|
Songas defends proposed tariff hike
2008-04-14 09:40:43
By Gadiosa Lamtey
The management of the Songo Songo gas to electricity project, Songas Ltd, has defended its proposed tariff increase for natural gas supply, saying it is aimed at recovering investment costs and reducing, in the long-run, the cost of power generated from gas.
Songas Corporate Finance and Business Development Manager Oswald Mutaitina told The Guardian that tariff increase was crucial for an expansion project targeted to double its capacity and meet the current and future demands.
However, various stakeholders in the energy sector have opposed the Songas proposal to increase gas processing and transportation tariff from 15 per cent to 17.5 per cent.
They voiced out their opposition last Thursday at a public hearing organized by Energy and Water Utilities Regulatory Authority (Ewura).
Tanesco, which was represented by Decklan Mhaiki, said the proposal lacked justification and queried why its customers alone should bear the cost of Songas expansion.
Additionally, he said the proposal would compel his company to pay over USD 18 million more for additional gas over the next 15 years
``Songas is asking to use a tariff mechanism that will allow its investors to recover their investment in the additional gas processing equipment and to make a reasonable return,`` said the Songas official in a statement to this paper.
According to him, future peak demand for gas has been forecast at around 110 million standard cubic feet per day.
And given the growing demand, the Gas Working Group, a think tank set up by the Ministry of Energy and Minerals consisting of the Ministry,PanAfrican Energy, TPDC, Tanesco and Songas, had agreed to increase gas processing capacity.
He said Songas had implemented the proposal by installing two more gas processing trains at Songo Songo Island.
Mutaitina said the tariff has been proposed in order to recoup costs of the new investment.
|
