Prof Sospeter Muhongo

The government has announced power connection fees for new customers, with substantially lowered rates.

 The new rates will now bring a sigh of relief to the public, especially failing to have their homes electrified due to astronomical fees demanded by the power utility firm, Tanesco.

 Tabling the 2012/13 estimates for the Ministry of Energy and Minerals yesterday in Parliament, Minister Prof Sospeter Muhongo said the new rates will be effective January 2013.

 According to the minister, the new rates are aimed at reducing the burden of power connection cost by between 30 and 70 per cent from the levels that new customers have been shouldering.

 For years Tanzanians have been complaining about unbearable costs of power connection. This time around the government appears to have positively responded to the public outcry. The strategy, according to Prof Muhongo, will enable 30 per cent of Tanzanians to be connected to power even by 2015.

 Explaining about the new rates, Prof Muhongo said in rural areas new power customers for a single phase not exceeding 30 metres will now be required to pay Sh 177,000 while in urban areas customers will pay Sh 320,960 instead of Sh 455,108.

 The reduction in fees is equivalent to 61.11 per cent for rural dwellers and 29.48 per cent for urban dwellers. However, the rates will only apply to customers whose connection will not demand an additional electricity pole.

 The minister explained that for rural dwellers connected through a single phase line but requiring one electricity pole will pay Sh 337,740 while urban dwellers will pay Sh 515,618, a reduction of 75.02 per cent and 61.86 per cent, in rural and urban areas, respectively. 

 Currently rural dwellers pay Sh 1,351,884 for power connection service that requires a single electricity pole.

 With more poles needed the customer will pay more, with those requiring two electricity poles for power connection in rural areas slated to pay Sh 696,670 while in urban areas such customers will have to dig deep into their pockets and pay Sh 2,001,422.

 Speaking on the 532 km gas pipeline project from Mtwara to Dar es Salaam, Prof Muhongo said in the 2012/13 financial year the government has allocated Sh 63 billion for the project while other funds will come from development partners.

 According to the minister, the total cost for the project is estimated at $ 1,225.3 million (about Sh 1.96 trillion). Available reports show the People’s Republic of China recently signed an agreement with the government to foot the remaining amount of project costs.

 Prof Muhongo said the project is expected to be completed end of next year thereby saving $ 900 million in fuel costs for power production annually.

 According to the minister, the government has conducted an evaluation of the property located on the track where the gas pipeline will pass.

 Speaking on bulk oil procurement, the minister said the government will, in this financial year, review its regulations to do away with the shortcomings noticed, notably the functions of the Petroleum Importation Coordinator (PIC) to improve efficiency.

 Bulk oil procurement started in January this year and since then complaints have been raised by stakeholders, including quality of the oil imported. The minister said limited role of PIC management was a problem, as currently the PIC board makes decisions on oil procurement.

Due to such shortcomings, guidelines governing bulk oil procurement were reviewed in May this year by involving stakeholders in the petroleum sector.

 Furthermore, PIC formed a tender committee to supervise oil procurement matters instead of the tasks being supervised by PIC board, owing to clear conflicts of interest.

 A total of Sh 641.269 billion has been allocated for the ministry in 2012/13 financial year out of which 531.190 billion is for development expenditure.

 As opposed to other ministries whose money for development expenditures is to be relied on foreign aid and grants, the case is different with the Ministry of Energy and Minerals as Sh 431.190 billion out of Sh 531.190 billion, equivalent of 81.19 per cent of its funds meant for financing development projects will be domestically raised.

 About Sh 110.078 billion has been allocated for the ministry’s recurrent expenditure.