Sell Tanesco now, say leading CEOs

[Mdondoaji]

The Citizen Reporters
Dar es Salaam. Business leaders yesterday called for the privatisation of Tanzania Electric Supply Company (Tanesco) as part of a long-term solution to the chronic power crisis.However, while some were in favour of privatising the cash-strapped utility in its current form, others proposed that the firm be split into three entities responsible for generation, transmission and distribution.In a quick reaction, Tanesco managing director William Mhando warned that privatisation of the company would hurt poor people as tariffs were likely to increase sharply.
“It should be understood that even if we privatise Tanesco, the competition would not be like that among telecoms firms. I think we need to do more research,” he said.

Mr Mhando asked the private sector to work with Tanesco in addressing the problem of chronic power shortages, adding that the company was ready to cooperate fully.The call for Tanesco’s privatisation was made at a breakfast meeting organised by the Tanzania Private Sector Foundation (TPSF) to discuss ways of solving power problems.

Industrial and business consultant Arnold Kilewo said Tanesco was facing problems similar to those that Tanzania Breweries Limited (TBL) grappled with before its privatisation in the 1990s.“I think we can privatise it like we did with TBL, which is now thriving. I don’t understand why we are finding this so difficult with Tanesco,” he wondered.

Mr Kilewo warned against the politicisation of the power issue, saying this delayed implementation of important projects and adversely affected the business community.

Mr Albert Rweyemamu, an underwriter with African Trade Insurance Agency, said privatising Tanesco as a single unit was not a good idea, and suggested that the company be split into three entities.He said the government could supervise distribution and leave other aspects of power production to independent firms.

“I think by so doing, things will go well and there will be a fresh impetus,” he added.The government said it was finalising power reform strategies that would see significant changes in investment in the generation, transmission and distribution of electricity.
The acting Commissioner of Energy and Petroleum Affairs in the Energy and Minerals ministry, Mr Theophillo Bwahea, said the reforms were meant to encourage the private sector to invest in power generation and distribution with a view to promoting competition.

Mr Bwahea said generation and distribution would be overseen by separate entities under the proposals.
Back in 1996, it was agreed that Tanesco should be privatised, but the decision was changed in 2006. No meaningful investment was made in the generation and distribution of electricity in the 10 years.

Yesterday’s meeting took place amid debilitating power cuts necessitated by routine maintenance at Songosongo gas fields in Kilwa District, Lindi Region. Tanesco switches power off 16 hours a day in response to a 250MW deficit on the national grid.

TPSF chairperson Esther Mkwizu urged the private sector to take the power crisis in Tanzania as an opportunity to assist Tanesco by investing in generation.“The demand for power is so high that the government alone cannot manage to bridge the gap. It is therefore time the private sector invested in power generation,” she said.

Chairman of the parliamentary Committee on Energy and Minerals January Makamba said the government was still using old infrastructure inherited from the colonialists, adding that Tanzania had stopped investing in the power sector despite demand increasing steadily.

“Tanesco wants to expand power supply and yet it has not invested in power generation. How do we expect to serve the people?” he queried.He also warned that the environment for the private sector to generate and sell power to Tanesco was not conducive enough.

The Electricity Bill was passed in 2008 with the intention of enhancing the private sector’s participation in the generation and distribution of electricity, but the Confederation of Tanzania Industries (CTI) said in its policy paper last year that the incentives for private investment in the power sector were too low.
Reported by Alawi Masare and Bernard Lugongo; see editorial on Page 8


Source: The Citizen

My take: We should not sell Tanesco but we could downsize it to be as regulator instead of power supplier. We should privatized the power supply sector to private companies invite private companies to come and invest in the sector.

 

[Rutashubanyuma]

Plans to unbundle Tanesco underway

By SEBASTIAN MRINDOKO, 25th May 2011 @ 12:00, Total Comments: 0, Hits: 388

THE government has resolved to unbundle the Tanzania Electric Supply Limited (Tanesco) before listing it on the Dar es Salaam Stock Exchange (DSE).

It plans to divide the company into three entities and each would be assigned a separate function in generation of electricity, its transmission and trading.

This was said in Dar es Salaam on Wednesday by the Assistant Commissioner for Energy, Mr Theophilo Bwakea, at a breakfast meeting organised by the Tanzania Private Sector Foundation (TPSF) that discussed ways of ending persistent power blues.

"Before the end of the year, we expect government's endorsement of the plan," he said.

Mr Bwakea said the next stage would be carrying out studies and evaluation on the project, ahead of the actual unbundling process.

In 2013, the government is expected to inject substantial capital on each of the three entities to enable them operate profitably before listing on DSE.

He said the government would have at least 60 per cent stake in each of the entities and the rest of the shares are to be owned by Tanzanian individuals and corporate bodies.

The assistant commissioner said the Energy and Water Utilities Regulatory Authority (EWURA) would continue to observe and oversee standards of the services, as well as consumer protection on power tariffs and finding new investment opportunities.

The chairman of the Parliamentary Committee for Energy and Minerals, Mr January Makamba, backed the planned unbundling and initial public offer saying it would lead to sustainable investments as well as ensuring reliable power supply.

"We ought to stop talking about availability of rain when it comes to the issue of power generation. Climate change has made rains more unpredictable," Mr Makamba observed.

Mr Arnold Kilewo, a stakeholder from the private sector, welcomed plans to list the proposed power generation firms on DSE.

"We in the private sector want electricity and not politics," observed Mr Kilewo.

 

[Rutashubanyuma]

Tanesco pleads for more funds

By ALVAR MWAKYUSA, 24th May 2011 @ 20:00, Total Comments: 0, Hits: 573

THE Tanzania Electric Supply Company Limited (TANESCO) said on Tuesday that it lacked adequate funds to undertake major power generation projects to guarantee reliable power supply in the country.

The power utility Managing Director, Eng. William Mhando, told the Parliamentary Standing Committee for Energy and Minerals in Dar es Salaam that the company has plans in place for such projects but lacks resources.

Eng. Mhando said the company has over the past years sought 1.3trn/- to overhaul the current dilapidated power systems in vain.

"On several occasions we have been told to seek loans but we have not been successful," he told members of parliament (MPs).

He noted that current tariffs charged by the company are far below operating costs even as customers are complaining that the rates are high.

"The tariffs are not cost effective when compared to generation and operation costs. In fact, we make losses amounting to 58bn/- each year mostly from off-grid power plants in Kigoma, Rukwa and Songea," he said.

However, the TANESCO boss was not in a position to state how much money the company requires to undertake the projects, saying he will need some time to establish the figure.

Eng. Mhando's sentiments were echoed by the Energy and Minerals Minister, Mr William Ngeleja, who told reporters that the government will ensure efforts are made to generate 1,000MW by 2013.

"We have managed to get loans and grants to implement some of the projects," the minister said.

In another development, Eng. Mhando admitted before the parliamentary committee that the power purchasing contract between the power utility and Songas Tanzania Limited has a number of shortcomings which need to be addressed.

This was after the committee's Chairman, Mr January Makamba, challenged TANESCO to explain why Songas has not resorted to using jet fuel to generate power as Songo Songo gas facility undergoes maintenance.

"The contract clearly stipulates that during emergencies some four units at the plant are dual-fuel and thus could be used to generate power through jet fuel but this is not happening. Since Songo Songo is not producing natural gas at present, we could have resorted to this option," he remarked.

Eng. Mhando said he had not gone through the contract thoroughly, but noted that the management of Songas had told him the units would need some modifications to be able to use the liquid fuel.

Minister Ngeleja supported the TANESCO chief saying the government will go through the contract and address the said shortcomings.

It was also learnt during the meeting that the power utility spends about 70 per cent of its revenues on purchasing power from Songas.

"This is not right because Songas does not produce 70 per cent of the electricity in the power grid," Mr Makamba charged.

Meanwhile, a local journalist, Mr Timothy Kahoho, is contesting the sale of the controversial Dowans Tanzania Limited's electricity generating plant at Ubungo in Dar es Salaam to an American company, Symbion Power, saying the deal is illegal, reports JULIUS BWAHAMA.

Mr Kahoho on Tuesday filed an application against Dowans Tanzania Ltd, Dowans Holding SA and Tanzania Electric Supply Company Ltd (TANESCO) at the High Court asking it to terminate the recent sale.

He has also filed another application in which he wants the court to arrest the directors of the two foreign respondents, Dowans Tanzania Ltd and Dowans Holding SA.

The journalist argues that the respondents have breached the order that forbade them from engaging in any activities without first informing the court.

The order was given on March 2, this year by Judge Emilian Mushi in a petition in which Mr Kahoho, Legal and Human Rights Centre (LHRC), Lawyers Environmental Action Team (Leat) and Sikika Company Ltd are against the 97bn/- award given to the two foreign respondents by International Chamber of Commerce Court (ICC) in London.

He also seeks the court to call off the sale because the two respondents --Dowans Tanzania Ltd and Dowans Holding SA are foreign firms which have their sole property at Ubungo site and thus their action prove that they are winding-up their operations in the country.

He claims that being foreign companies, the proceeds got from the sale shall not benefit Tanzanians, are likely to be repatriated to their countries of origin.

Mr Kahoho wants the directors of Dowans Tanzania Ltd and Dowans Holding SA be arrested on the grounds that they defied court order given in March, this year, for not to engage in any development activity without informing the court.

He insists that they should also be arrested because through the sale of the generators at the Ubungo Plant to Symbion Power of America, they are in contempt of court.

Alternatively, he wants the court to order the arrest of the directors and also order them to submit the sum of 120m US Dollars as security for the costs pending the outcome of the petition before the court.

 

[nngu007]

26 May 2011
Business leaders yesterday called for the privatisation of Tanzania Electric Supply Company (Tanesco) as part of a long-term solution to the chronic power crisis.However, while some were in favour of privatising the cash-strapped utility in its current form, others proposed that the firm be split into three entities responsible for generation, transmission and distribution.


In a quick reaction, Tanesco managing director William Mhando warned that privatisation of the company would hurt poor people as tariffs were likely to increase sharply.


"It should be understood that even if we privatise Tanesco, the competition would not be like that among telecoms firms. I think we need to do more research," he said.


Mr Mhando asked the private sector to work with Tanesco in addressing the problem of chronic power shortages, adding that the company was ready to cooperate fully.The call for Tanesco's privatisation was made at a breakfast meeting organised by the Tanzania Private Sector Foundation (TPSF) to discuss ways of solving power problems.


Industrial and business consultant Arnold Kilewo said Tanesco was facing problems similar to those that Tanzania Breweries Limited (TBL) grappled with before its privatisation in the 1990s."I think we can privatise it like we did with TBL, which is now thriving. I don't understand why we are finding this so difficult with Tanesco," he wondered.


Mr Kilewo warned against the politicisation of the power issue, saying this delayed implementation of important projects and adversely affected the business community.


Mr Albert Rweyemamu, an underwriter with African Trade Insurance Agency, said privatising Tanesco as a single unit was not a good idea, and suggested that the company be split into three entities.He said the government could supervise distribution and leave other aspects of power production to independent firms.


"I think by so doing, things will go well and there will be a fresh impetus," he added.The government said it was finalising power reform strategies that would see significant changes in investment in the generation, transmission and distribution of electricity.


The acting Commissioner of Energy and Petroleum Affairs in the Energy and Minerals ministry, Mr Theophillo Bwahea, said the reforms were meant to encourage the private sector to invest in power generation and distribution with a view to promoting competition.


Mr Bwahea said generation and distribution would be overseen by separate entities under the proposals.


Back in 1996, it was agreed that Tanesco should be privatised, but the decision was changed in 2006. No meaningful investment was made in the generation and distribution of electricity in the 10 years.


Yesterday's meeting took place amid debilitating power cuts necessitated by routine maintenance at Songosongo gas fields in Kilwa District, Lindi Region. Tanesco switches power off 16 hours a day in response to a 250MW deficit on the national grid.


TPSF chairperson Esther Mkwizu urged the private sector to take the power crisis in Tanzania as an opportunity to assist Tanesco by investing in generation."The demand for power is so high that the government alone cannot manage to bridge the gap. It is therefore time the private sector invested in power generation," she said.


Chairman of the parliamentary Committee on Energy and Minerals January Makamba said the government was still using old infrastructure inherited from the colonialists, adding that Tanzania had stopped investing in the power sector despite demand increasing steadily.


"Tanesco wants to expand power supply and yet it has not invested in power generation. How do we expect to serve the people?" he queried.He also warned that the environment for the private sector to generate and sell power to Tanesco was not conducive enough.


The Electricity Bill was passed in 2008 with the intention of enhancing the private sector's participation in the generation and distribution of electricity, but the Confederation of Tanzania Industries (CTI) said in its policy paper last year that the incentives for private investment in the power sector were too low.
Reported by Alawi Masare and Bernard Lugongo

 

[Mtaalam]

huyo William Mhando hicho cheo kapataje?cz the things he said relatin to the topic...
Anaclaim if tanesco itakua privatised... Eti itawaumiza wananchi wa hali ya chini as rates zitapanda sana as if rates za sasa hivi ziko chini...
Umeme bei juuu, halafu bado haupatikani...
Sasa si bora iuzwe kabsaa umeme uwe bei juu lakini upatikane!
Shenzy kabsaaa yani nchini kwetu kila kitu ubinafsi,siasa ndani ndio maaaaanaaaa hatuendelei

 

[The Stig]

Tanesco inabidi ipasuliwe sehemu tatu halafu zibinafsishwe. Huo ndiyo ukweli na ndiyo dawa pekee.

 

[CHESEA INGINE]

Niliwahi kusema huku JF kuhusu Tanesco, na bado napenda kuisimamia kauli yangu ya kuwa igawanywe idara tatu (AU MAKUMPUNI MATATU) Ubinafsishaji wake uwe kama tulivyofanya wa CRDB na sio kama wa TBL! Shirika hili liwe LETU! na sio wawkezaji kutoka nje! Tafadhali!

 

[Nguruvi3]

nngu007;2022684]
Business leaders yesterday called for the privatization of Tanzania Electric Supply Company (Tanesco) as part of a long-term solution to the chronic power crisis

It's more than two decades since we ventured into privatization. Before the business community insinuates this idea they must come out cogently with examples of any firm(s) which has yield tangible results and for long term solution.

However, while some were in favor of privatizing the cash-strapped utility in its current form, others proposed that the firm be split into three entities responsible for generation, transmission and distribution

Mh! The TRC was spitted into TRL and RAHCO for the same purpose. The situation is dire to the extent that the company is collapsing.Dar city council(DCC) was spitted in municipals, is there any changes one could be proud of.I wonder if the problem is the size of Cooperation or poor management!

In a quick reaction, Tanesco managing director William Mhando warned that privatization of the company would hurt poor people as tariffs were likely to increase sharply

Mr. Mhando is not in touch with common Tanzanians. Currently the price is exorbitant, therefore he needs to address this in first place. Discussing what could happen 'if' is a self defence, the sign of weak leadership

."It should be understood that even if we privatize Tanesco, the competition would not be like that among telecoms firms. I think we need to do more research," he said

Telecoms in Tanzania have the highest rate as compared to many third world countries- Ghana, Nigeria and Kenya just few to mention.We used to have TPDC as sole importer of oil, after privatization and rampant importation it has be proven failure.Mr. Mhando's
comparison of Tanesco vs. Telecom is flawed.

Industrial and business consultant Arnold Kilewo said Tanesco was facing problems similar to those that Tanzania Breweries Limited (TBL) grappled with before its privatization in the 1990s."I think we can privatize it like we did with TBL, which is now thriving. I don't understand why we are finding this so difficult with Tanesco," he wondered

Mr. Kilewo, the problem of the then TBL was not profit making rather the profit was grabbed by the government to fund Mbio za Mwenge and other National events such as sherehe za Uhuru etc. The Organization could not invest more. The money siphoning has been stripped off by the investors TBL is now thriving well.

Mr. Kilewo warned against the politicization of the power issue, saying this delayed implementation of important projects and adversely affected the business community

I strongly agree, politics is the core issue in Tanesco as to other many government cooperation.

The acting Commissioner of Energy and Petroleum Affairs in the Energy and Minerals ministry, Mr. Theophillo Bwahea, said the reforms were meant to encourage the private sector to invest in power generation and distribution with a view to promoting competition

Yes, we can promote competition but under the current unregulated environment it's unlikely to yield any positive results.

Back in 1996, it was agreed that Tanesco should be privatized, but the decision was changed in 2006. No meaningful investment was made in the generation and distribution of electricity in the 10 years

Nyerere had a vision on energy sectors unfortunate his students like Mkapa failed him. Mkapa decided to split Tanesco under the dubious contract given to his own in-law. We need to explore more sources like Stiegler project which could provide domestic supply as well as export.

Yesterday's meeting took place amid debilitating power cuts necessitated by routine maintenance at Songosongo gas fields in Kilwa District, Lindi Region. Tanesco switches power off 16 hours a day in response to a 250MW deficit on the national grid

Tanesco is suppose to have 'back up supply' incase of emergency or unforeseen event.

TPSF chairperson Esther Mkwizu urged the private sector to take the power crisis in Tanzania as an opportunity to assist Tanesco by investing in generation.” The demand for power is so high that the government alone cannot manage to bridge the gap. It is therefore time the private sector invested in power generation," she said

Good point, this could result in real competition but not dissolving Tanesco

Chairman of the parliamentary Committee on Energy and Minerals January Makamba said the government was still using old infrastructure inherited from the colonialists, adding that Tanzania had stopped investing in the power sector despite demand increasing steadily

January did you discussed this with Mr. President at the time you were in Magogoni?

The problem in our country is management. Leaders are appointed not based on academic merits and experience or tracked proven records.The Board(s) of the company for instance, has been a place for retirees to extend their benefits.
I am not against privatization however it should happen with convincing reasons. NBC was given to South Africans in give away price ,now it is making profit firm. NMB once mocked as benki ya walala hoi is doing well. CRDB which survived privatization under the clout of Mwalim, is competiting with International banks etc. Where there is limited politics and egoism we can deliver.