Tanzania Daily News (Dar es Salaam)

23 June 2014

Tanzania: Cabinet Okays TANESCO Reform

CABINET has approved the Electricity Supply Industry (ESI) reform strategy that seeks, among others, to unbundle the Tanzania Electric Supply Company (TANESCO) into three separate units responsible for power generation, transmission and distribution.

The major industry reforms envisage to boost power generation and connectivity towards achievement of the middle-income economy by 2025.

Under the approved strategy, power generation is anticipated to increase from the current 1,583MW to at least 10,000MW by 2025 and increase electricity connection levels from 24 per cent to at least 50 per cent and access levels from 36 per cent to at least 75 per cent by 2025.

The strategy document that was availed to the 'Daily News' indicate that through the ESI reform strategy and roadmap, the ambitious plan would require 11.4 billion US dollars (over 18tri/-) between 2012 and 2017, which translates into 1.9 billion US dollars (over 3tri/-) annually.

Tanzania's population is expected to grow to 69.5 million in 2025 from the present 45 million, while electricity demand growth rate is between 10 and 15 per cent per annum.

Reduction of system losses, both technical and non-technical, from 18 per cent in July 2015 to 16 per cent in June 2018, is also among activities lined up for implementation in the ambitious programme.

In the plan, the government plans to promote financial and commercial viability of the power sector as well as improving ESI's governance and performance for quality service delivery.

"The aim is to create an ESI that further supports National Development Plans 2025, attract private investment to the sector and to ensure adequate, reliable, affordable and accessible electricity supply," reads part of the document.

To implement the reforms during the fiscal year 2014/2015, a total of 565.71bn/- will be required to facilitate studies, human capital development as new skills to marshal the reforms will be needed. The amount will also be used to settle Tanesco arrears.

"The new companies should start with clean balance sheet come December 2017. The government, development partners and Tanesco would fund the ESI reforms implementation," reads part of the document. The reforms are expected to be executed between this year and 2025.

It will start with immediate term (July 2014 - June 2015), short term (July 2015 - June 2018), medium term (July 2018 - June 2021) and long term (July 2021 - June 2025).

It is also expected that the distribution and generation entity of the power utility will be listed at the Dar es Salaam Stock Exchange (DSE) by 2024. "Reform is essentially a process rather than a one-time event; the roadmap shall be reviewed from time to time.

"There is no one size fits all reform models, the proposed reform strategy is tailored to Tanzanian ESI needs. Concerted efforts from all stakeholders are required to make the reform a success," the statement reads in part.

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