Tanzania's controller and Auditor-General has raised the red flag over the amount of money utility company Tanesco owes independent and emergency power producers, and is calling for cheaper sources of electricity to rescue the ailing company.
The Tanzania Electric Supply Company Ltd owes five independent power producers and emergency power producers large amounts in bills for power they have injected into the national grid.
The CAG has noted a mismatch between the cost of buying electricity by Tanesco and the unit selling price to clients, leading to huge losses.
Tanesco has been buying power at Tsh544.65 ($ 0.24) a unit and selling it at Tsh279.35 ($0.13) to customers, leading to losses of Tsh265.30 ($0.12) per kilowatt hour (kWh). The debts also include capacity charges, fixed fees for agreed periods covering the cost of building, operation and maintenance of power plants, and energy charges covering the cost of fuel.
The independent power producers own facilities that generate electricity for sale to utilities and end-users on long-term agreements while the emergency power producers own mobile generating plants deployed quickly to supply power for short periods.
Controller and Auditor General Mussa Assad has recommended cheaper sources of electricity such as hydro and gas to replace the expensive power from the private producers.
"The monthly capacity charge paid by Tanesco is $ 9.7 million in respect of power purchased from Aggreko Plc, Songas Ltd and Independent Power Tanzania Ltd," he said.
Before the suspension of Symbion Power Company Ltd's supply deal of 112MW in May 2016, Tanesco was paying $16.3 million monthly as capacity charge to the private plants.
The emergency power producers are Aggreko's diesel plant of 50MW each at Ubungo and Tegeta in Dar es Salaam, Symbion's Ubungo natural gas plant of 120MW, and Symbion's Dodoma and Arusha diesel facilities of 105MW.
The independent producers are Independent Power Tanzania Ltd's fuel-fired 100MW facility at Tegeta and Songas's 189MW plant at Ubungo, which runs on gas.
Symbion Power has filed a suit against Tanesco at the International Court of Arbitration in Paris, seeking $561 million for alleged breach of contract relating to a power purchase agreement.