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Tanesco logjam is economic disaster

23rd April 2012
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Editorial Cartoon

Many of us will have been shocked by the reports from Dodoma the other day that the Tanzania Electric Supply Company was facing a serious financial crisis, leading it to put on hold all applications by new customers for power connection.

The news was revealed last week by the Chairman of the Parliamentary Standing Committee for Energy and Minerals January Makamba when tabling the committee’s report on the two sectors in the House.

According to the report, Tanesco is currently facing serious financial problems and that until April 10 this year the power utility had a debt amounting to 296.8bn/-.

For sure the development is a big blow not only to customers seeking first-time connections, but must have all those who rely on the public utility for the all-important facility really worried.

What is more Makamba warned that the current situation might change for worse in the next few months, if supply from hydro-power sources does not hold up. As he pointed out this source remains precarious due to low water level at Mtera.

According to Makamba reports showed that water level at the major Mtera hydro-power dam had reached 691.37 meters by Tuesday last week, only 1.37 meters above the allowed level for power generation.

In today’s world, one can do little to advance without that an assured supply of power, whatever the source. Indeed electricity is no longer a luxury, but rather a powerful tool of social and economic progress for our country, just as roads and railways are.

While we acknowledge that there are still major challenges that those seeking power connection from Tanesco face, we do also know that it is a cheaper source of electricity compared to others, such as generators. The majority of power consumers rely on the source.

But the suspension of new connections is a bigger blow to the efforts underway to put Tanesco on an even keel. The company’s major revenue growth plan is accelerated customer enlistment.

Indeed the company’s target was to 137,000 new customers starting March this year, as a way of removing one of the main bottlenecks to growth that the firm has been facing.

With just about 14 per cent of the population accessing the increasingly more expensive electricity, it means that Tanesco’s overhead costs have continued to grow more quickly than its revenue base, sinking the company deeper into debt.

It is thus difficult to see how the debt-ridden company can break even or become profitable in this situation, unless it gets another major price hike. Sadly these hikes are not in the long term the real panacea for a healthy Tanesco, for they in turn trim its customer purchasing power.

Indeed some must have been shocked to see a more ailing Tanesco after the latest 40-plus per cent tariff increase.

That is why we sincerely hope that the connection suspension is a temporary action and that everything will be done to ensure more customers are supplied with power as per the company’s plan.

But more importantly we hope that the relevant authorities are seriously engaged in finding a way out of the logjam for this critical institution in our economic plans.

SOURCE: THE GUARDIAN
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