Last nails in Dowans as Tanesco shifts gear
By Orton Kiishweko
With its abortive bid for the Dowans power plant now behind it, Tanesco has decided to buy two new generators to inject 160MW of electricity into the national grid and avert a looming power crisis.
Senior officials of the Tanzania Electric Supply Company (Tanesco) said in Dar es Salaam yesterday that the two new power-generating plants would be installed in Dar es Salaam (100MW) and Mwanza (60MW).
Tanesco distribution manager Declan Mhaiki told the monthly Editors' Forum that tenders for the project would be announced in the next four months, in accordance with the public procurement procedures and rules.
The forum is a grouping of editors and managing editors of the print and electronic media in the country.
Mr Mhaiki's disclosure comes two weeks after Tanesco was forced to bow to public pressure and withdraw its hotly debated plan to purchase second hand power generators from the controversy-ridden Dowans Tanzania Limited.
The two new plants to be installed in Dar es Salaam and Mwanza would run on heavy fuel, he said.
During the heated debate on whether or not Tanesco should acquire the used Dowans gas turbines, thus contravening the public procurement law, it was suggested that the company could source for new plants from a reputable manufacturer in less than a year.
But the Tanesco officials told the editors that "a number of investors have given us 18 months, as the period in which they can bring in the generators."
Mr Mhaiki said that they were still uncertain even about such deadline due to the ongoing financial crunch that has ravaged the private sector in the United States, where it originated, and other developed countries.
"Getting the generators this year will be very hard, and our biggest impediment lack of funds," he said. "The needs are growing. Now, we are talking about generating an additional 160MW, but this could increase in 2010."
Many of the company's current generators, he added, had been operating for years and there was need for funds for maintenance and the purchase of spare parts.
But on a more positive note, the editors were informed that the company expects to start making profits next year after recording billions of shillings in losses over the years.
Finance director Jamhuri Ngelime said the company was expected to break even next year, after reducing losses by over 50 per cent in the last three years.
In 2006, Tanesco had a debt of Sh260 billion, but this was reduced to Sh67 billion in 2007. And last year, the debt declined to Sh20 billion. Mr Ngelime said they expected to slash the debt substantially by the end of the year.
The company had been making losses because the cost of production did not correspond with the electricity tariffs, he added.
"Even when the cost of production goes up, Tanesco does not have the authority to push up the tariffs as a means to counter making losses."
The line supplying power to the north, the company said, was "overpowered" due to the high demand from a number of mining firms.
To counter the situation, Tanesco was planning to put up a fresh line from Iringa through Singida to Shinyanga.
But the project is pending as the 500 million euros assistance from the World Bank was still awaited.
According to Mr Ngelime, 24 per cent of electricity produced is lost because many of the lines are old and some generators overloaded.
Production manager Gregory Mkumu said there were plans to set up plants in Kigoma (6MW), Kasulu (2.5MW), Kibondo (2.5MW) and Sumbawanga (5MW) and Mpanda.
Currently, the national grid has 570MW but the distribution manager Mhaiki said there was need for a "spinning reserve" for certainty.
"We need at least 15 per cent extra or 105MW as a surplus on the system," he explained.
Speaking at the same forum, the Civic United Front national chairman, Prof Ibrahim Lipumba, said there should be "no political influence peddling" in the running of parastatals.
He urged President Jakaya Kikwete to call for a national dialogue to discuss a way forward amid the international financial crunch.
Prof Lipumba, who is a top economist, said the last monthly presidential television address did not deal with the problems affecting wananchi, especially poverty.
"Let's use this crisis to discuss our vulnerabilities so that we can benefit in the process," he said. He added: "We have to make sure our government is wise on internal spending."
He also criticised as a conflict of interest the appointment of MPs to the boards of parastatals yet the same bodies are accountable to the National Assembly.
The debate on whether or not to buy the Dowans turbines at Ubungo in Dar es Salaam has lately turned into a fully-fledged battle, pitting CCM politicians against one another.
At the centre of the controversy are Kyela MP Harrison Mwakyembe and his Igunga counterpart, Mr Rostam Aziz.
The latter has challenged Dr Mwakyembe to respond to charges that his ownership of an electricity generating plant, when he is the vice-chairman of the parliamentary Energy and Minerals Committee, amounts to a conflict of interest.
But Dr Mwakyembe has said he could not have declared his interest in the firm as it has yet to take off, arguing that what he's involved in as a project by some patriotic people to set up a power generating company to save the country from an energy crisis.
However, the altercation has turned ugly with Mr Aziz accusing Dr Mwakyembe of resorting to a racist campaign.