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MPs dismiss draft power supply bill
2008-03-20 09:07:38
By Judica Tarimo
Government plans to fast-track the endorsement of a draft bill seeking to have power supply business in the country commercialised have hit the wall.
Members of Parliament attending a two-day seminar in Dar es Salaam yesterday dismissed the draft bill as unrealistic in the light of the financial crisis the giant state-owned Tanzania Electric Supply Company (Tanesco) is in.
The bill was initially scheduled for tabling in the last (February) meeting of the House but legislators blocked it.
Instead, they pressed then Energy and Minerals minister Nazir Karamagi to disclose a report on the controversial power generation contract between Richmond Development LLC and the government first before they could discuss the bill.
Endorsement of the bill would open the doors to private players, particularly foreign investors, to engage in the supply of electricity in the country.
But the move would also subject Tanesco to competition from foreign power suppliers, which the legislators said was unfair because of the shaky purchasing power of most Tanzanians and Tanesco`s financial woes.
``If we decide to privatise this (power) sector, we will subject Tanesco to stiff competition from foreign investors.
That would automatically mean that we will be denying the rural population access to electricity,`` said opposition legislator Willbrod Slaa (Karatu - Chadema).
``No private investors will be willing to supply electricity to the rural areas and, if any of those willing will charge high tariffs which rural people cannot afford,`` he added.
The MP said endorsing the draft bill would effectively strangle Tanesco, ``which supplies electricity at affordable tariffs contrary to what foreign suppliers ever could``.
``Investors will usually operate commercially, without due consideration for the welfare of our people, most of whom are poor,`` argued Dr Slaa.
Godfrey Zambi (Mbozi North - CCM) meanwhile stated that time was not ripe for Tanzania to privatise sensitive sectors such as power generation and supply. He agreed with his Karatu colleague that any such move would see ``the financially sick Tanesco succumb to stiff competition``.
``It is completely unfair to allow in investors to compete with Tanesco, which currently is in ICU (Intensive Care Unit) We should first empower the state-owned firm financially and stabilise its performance before allowing in private players,`` observed the MP.
Same North CCM legislator Anne Kilango Malecela also rejected the bill as unviable and asked the government to strengthen Tanesco in terms of equipment and funding.
``I have made a thorough study into the repercussions of allowing in foreign investors in the power supply sector in a poor country like ours. Because of time constraints, I will present my full report later but I insist that we should desist from allowing in private power suppliers to compete with Tanesco at this time,`` she noted.
``I fully understand that competition is part of today`s business world but I strongly advise the government to be patient and improve Tanesco`s operations before thinking of allowing in alternative players,`` she added.
Ponsiano Nyami (Nkasi - CCM) and several other legislators also expressed the view that inviting foreign power suppliers as proposed in the draft bill would adversely affect the country`s rural electrification programmes.
``Most investors will be out to operate at a profit and, for obvious reasons, rural people would be forced to access electricity at unaffordable tariffs. That would automatically defeat the whole purpose of having rural electrification programmes,`` according to Nyami.
The MPs tasked the government and Tanesco to work on the national power system master plan and submit a comprehensive report on the same to the House for further scrutiny before pushing for the endorsement of the draft bill.
Tanesco Managing Director Idris Rashid admitted in a presentation at the seminar, which opened yesterday, that the firm had serious financial problems that had made it fail to implement its strategic power development, production and distribution programmes.
Because of the crisis, he explained, the firm was forced to hike tariffs in a frantic effort to meet its targeted objectives of improving power supply.
``We will keep on raising tariffs because we have no money. We don``t even have money to pay some of the debts we have inherited or buy basic equipment and improve power supply systems and infrastructure. It is difficult for us ever to lower tariffs unless the government comes to our rescue,`` said Dr Rashid.
``Our corporate focus is to operate commercially…and one of the conditions of commercial operations is that tariffs must reflect the cost of producing electricity. If the government wants us to reduce tariffs for consumers, then it should give us subsidy. We need to be supported,`` he added.
The Tanesco MD said they need a staggering 1.6 trillion/- to improve their power production and distribution infrastructure and systems.
He also called on the government to expedite the implementation of the 400-MW Kiwira power project, 400-MW Mchuchuma project, and 1,200-MW Stiegler`s Gorge project, ``which we believe can greatly boost power supply, thus containing the current crisis and lower power tariffs``.
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