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Power shortages widen Tanzania's trade deficit

Discussion in 'Jukwaa la Siasa' started by nngu007, May 27, 2012.

  1. nngu007

    nngu007 JF-Expert Member

    May 27, 2012
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    Tue May 22, 2012 4:14pm GMT

    * Current account gap widens 135 pct in yr to Feb
    * Higher gold exports outweighed by sharp rise in oil imports
    * Machinery imports up 53 pct on gas, oil exploration projects

    By Fumbuka Ng'wanakilala

    DAR ES SALAAM, May 22 (Reuters) - Gas-rich Tanzania's energy shortage has driven its current account deficit to widened by 135 percent on soaring oil imports to generate power in the face of shortages and blackouts.

    Despite a rise in gold exports in east Africa's second-biggest economy, the nation's total imports bill rose 39.1 percent in the year to February to $12.6 billion, mostly due to a rise in oil imports, its central bank said on Tuesday.

    Tanzania's coastline is fast becoming a major gas hub with major discoveries made in the east African region and the country has licensed at least 18 international companies to look for offshore and onshore energy reserves.

    But hydro power accounts for around half of Tanzania's energy supplies, with prolonged drought resulting in rolling blackouts across the country. The Tanzanian government has shifted its focus to thermal power projects to wean itself off rain-dependent hydropower stations.

    Energy demand is expected to grow to 1,583 megawatts by 2015 from the current demand of around 800MW, according to estimates by the country's energy ministry.

    Analysts said rising oil imports could hurt the import-dependent economy, which has been struggling with a high inflation rate and slower growth.

    "Tanzania must do away with generating electricity from oil-fired power stations. This source of electricity is very costly to consumers and the economy and is not sustainable. It actually adds up to the cost of doing business in Tanzania, with a high inflation rate," said Humphrey Moshi, professor of economics at the University of Dar es Salaam.

    "Tanzania can no longer depend on hydro-power stations due to the effects of climate change, hence the need to turn to alternative sources of energy such as natural gas and coal."

    Tanzania's year-on-year inflation rate fell to 18.7 percent in April from 19 percent previously on lower food and energy costs, but analysts said the decline was too slow and forecast the rate to remain in double-digit figures for the rest of the year.

    Poor rains across east Africa for much of last year undermined food security and electricity output, triggering spikes in the levels of inflation and threatening economic growth.

    In the year to February, the current account deficit widened to $5.248 billion from $2.233 billion a year ago, and slightly higher than in January, when it stood at $5 billion from $2.341 billion the year before period.

    Oil imports surged 85.7 percent to $3.519 billion due to a rise in domestic demand for oil for power generation amid chronic energy shortages.

    "A rise in imports of goods particularly oil ... outweighed the impact of an increase in exports," the central Bank of Tanzania said in a report on its website.

    "Similarly, there was a substantial increase in imports of machinery by 53 percent to $1.858 billion mostly for gas and oil exploration projects under foreign direct investments."

    Total exports rose 12.1 percent to $6.851 billion, helped by an increase in gold sales and tourism earnings.

    The central bank said gold exports, the country's top foreign exchange earner, rose 41.3 percent in the year to February largely due to rising gold prices at the world market, fetching $2.269 billion.

    Tanzania, with a population of 40.7 million, is Africa's fourth-largest gold producer after South Africa, Ghana and Mali. Gold accounted for 58.9 percent of the country's total non-traditional exports.

    The price of gold at the world market went up by 28.1 percent to $1,623.7 per troy ounce in the year to February, while the export volume of the precious metal increased to 40.2 tons from 36.4 tons previously.

    "This was exacerbated by the decline in official current transfers by 19.1 percent t $568.7 million."

    Tanzania, one of the continent's biggest per capita aid recipients, received $453 million of aid for its 2011/12 budget, with the foreign exchange inflows helping to bolster the local currency.

    Gross official foreign exchange reserves held by the central bank fell to $3.51 billion in the year to February, or 3.7 months of import cover, from $3.9 billion a year ago.

    The central bank's monetary policy target is to have an accumulation of international reserves adequate to cover at least 4.5 months of projected import of goods and services.
    (For more details, go to
    (Reporting by Fumbuka Ng'wanakilala; Editing by George Obulutsa, Ron Askew)
  2. nngu007

    nngu007 JF-Expert Member

    May 27, 2012
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    We are now called Gas Rich Tanzania, Tatizo ni Viongozi wa CCM watatufanya Masikini kama wakiwa Madarakani baada ya

    2015; Lazima watuachie Chama kingine kiongoze na Katiba Mpya ili tuone Maendeleo Kidogo; Kwanza kabisa ni watoto wa

    Mitaani nini CCM inafanya kuwasaidia? Kuliko kununua T-shirts, Khanga na Nguo za Kijani na Njano? Wakati wa Nyerere haikuwa hivyo.

    Na kuondoa Matusi ndani ya Viongozi wa CCM
  3. p

    politiki JF-Expert Member

    May 27, 2012
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    The sad part in this article is the power rationing in our country is engineered by corrupt gov.officials who want to enrich themselves and not lack of resources or skills to change the situation around.