The Tanzania Electric Supply Company Limited (TANESCO) owes oil marketing and trading companies more than 85 billion/- for fuel imports used in emergency power generation as part of the mounting debts facing the public utility, which is currently seeking approval for a tariff downward adjustment from the country’s energy regulator.
The 85.774bn/- liability towards oil firms is part of a 765.7 billion/- total debt laid bare by TANESCO in its formal application for the tariff reduction presented to the Energy and Water Utilities Regulatory Authority (EWURA) last week.
Still, according to TANESCO’s managing director Felchesmi Mramba, the company’s mounting debts are under control and the decision to seek power tariff cuts is a positive one.
Mramba told journalists in Dar es Salaam on Monday that by shifting from diesel and heavy fuel oil to natural gas for power generation, the cash-strapped power utility expects to offset any revenue shortfalls from the tariff reductions.
The TANESCO document to EWURA, which was seen by The Guardian, shows that of the oil firms, GBP Tanzania alone is owed 49.06bn/- for fuel supplied to Aggreko Plc which entered into an emergency power generation contract with TANESCO in 2011. The contract required Aggreko to provide two temporary 50MW diesel power plants at Ubungo and Tegeta.
Aggreko also charges TANESCO a fee for managing the associated fuel supply, while Total Tanzania Limited is also owed 19.5bn/- by the power utility for the supply of fuel to Aggreko. On top of that, TANESCO also owes other fuel companies some 5.644bn/- for the supply of fuel and lubricants for its off-grid power plants in isolated parts of the country.
While campaigning in the 2015 general election in October, President John Magufuli asserted at several public rallies that he had proof that the country’s recurrent power shortages were caused by saboteurs aiming to benefit from corrupt fuel import deals, vowing to put an end to the racket if he became president. Magufuli repeated the assertion in his inaugural presidential speech to parliament in November.
Although Tanzania has in recent years made big discoveries of natural gas and expressed hope of starting large-scale production within a decade, investors have long complained of graft. Businesses also say frequent power outages are hurting productivity and are a barrier to growth in East Africa’s second-biggest economy.
“There is sabotage in the ongoing power rationing ... some people are deliberately opening hydro dam floodgates at night to deplete the water levels,” Magufuli said at a campaign rally in Dar es Salaam in October. “This sabotage is done to create power shortages so that they can import fuel for power generation ... that’s how some dishonest TANESCO employees are getting their kickbacks,” he added.
TANESCO has in the past attributed the problem of hydro dam water levels dropping, leading to enforced power rationing, to drought. According to government figures, Tanzania needs to generate at least 1,332 megawatts of electricity to avoid power cuts, but usually falls below that target.
The country’s energy sector has long been dogged by allegations of corruption. A group of donors last year withheld nearly $500 million in national budget support after the latest scandal in the sector led to the resignations of three cabinet ministers.
SOURCE: THE GUARDIAN
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