TANESCO Acting Managing Director, Eng. Felchesmi Mramba
The Tanzania Electricity Supply Company (TANESCO) has threatened an indefinite power rationing if its request for an increase of electricity tariffs by 67.87 percent isn’t approved.
Currently, the company is operating at a loss, arguing that the current revenue does not meet its expenses. As a result, TANESCO would be unable to meet its obligation and would always be in conflict where contractual obligations are made.
The company losses are said to have increased from Sh43.23 billion in 2011 to Sh178.25 billion in 2012 due to operational costs.
TANESCO has therefore proposed to increase the current tariffs of Sh197.81 per unit to Sh332.06 per unit – a 67.87 percent increase. The move is to manage operational costs and delivery of quality product to the customers.
If approved, TANESCO has promised to solve its problem by providing quality service and create a conducive investment environment within the country.
Speaking yesterday during stakeholder’s public hearing on TANESCO Tariffs Review Application at Dar es Salaam, TANESCO Acting Managing Director, Eng. Felchesmi Mramba said the adjustments were necessary to cover operational costs and improve the general performance of the utility.
Mramba said: “If the company’s application is disapproved, the company will fail to cover its operational costs due to overdependency on expensive liquid fuel to generate electricity.”
He said the company would also fail to access loans from bank institutions to invest in development projects which will enable TANESCO meet its obligations, including connecting 30 percent of the country’s population with electricity by 2015.
Meanwhile, Dar es Salaam acting Regional Commissioner Raymond Mushi said electricity was “very important” in improving the economy of any country and increase investment within the country.
“Electricity is part and parcel of development of any country’s economy,” he stated.
He noted that the company has the responsibility of improving its efficiency and delivering quality service to the customers, including increasing access of electricity to the interior areas.
But at the roundtable, some stakeholders had dissenting views on proposals for increased TANESCO tariffs.
Goodwill Wanga, director of research, planning and industrial development at the National Development Corporation (NDC), said no country could develop without having reliable power supply.
He said investors who require large amount of power in heavy industries were now scared (of coming to Tanzania) because of the country’s unreliable power situation.
So he suggested that the 67.87% tariff adjustment be effected from January 2014; followed by a further 12.74% from January 2015 and 9.17% from January 2016.
He said NDC supports the proposed new tariff adjustments but that they be implemented in annual phases for the next three years.
However, Confederation of Tanzania Industry (CTI) councilor Dr Samule Nyantahe rejected the propose tariffs, saying the increases would not resolve TANESCO’s long-term financial problems – arguing that the fundamental causes of the problems had not been addressed.
He also said the new tariff will raise the price to the final consumers, and affect people’s welfare.
“CTI believes that tariffs increase will cause fuel inflation which for the last six months has been declining from the previous two digits level down to one single (6.5% in October 2013),” he said.
CTI therefore recommends that TANESCO should enhance debt collections from its customer, including government institutions.
SOURCE: THE GUARDIAN