31 January 2013

Tanzania: User Relief As Tanesco Drops Electricity Tarrif Hike Plans

Photo: Chris Kirchhoff
Electricity pylons.

TANZANIA Electric Supply Company (TANESCO) has withdrawn its application to hike tariffs by over 155 per cent but requested to turn the current emergency prices into a permanent feature.

The state-owned power utility's request to retain the current tariffs as permanent has been approved by the Energy, Water and Utilities Regulatory Authority (EWURA). It said in a press release issued on Wednesday that "the order shall come into force" tomorrow after revoking the emergency tariff adjustment order of 2011.

EWURA's Principal Communications and Public Relations Officer Mr Titus Kaguo said that TANESCO should not withdraw their application, the regu- lator was considering hiking the price as per consultant's cost of service study.

"However, before the completion of the tariff review process, TANESCO withdrew its application and requested to be allowed to retain the current tariffs," Mr Kaguo told the 'Daily News'. A study by AFMERCADOS EMI from Spain recommended cost reflective tariffs with increases of 33.8 per cent for this year, followed by small increase of 0.85 per cent in 2014 and 15.14 per cent in year 2015.

According Mr Kaguo, the regulator considered a hike in power tariffs to save TANESCO from running into financial doldrums. "(But) since they (TANESCO) thought it best to withdraw their application bid, it is they who will know how best to bridge the deficit," the EWURA said.

The current tariffs, which were hiked last January by 40.29 per cent, had been pegged at 60/- for domestic low usage; that is between 0 and 50 kWh, 273/- for over 50kWh and 221/- per kWh for general usage.

The charges for the low voltage supply were 132/- per kWh and 118/- for high voltage supply; that is for demand of over 14,000kVA. Zanzibar Electric Company (ZECO) are charged 106/- per kWh for over 12,000kVA supply. TANESCO's Acting Director Gen- eral was not immediately reachable to shed light on the firm's reverse stance.

The Ministry of Energy and Minerals has categorically said that the utility firm was not supposed to increase electricity tariffs and should instead justify its revenue expenditures before the hike. The firm also receives subsidy from the government.

TANESCO, on the other hand, maintained that it needed a tariff hike, citing high operation costs resulting from generating power from fossil energy. It claims that in the circumstances, it either gets an 81.27 per cent tariff hike to 359/- a unit or risk bankruptcy.

The Confederation of Tanzania Industries (CTI) said the current 40.29 per cent on electricity hike tariffs imposed last year, although relatively low compared to the 155 per cent increase requested by TANESCO, was still very high.

"The tariff hike will, without doubt, increase the cost of production and render Tanzania's products unable to compete with similar imported products," CTI said on its website.

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