Dar Es Salaam - Tanzania’s state-owned power utility was seeking a 67.9 percent hike in electricity tariffs to tackle rising power generation costs, a senior official said this week.
Years of sustained drought have cut hydroelectric output, forcing the company to rely on oil-fired power plants and causing in substantial cost rises.
Tanesco’s acting managing director, Felchesmi Mramba, said the financially strapped utility made a loss of 178 billion shillings (R21bn) last year, deteriorating from a 43 billion shillings loss a year earlier.
“If we don’t raise power tariffs, our company will not be able to meet costs of running oil-fired power plants,” Mramba said, noting that the cost of generation currently exceeded total revenues.
He added: “Without bringing Tanesco to financial sustainability by raising power tariffs, the company will not be able to repay its bank loans and this will also affect its ability to secure new loans.”
Tanesco sells electricity at an average price of 197.81 shillings per unit of power, but wants to raise it to 332.06 shillings a unit.
Mramba said the firm was in the final stages of securing a 408 billion shillings syndicated loan from local commercial banks to finance its operations.
Oil-fired power stations make up 45 percent of generation costs, followed by gas-fired plants at 42 percent and hydropower plants at 13 percent.
The International Monetary Fund said this month that one of Tanzania’s main priorities was to make its power sector financially sustainable so it could maintain steady economic growth and stem fiscal pressures in the next two years.
Completion of a 532km natural gas pipeline from the south-east of the country to Dar es Salaam would lower power generation costs by allowing the utility to switch to gas-fired plants, Mramba said. The pipeline would be ready by December next year. – Reuters