2 January 2013

Tanzania: All Set for Crucial Power Tariff Hike Meeting

AN exit meeting of stakeholders debating the Tanzania Electric Supply Company (Tanesco) power tariff hike is due to be held today, as the Ministry of Energy and Minerals adopts a cautious wait and see approach.

"I cannot comment anything on the matter, we are just waiting to see what happens," said Permanent Secretary, Eliakim Maswi as the state utility pursues its case seeking a more than 40 per cent tariff hike.

Stakeholders will today conclude their debate which has overwhelmingly tilted towards Energy and Minerals Minister, Prof Sospeter Muhongo's position that there is no need to hike power tariffs and instead Tanesco should set its house in order.

The final stakeholders meet will be followed by Energy and Water Utilities Regulatory Authority (Ewura) Board of Directors meeting that will endorse the final tariff hike. According to Ewura Act of 2001, the ministry cannot stop the price hike unless Tanesco is given instructions to withdraw its application.

"As far as we are concerned, the application is still valid and we will continue with the process until a verdict is made," said Ewura Director General, Harun Masebu. Mr Masebu pointed out that Tanesco is free to withdraw the application at any point in time provided that it is done before a final decision by the board is made.

"Ours is like a court process, so once someone withdraws their case, we don't give a ruling," said Masebu. After the final stakeholders meeting today, Ewura Board of Directors is due to meet before next Sunday and new tariffs may be announced by the end of next week.

Prof Muhongo and many power consumers argue that Tanesco which is still heavily subsidized by the government and loses much of its income to corruption, does not need tariff hike. Tanesco last secured a 40.29 per cent tariff hike last January after requesting for an over 155 per cent increase.

The firm which is struggling to repay debt backlog, fight egoism and corruption, loses close to 20 per cent of revenue to leakages. "Treasury has been giving Tanesco grants to buy fuel for power generation but ask the company where their revenue is?" asked Prof Muhongo last October as his position to oppose tariff hike was first made public.

Prof Muhongo, a geologist, said Tanesco should also explain and justify how they were spending their revenues. According to Ewura, in this year Tanesco's total distribution loss due to leakage is 17.76 per cent or 11.5 million US dollars (about 18.4bn/-) in capital expenditure and 1.17 million US dollars (1.87bn/-) in operation costs.

To reduce the losses by 2.68 per cent between 2012 and 2015, the firm needs 34.5 million US dollars (55.2bn/-) to rehabilitate and replace old infrastructure along the distribution lines. However, Tanesco pushes for tariff hikes citing high operation costs resulting from generating power from fossil energy amounting to 5.2 million US dollars (about 8.3bn/-) a day.

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