Ex-Richmond power deal may be extended to 2012 By Tom Mosoba THE CITIZEN The Dowans emergency power supply contract could be extended for another three years despite stiff opposition to the project, The Citizen can report. While the Government is under pressure from MPs and the general public to review or cancel the contract that costs the country Sh152 million everyday in capacity payments alone, other official reports indicate that it could be extended to 2012. A comprehensive power system master plan released by Tanzania Electric Supply Company (Tanesco) proposes, among other things, that the contracts of Dowans (100mw) and Aggreko (40mw) be extended. The master plan was released last March and is meant to guide the immediate, short and long term plans by the Government to meet the growing demand for electricity across the country and end recurrent power shortages. According to the plan, Dowans, the firm that inherited the contract from the infamous Richmond Development Company, should have its contract extended from 2009 to 2012. The report says Aggreko, whose contract runs out at the end of this year, should also be extended to 2009. �To meet the increasing load it is also proposed that the end of lease dates for the Aggreko and Alsthom rental units would be delayed from 2008 to 2009, and that the end of lease for the Dowans 1 and 2 rental units would be delayed from 2009 to 2012,� read part of the plan labelled as final for implementation by Tanesco. The report says all identified resources that can be implemented should immediately be committed because in the short term there were very few options to meet expected demand for power that will rise from the current 800mw to 1,700mw in less than eight years. The decision for extension is primed on fears that Tanesco may not summon enough funds to provide own additional generation amounting to 230mw over the next two years. This generation includes the current generation by Dowans (100mw), Aggreko (40mw), Alsthom (40mw) and 50mw from old and unserviceable diesel powered engines belonging to Tanesco that are to be immediately retired. Inquiries by The Citizen in the last four weeks have revealed that due to the public sensitivity surrounding the Richmond and Dowans saga, the government was facing hard choices to make over whether to grant the extension. Sources said an alternative would be to review these contracts to lower their costs or a complete buy out by the state if the said firms would be ready to play along. Prime Minister Mizengo Pinda, who is expected to table in Parliament a preliminary report by the Government on recommendations by the Dr Mwakyembe probe committee on Richmond, is understood to be the one entrusted with handling the matter to find the best way forward. Reliable sources have confided that Tanesco has already and discreetly informed the government of the possibility for renewal of the Alsthom, Dowans and Aggreko contracts, to meet its projected short-term requirement for power supply. �An urgent decision is required for Alsthom whose contract expired on March 20 this year, as the company is shopping for a deal in other countries in the region,� said one of our sources. The source explained that the decision for Alsthom was critical because the country needed at least 60mw of generation for national grid stabilisation and expansion of mining activities around the lake region which the government could not ascertain. Alsthom was contracted in March 2007 and earned $1.75 million in capacity charges every month but its energy was never used during the entire contract period, a factor attributed to recovery of hydro dams due to heavy rains while Tanesco also shunned it because it was required to use Sh9 billion every month to buy the fuel to run the plant. Contacted during our inquiries, Minerals and Energy minister William Ngeleja would neither deny nor confirm the reports on the call for extension of these contracts. �I would appeal that for now that I don�t say anything because the Prime Minister is currently handling this matter,� said Mr Ngeleja during an interview with The Citizen in his office. His ministry�s budget in Parliament later in the month will also shed some light into the way the government was planning to respond to the country�s power generation and transmission challenges. Tanesco managing director Idris Rashidi, on his part, did not reply to several of our emails after efforts to reach him personally proved futile. He was nevertheless quoted in a section of the local media as having said that the power utility company did not have plans to purchase any of the Independent Power Producers (IPPs). The Chairman of the Parliamentary Committee for Energy and Minerals, Mr William Shelukindo (Bumbuli-CCM) and Dr Harrison Mwakyembe (Kyela-CCM) who chaired the committee that probed the Richmond scandal both said they would be in a position to comment after Pinda tabled his report. However, Mr Shellukindo said his committee has categorically told the Government it was opposed to any extension of the IPPs contacts including Dowans, owing to the huge costs incurred as a nation to service them. �We are of the view that all the controversial power contracts should be reviewed and I know government is in good progress. There should be no extension but if that is necessary, fresh negotiations should be done bearing in mind problems that we have so far experienced,� Mr Shelukindo told The Citizen in Dodoma. The Bumbuli MP said the Alsthom supply was not needed because it was meant to stabilize the national grid that is however running. He advised the government to empower Tanesco with resources to buy its own generation for emergency needs. �Tanesco will need guarantees to buy plants to run in case of emergencies but they have no money.� He pointed out to the near completion of the 45mw Tegeta and 100mw Wartsila built gas-powered projects to be operated by Tanesco, as the best way to go. A World Bank energy specialist, Mr Ralph Karhammar, said on his part that the Tanesco�s power master plan should be watertight as it was expected to form the basis on which all the corporation�s strategies for revival would be based. Mr Karhammar said while he would not know if there were indeed plans to extend the Dowans contract, adding, �it would be tricky owing to what has been going on.� The official noted that the challenge for both the gas fired plants owned by Tanesco and the IPPs would not shift to availability of enough natural gas to meet their demand. The business community under the auspices of the Confederation of Tanzania Industries (CTI) has also petitioned the Prime Minister over some of the IPPs contracts which they want reviewed. CTI chairman Reginald Mengi said at a recent power forum that power tariffs increases was contributed to by direct costs of corruption in the exorbitantly negotiated contracts. Manufacturers are worry of pushes by Tanzania�s development partners to raise power tariffs following another 21 percent raise recently. The International Monetary Fund (IMF), one of the bodies expected to heavily fund the energy sector is understood to favour an almost a similar raise in energy costs that CTI lament could push the cost of doing business locally over the roof.