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Energy expert at World Bank says lack of funds has crippled Tanesco
2007-04-05 10:12:09
By Perege Gumbo
An energy specialist from the World Bank has said investment funding was neglected for ten years in Tanzania Electric Supply Company (Tanesco), a reason why its operations are ailing.
Ralph Karhammar of the Bank has claimed for the last decade, there have been no substantial investments which could enable Tanesco to undertake major rehabilitations required.
As a result, he said, sizeable Tanesco`s infrastructures were outdated and some needed immediate and complete overhaul to facilitate efficient flow of electricity.
Karhammar was speaking at a coffee morning presentation prepared by the World Bank office in Dar es Salaam last week.
The World Bank, he said, was aware of the scale of under-funding the Tanesco has been experiencing and it was carrying a pilot project in some few regions including that of Mwanza to upgrade the utility’s infrastructures.
The new revelations have come amidst complaints from sections of the Tanzania business community led by industrialists about Tanesco`s inefficient power supply.
At a recent meeting between cement producing companies and journalists for instance, unreliable power supply was cited as one of the stumbling blocs for their increased profitability as they had to incur extra costs to address the problem.
At a press briefing over the weekend, Tanesco Managing Director Dr. Idris Rashid said the utility requires USD1bn (1.3trillion) to be efficient.
He said the World Bank is expected to chip in USD100m for rehabilitation and electrification projects in Kurasini Creek, Kigamboni and Gongo la Mboto in the city.
The USA’s Millennium Challenge Account (MCA) would also release USD 275m (375bn/-) for rehabilitation in Morogoro, Tanga, Dodoma, Iringa, Mwanza and Mbeya regions.
During the breakfast discussions, pricing of the facility featured prominently with conflicting views from different stakeholders.
Some of the stakeholders suggested that the pegging of prices of power unit should bear and take consideration of the people`s per capita income, the idea which was downplayed by some others arguing that would mean offering electricity services for free.
On his part, Tanesco Director of Corporate Planning and Research Abdullah Kabinaddin said that under-funding was likely to continue if international financial institutions maintain their reluctance on intervention through heavy funding.
Unlike in the past when lending by multilateral financial institutions used to enjoy substantial grace period ranging between 15 and 20 years, the current loans had stringent strings with very small lapse of grace period.
``With such an attitude, even the envisaged Independent Power Plants (IPP) was unlikely to work smoothly as there was little grade and higher interest rate`` he said.
The government was advised to review tax structure on electric gadgets or take deliberate measures to allow mass production of the items.
Tanesco has announced a strategic plan is to double the current 10 percent of estimated 35 million Tanzanians that have access to electricity (which as of December 31, 2006 reached 630,310) come year 2012.
The Tanzania energy consumption pattern shows that the country has a total of 959 MW out of which 561MW is hydro generated power and the rest was from gas and fuel.
Tanesco claims was providing electricity below recurrent cost, and its losses are mainly covered through government`s subsidies.
Tanesco charges around 7 cents per kWh on average production cost of 10 cents. TANESCO claims that its tariffs are lower than in most African countries including Kenya, Uganda and Rwanda.
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