3 December 2012

Tanzania: Tanesco Moves to Clear Orca Debt

THE Tanzania National Electric Supply Company (TANESCO) has paid slightly over half of its debt to Orca Exploration that amounted to dollars 22.7 million (about 36.23bn/-) by the end of this year's third quarter.

According to the gas exploration and distribution company, up to the end of September the debt stood at dollars 21.7million (about 34.7bn/-) as TANESCO moved to balance its ledger.

Management team. "We are pleased to report that as a result of close collaboration with the Ministry of Energy and Minerals (MEM) and the new TANESCO management, progress has been made in reducing past due accounts," Orca Chairman and CEO Mr W. David Lyons said in a release.

He added: "TANESCO payments are foremost in the minds of our shareholders and management...We continue to work closely with the government towards a full resolution."

The firm had to secure a commercial loan to run its business after the state power utility failed to honour its obligation, including the drilling of well SS-11. On the other hand, in order to meet rising demand, the mother company of PanAfrica Energy, increased gas sales averaging 57.5 million cubic foot per day (MMcfd) for the quarter, up by 6.0 per cent compared with the second quarter.

Despite the increase in gas production, Orca's profit after tax for the quarter was down 75 per cent to 1.3 million US dollars ( 2.08bn/-) against second quarter of 5.2 million US dollars ( 8.3bn/- ). "(This was) a result of writing off 7.5 million US dollars in costs associated with the La Tosca, Italy exploration well," Mr Lyons said in finance statement for the third quarter.

But the CEO said "If the cost pools had been fully recovered at the beginning of the quarter, funds from operations for the quarter would have been approximately 8.0 million US dollars (12.8bn/-)."

Average Power Gas sales during the quarter, were up over the second quarter to 3.55 US dollar per Mcf from 2.80US dollars per Mcf, a result of higher prices provided under the Portfolio Gas Sales Agreement with TANESCO. Weaker liquid fuel prices drove a 9.0 per cent reduction in industrial gas prices to 9.21 US dollars per Mcf from 10.14 US dollars per Mcf.

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