The Anatomy of Power Crisis: Who Didn't Do What and When!

[Buchanan]

Anatomy of the power crisis: Who didn`t do what, and when! By Nimi Mweta 17th July 2011Solving the power crisis is rapidly becoming the defining problem of the fourth phase administration, in much the same manner as nationalizations and Ujamaa villages defined the first phase, liquidations of parastatals the second, and failed privatizations the third phase. On the basis of how this problem is handled lies the immediate future not only of the country’s economy in general but also the stability of its finances, and calmness of its politics. The issue has taken one casualty on the political scene – and more could follow. At present the big idea is to engage in a special rescue plan for the power sector, for instance by targeting certain technically feasible areas which could help resolve the problem once and for all. It is perhaps this aspect which Prime Minister Mizengo Pinda hadin mind when he rejected a proposal from House opposition leader Freeman Mbowe that a commission be constituted to examine the power crisis and how to get out of it. The Chademachairman intimated that pressure for a demonstration on the matter was rising. What the premier said was that there is no need for a commissionas the problems are well known and the government is working around the clock to solve them. One initiative he took up was to personally travel to South Korea to talk with the government and some private investors if they can put up a gas plant in the Songosongo or Mnazi Bay area, sothat there is capacity production of gas. What is unclear is how rapid that can be done, and on the other, if its financial aspect will not duplicate what is now thecase for Songas. Despite that the huge public clamor about the problem in the power sector was directed at Richmond Development Corporation and Dowans (T) Ltd for adding yet another system for which Tanesco suffers capacity charges, it is hard to affirm that this was the problem. Analysts say that when the power blackout came up in 2006, it followed ten years of low or no investments in the national grid infrastructure, such that as the situation worsened, only emergency measures could do. And the Dowans plant was freighted in record time, if one checks with the time it took to tender and build IPTL and Songas gas-based plants. The question that has become rather problematic in getting to the bottom of the power crisis is what went wrong in the 1996 to 2006 period, as if forms the proper background to the later developments. In 1996 the power company was ‘specified’ or listed for privatization, but extensive disputes surfaced as to the manner and form privatization could take, and eventually nothing was agreed upon. The best method would have been to privatize it singularly and wholly as in the case of Tanzania Breweries Ltd or TCC, the cigarettecompany, but as this would only benefit foreign investors, others locked horns. At some point it seemed that the World Bank was backing an idea, examined by some local consultants with perhaps some technical assistance from the IDA itself, that the company be split into three, to enhance ‘competition’ and ‘efficiency.’ Those who are familiar with whathappened in the US state of California crossed their fingers, knowing that the result would be a chaotic situation where the generating company lays prices for the transmission company – and the latter dictates prices for the supply/distribution firm. In California this ignited a multiple factor price surge, throwing Democrats out of power. So at least something wasn’t donetowards the end of the 1990s, namely to split the company into three so that everyone can buy a chunk of shares in one of the three firms, as their ownership would be multiple. Strategies are usually thought up in ways that appear to be technically competent but hide cloak and dagger calculations as to what this or that group of interests will gain. Finally the government was unable to solve the matter as the best way, privatizing it in one piece, was out of range – and the rest was unfeasible. So a middle of the road solution was found with the World Bank with Swedish funding, that the company be placed under expatriate management to redress its finances before privatization. That happened, and as Bumbuli MP January Makamba was remarking recently, for the first time even the army paid its electricity bills, apart from government departments generally, the State House, Muhimbili Hospital, as well as Zanzibar! It will be recalled that Zanzibar sounded the alarm to Union authorities about it; they ignored it. Having avoided the error of split privatization of Tanesco, by the time the company had ended its first two year stint the paralysis asto what to do next was still in place, so it was given another term, up to 2006. When it ended the climate had changed and issues of how to divest Tanesco and other big public firms were out of view, the2005 nomination run in CCM having been organized under impeccable parastatal credentials,to reject all ideas of ‘selling the country.’ It was the heyday of rejuvenated radicalism, angering the donors. Still the donors did not understand the ‘pattern of the game’ during the period, but in their usually optimistic and often indulgent way of doing things, wished to believe that ‘new zeal, new vigor and new pace’ was a clarion call for going full steam, toimprove the economy. With them it meant becoming more resolute about economic reform, which thus includes privatization of major public companies dominating the various sectors. They only learnt from 2007 onwards that there was no such intention by the government. When they now reached these conclusions, the development aid divestment process set in – as donors could no longer commandthe sort of policies which should be followed. They surrendered that onus or privilege during the late 1990s negotiations about the African debt, that it be cancelled, not on the basis of proper completion of a structural adjustment program –as this would have entailed privatizing the major parastatals so as to sweep all impediments to real private-sector led growth. They urged good governance. That is where the political problem about the power crisis is anchored, that there are no longer any bearings as to how problems like power shortages can be resolved, or to speak like the Chinese, there is no ‘theory’ guiding discussion on the issue. The government acts on the matter pragmatically, depending on consensus available at any moment, in the cabinet, the higher party echelons and public opinion, not on the basis of defined outlook on economy as a whole. Such an outlook existed; itwas rejected as unpatriotic, so none is available, as the patriotic option is unfeasible, that government should buy new turbines. Reading through a recent presentation by parliamentary energy and minerals committee chairman Makamba, it appears that a sort of double speak is maintained on this issue. He says that the 1996 to 2006 was lost as regards infrastructure investmentin Tanesco due to the unsettled position as to whether it will be privatized or remain a state firm (many local experts use ‘public’ tomean state-controlled firm). Whatthis position suggests is that donors restrained themselves as they didn’t know who would takeover the company. That is also the sort of wisdom that one gets when talking to Tanesco officials; placing the firm on privatization line up had driedup aid-related projects, in which case this act arose from the folly of ‘infatuation’ with privatization.. It isn’t surprising that they should put the matter that way, as they thence appear victims of unpatriotic machinations from the Ministry of Energy and Minerals, and that donors are perfectly at ease with Tanesco as it, the sole problem being the dimwitted idea of privatization. Itis an unrealistic view. Only when one comes to the details does the problem come upmore clearly, for instance that Tanesco uses 70% of its income for purchasing the gas, paying the capacity charge and electricity for Songas alone, an untenable financial matrix. No MP has come up with an idea of how to solve this, and whether a new gas plant will not have ‘cash sale’ terms - thus Tanesco would have no cash to buy gas for IPTL, Symbion and Wartsila plants even if the gas was there. Only at that point does one begin to understand why the issue of privatization came up, to remove covering investor risk, by paying ‘capacity charge.’ SOURCE: GUARDIAN ON SUNDAY