclear if this formula proposed by the World Bank or rather approved the plan is helpful, as its operations would reflect the same Ewura sort of conditions. Since generation, transmission and distribution would revert to different firms, a price giver and price taker situation arises, a cost spiral situation, evidently.
All these efforts, either of sticking to regulation without restructuring or opting for a so_called "unbundling" of the company as if the various parts were inherently at odds with each other, reflect a fixed idea.
It is part of a strategic wish to avoid the sale of the company integrally to a major bidder, for the simple reason that pains of anti_globalisation quarters are heightened that way, while 'unbundling' creates a sea of clients where bureaucrats have a field day choosing from.
But they they will reap the cost spiral, and it won't take off, or alternatively it is then summarily sold off.
These privatisation options apart, it should be said that the scenario that comes into view after the tariff readjustment exercise is "business as usual," that clients will have to pay for connection costs because the amount raised is insufficient, and that Ewura has no capacity to check this.
This is ultimately the weak point of regulation, as strictly speaking it is meant to constitute a tribunal where cost_effective operators each relying on lowering prices to attract consumers, take their differences.
Thus it is evident that regulation is effective in telecommunication but not in energy, water.
Without straying too far from the issue, CTI raised the prospects of combined effects of electricity tariff hike and enforcement of the new minimum wage, which it is in a way apparent that the Government is intent on insisting on their being paid.
That is sure to set off a price spiral that takes inflation back to two digits, unless some new thinking takes place between now and end of January. Otherwise the pressures of the pursuit of popular measures bring a storm of effects leading to an IMF programme.
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