TANZANIA Electric Supply Company (Tanesco) has asserted that they pay 5.2 million US dollars (about 8.3bn/-) a day for generating electricity using diesel and Heavy Furnace Oil (HFO).
In this case, the company needs 81.27 per cent tariff hike or run into bankruptcy. The firm said the new tariffs are calculated at the current price of an average of 193/- per unit, thus enabling Tanesco to "just break even" and if passed the new tarrif should come into effect next year.
But a consultant, AF-MERCADOS of Spain, hired by Energy and Water Utilities Regulatory Authority (EWURA) reported that this year the state-power utility deserves an increment of 29.49 per cent. The consultant argues that Tanesco needs the increment, which equals to 253/- a unit and 4.96 per cent for next year, 0.9 per cent in 2014 and finally 8.64 per cent in 2015.
Acting Tanesco Managing Director Mr Felchesmi Mramba told the stakeholders meeting that sat to deliberate on the tariff that without the suggested hike, the company would make a loss of 800m/- next financial year. "The increment will only assist us to improve services but the company will not make a profit at all, merely a break even," Mr Mramba pleaded.
The Acting MD added: "The proposal to the government to scrap off oil taxes and loan guarantee were not implemented while rains were not enough therefore we need tariff raise." Mr Mramba noted that the consultant's assumptions were not realistic as had overestimated 'plant factor' generation capacity and Tanesco had increased oil-to-electricity generation dependency.
For instance, he said, due to drought the firm had lost 350MW that was produced using hydro-plants while the consultant has put on the high side electricity from these sources and undermined oil plant.
According to the consultant in the next three years, Kidatu expects to generate 88 MW (but actual according to Tanesco is 20 MW), Mtera 54 MW (12.5 MW), Kihansi 15 MW (25 MW) and Pangani System 40 MW (21 MW). Ubungo One gas plants is expected to generate 85 MW (84 MW), Ubungo Two 95 MW (35 MW), Tegeta 87 MW (81 MW). "These figures are not right since there is neither enough water nor gas to produce electricity," Eng. Mramba said, adding that by the end of October, Tanesco owed suppliers 250 million US dollars (about 400bn/-).
The Consultant also proposed automatic tariff adjustment in case of high inflation,fluctuation and global oil price increment every six months in order to ease Tanesco's balance sheet burden. Confederation of Tanzania Industries (CTI) representative Hussein Kamote said the entire move to push tariff any inch up was not supportive, since at the moment the country's power bills are on the higher side compared to the other countries in the region.
'This will make our industrial goods uncompetitive in the region and at the end of the day it will dwarf the sector entirely," Mr Kamote said. He added that: "Automatic adjustments are not thinkable since there is no mechanism that would force Tanesco to lower tariffs when inflation goes down or in case the shilling appreciates."
A Temeke resident, Mr Othman Omar Othman said Tanesco was not supposed to be awarded another power tariff raise as service delivered was not corresponding with the last increment. Another Ilala resident wondered why Tanesco want to take an expensive commercial loan instead of the government, the owner of the company, to float a bond.
(Tanesco) has spent the last 12 months chasing government guarantee instead of persuading the government to float a long tenure bond, which costs less than a bank loan. The company does not have money yet it wants an expensive capital," the resident said.
He also advised EWURA to use social networks - facebook and twitter - as a media of collecting views instead of website which few, especially those using Smartphone can access. The yesterday turnover was very poor. In January, this year, Tanesco proposed a 155 per cent tariff increment but ended up getting only 40.29 per cent which was temporary pending the proper scientific analysis of the appropriate amount to be raised.