Zanzibar starts paying power bill arrears after JPM, Shein tete-a-tete

20Mar 2017
The Guardian Reporter
The Guardian
Zanzibar starts paying power bill arrears after JPM, Shein tete-a-tete

PRESIDENT John Magufuli yesterday held talks with Zanzibar president Ali Mohamed Shein in Dar es Salaam on how to settle over 120 billion/- in outstanding power bills that the Isles government owes the state-run Tanzania Electric Supply Company (TANESCO).

President Magufuli and Dr Shein at State House in Dar es Salaam yesterday.

The talks came after Shein was quoted as saying Zanzibar was ready to use kerosene lamps if TANESCO disconnected power to the semi-autonomous archipelago, a statement that some political analysts have said could spark a rift in the delicate 53-year old union between mainland Tanzania and Zanzibar.

TANESCO earlier this month issued a 14-day ultimatum for its chronic debtors, including the Zanzibar Electricity Corporation (ZECO), to settle long overdue bills totaling 275.38 billion/- as part of an ongoing Magufuli-backed debt recovery drive.

The outstanding debtors also include various Union government ministries, departments and agencies which have run up power bills totaling 52.53 billion/-.
The ZECO bill alone amounts to almost half of the grand 275.38bn/- total.

"The talks (between Magufuli and Shein at State House in Dar es Salaam) were also attended by the Minister for Energy and Minerals, Prof Sospeter Muhongo; TANESCO acting managing director Kahitwa Bishaija; and TANESCO's senior finance manager Sadock Mugendi," the State House said in a statement.

Muhongo was quoted in the statement as saying the Zanzibar Revolutionary Government has already paid 10 billion/- to TANESCO over the past few days to settle at least part of the massive bill.

"Prof Muhongo assured the people of Zanzibar that power supply will not be disconnected," said the statement.

The minister reminded TANESCO customers with outstanding power bills that they have just five days remaining to pay up before the deadline expires.

Private companies and individual consumers have a combined collective debt of 95bn/- in unpaid power bills.

TANESCO’s recently appointed managing director Tito Mwinuka said in a statement earlier this month that the unpaid bills have “impaired” TANESCO’s capacity to implement important projects including the improvement of power supply infrastructure.

The government is seeking a loan of $200 million (about 450 billion/-) from the World Bank for TANESCO to settle some of its own payment arrears to its suppliers worth an estimated 800 billion/-.

President Magufuli wants cheap electricity to drive industrialization, but analysts have warned that the World Bank is likely to insist that the loss-making TANESCO increases power tariffs to cover the cost of producing power and begin much-needed reforms.

Tanzania's energy regulator EWURA on December 31 last year approved a tariff hike of 8.53 per cent, less than half of what the utility said it needed to cover its losses. But the next day, Magufuli sacked the then TANESCO boss, Felchesmi Mramba, saying the price hike would stymie his plans to ramp up industrial output.

Decades of mismanagement and political meddling means TANESCO sells electricity below cost. It also struggles to cope with transmission leaks and power theft.

Despite reserves of over 57 trillion cubic feet (tcf) of natural gas, Tanzania faces chronic power shortages due its reliance on hydro-power dams in a drought-prone region for about a third of its 1,570 megawatts of installed capacity.

TANESCO has to resort to costly fuel oil or diesel plants to fill the shortfall during dry spells, and many of its arrears are due to the costs of private power and fuel suppliers. Most oil plants are being shut or converted to use natural gas.

The government aims to add about 2,000 MW in gas-fired generation by next year.

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