Raining on Tanzania’s electricity parade
Consumers wait in hope that the rains will be sufficient to raise the water levels bringing much-needed relief in the power sector. Instead of relief, TANESCO recently announced a five percent increase in power tariffs. TANESCO’S Chairman, Fulgence Kazaura says that the increase was necessitated by the high thermal power generation costs.
The effect is that consumers will not only have to dig deeper into their pockets to pay for their pre-billed power but are also incurring costs of replacing items destroyed by power surges. Analysts have argued that Tanzania has the highest power tariffs in sub-Saharan Africa although TANESCO has continually stated that their tariffs are reasonably priced.
Large-scale manufacturers have been the biggest losers, having to decrease their production output as the price of manufacturing increases. Further, there has been retrenchment of industrial labourers due to the lack of activity during the day and skilled personnel have to work nightshifts when power is not rationed.
Insufficient electricity supply is now hampering expansion of the manufacturing sector, which grew slightly from 8.6 percent in 2004 to nine percent in 2005 due to increased production especially in the cement, aluminium and iron sheet industries.
This is a great achievement for a country whose mainstay is agriculture and whose economy is yet to shift from this dependence. However, with an inadequate supply of electricity, it seems the manufacturing sector is set for a lower growth rate than had been anticipated. Housing agents have also incurred immense losses. One agent who sought anonymity says that his firm uses up to $ 797 (Tsh one mn) daily in fuel charges to keep the generators working. To recover this cost, they charge their tenants a service charge or agree with the tenants directly on a mode of payment for the same especially since many of their clients are big corporations and multinationals.
Many electricity consumers can now breathe a sigh of relief after the government announced in early June that it will end power rationing in 12 weeks. So by the time you are reading these lamentations, our power woes in Tanzania should be over.
In her first budget to the nation, Finance Minister Zakhia Meghji mentioned in passing the issue of electricity supply though it was by no means the highlight. In the next year, TANESCO will get increased funding to help boost power generation capacity by about 145 Mega Watts of electricity, and ensure there is reduced rationing during the drought. The 2006/2007 budget will also support completion of the large-scale water project extending from Lake Victoria to Shinyanga and Kahama, which will hopefully stabilise the fluctuating hydro-electric levels.
At present, the country’s total power output is 550 MW, generated from the Mtera and Kidatu Dams. Currently, the total power output is only 70 percent of the total demand and this has been decreasing with the low water levels at each of the dams. Experts have, however, offered alternative ways of curbing the electricity crisis by reducing over-dependence on hydro-electricity. Energy sources like charcoal would be one of the ways but the government has placed a ban on charcoal as a fuel source for environmental reasons. But it remains the main source of power for those who cannot afford electricity. Solar and wind energy were also listed as energy alternatives as was a rare plant, Jetropha, which produces bio-diesel that can be used to run thermal power stations.
Users of alternative power sources will also largely benefit from tax exemptions granted during the budget. These include exemptions from customs duty for gas cylinders, solar powered
equipment and specialised accessories (matchboxes, energy saving bulbs) and exemption from VAT for LPG and LPG cylinders. A drastic reduction in excise duty on kerosene from $0,097 (Tsh122) per litre to $ 0,041 (Tsh52) per litre is also expected to increase use of the commodity as an alternative source of fuel.
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