TANESCO cuts debts, now operates without government financial bailouts

30Jan 2019
PETER NYANJE
DAR ES SALAAM
Financial Times
TANESCO cuts debts, now operates without government financial bailouts

The Tanzania Electricity Supply Company (TANESCO) says it has been running its activities without subventions from the government for the past two years owing to improved financial stability.

TANESCO executive director, Dr Tito Mwinuka (left) gestures as he explains to a section of editors achievements by the power utility firm. He is flanked by senior manager projects, Engineer Emmanuel manirabona (middle) and engineer Raymond Hosea, Tanesco’s deputy executive director responsible for distribution and customer affairs. PHOTO – FINANCIAL TIMES CORRESPONDENT.

According to TANESCO executive director Dr Tito Mwinuka, earlier they used to receive an average of 200 billion/- annually from the government to finance their operations.

TANESCO has traditionally relied on government financial bailouts or subsidy due to crippling debts and the fact that it has been selling every unit of electricity at a loss.

Dr Mwinuka did not give details on the current state of TANESCO's payment arrears, but the government announced in Parliament in May last year that the power utility's debts stood at a whopping 938 billion shillings.

A huge mountain of historical debts has undermined TANESCO's ability to invest in new projects and operate at a profit.

“But for the past two years we have not received a single cent from the government, and still we have been able to run our operations without many problems,” Dr Mwinuka said in a meeting with media editors in Arusha recently.

He attributed the achievements to a strong spirit of team work now being exercised by TANESCO workers countrywide.

Dr Mwinuka noted that in one year they received 400 billion/- from the state, and in the following year they received 358bn/-, but all that is now history.

“Our team work is paying off,” he said, adding that over the past two years the public power utility firm has also managed to arrest escalating debts.

Without giving figures, Dr Mwinuka said: “We have reached a point where the debts are no longer increasing. In fact, we have started to reduce them and our target is to make sure that by 2026 we do away with all debts.”

He explained that the aim is to start making profits and giving dividends to the government, saying this is now possible judging by the way TANESCO is now operating.

“Whenever I discuss things with my fellow employees, I do tell them that I would like to see TANESCO operating profitably and efficiently. That is where we are now heading,” he said.

The fact that the TANESCO debt has become stagnant is a clear indication that the company is in a good position to eventually clear it through good plans and efficient operations, he added.

The government is currently carrying out a total of 22 big electrification projects meant to improve power generation, transmission and distribution across the country. Dr Mwinuka described this as being unprecedented as all 22 projects are being implemented concurrently.

The projects, spearheaded by the mega Stiegler’s Gorge hydropower project, are geared towards - among other things - ensuring that the country not only produces enough electricity to sustain its needs, but also surplus power which can be exported to neighbouring countries.

The Stiegler’s Gorge project, awarded to the Egyptian-based Arab Contractors firm at a cost of $3.6 billion, is designed to produce 2,100MW of electricity.

Dr Mwinuka cited another project as the extension of the Kinyerezi natural gas-to-electricity project whose implementation has reached 82 per cent.

He said construction of a 400kV power transmission line between Singida and Isinya in Kenya, through Babati-Arusha-Namanga, has also started as part of flagship projects being undertaken by the power utility firm.

Feasibility studies for another 400kV transmission line from Rufiji-Chalinze-Dodoma are underway.

According to Dr Mwinuka, this 504km project is expected to be completed by 2021.

A feasibility study for production of 200MW gas-fired electricity in Mtwara has also been completed with the project expected to be finalised in 2020, while the government is currently analysing tenders for another 600MW coal-to-electricity project with results to be announced in due course.

There is also the Ruhudji hydroelectricity project which aims at producing 358MW. The project, whose completion has been lined up for 2023, will have its feasibility study review completed later this year.

Furthermore, a 222MW hydropower project at Rumakali is expected to be completed in 2023, with its feasibility study review expected to be ready later this year.

Said Dr Mwinuka: “TANESCO operations have improved tremendously and it is our intention to improve further so as to enable the country to realise its industrialization goals as well as attract more investors.

We want to make sure that electricity availability and reliability is no longer a challenge towards meeting these targets.”

TANESCO has traditionally relied on government financial bailouts or subsidy due to crippling debts and the fact that it has been selling every unit of electricity at a loss.

Although Dr Mwinuka did not give details on the current state of TANESCO's payment arrears, the government announced in parliament in May last year that the power utility's debts stood at a whopping 938 billion/-.

A huge mountain of historical debts has undermined TANESCO's ability to invest in new projects and operate at a profit.