30 August 2013, Dar es Salaam – TANESCO has paid a total of US$ 35.2 million (about 56.5bn/-) to Orca Exploration, a parent company of PanAfrica Energy to reduce to more than half its outstanding debt to the gas company.
The payment was done in two instalments between April and July this year bringing the remaining arrears to 31.2million US dollars (about 49.92bn/-), which Orca reclassifies as a long term receivable.
Orca’s Chairman and Chief Executive Officer, W. David Lyons said in a statement issued on day that the firm working capital decreased by 59 per cent during this year’s second quarter to 22.5 million US dollars, primarily due to the reclassification of the debt.
“Turning receivables into cash has continued to be a challenge and delayed payments from TANESCO have continued to seriously impact Orca’s cash balances,” Mr Lyons said.
The firm said establishing regular current payments are also a key Orca objective for management to stop the accumulation of arrears and ensure that operations can be maintained.
“As we reported in first quarter, the company can maintain operations from Industrial Gas sales alone,” the CEO said adding “however, Orca requires regular payments to honour its obligations to pay taxes.”
Orca’s chairman said the company remains confident that it will receive all amounts owing from TANESCO. Despite the diligent efforts of the government the ongoing irregularity of payments makes the assessment of timing difficult.
In addition to reflect the effect of the timing of payments in the present value of the receivable management has taken a 7.9 million US dollars charge against second quarter earnings to reflect its current estimate of the timing of collection and the cost of money.
In the same quarter that ended this June, the gas firm posted a loss of 6.8 million US dollars compared to profit of 3.0 million US dollars of first quarter of this year.
During the quarter under review, Orca completed additional reservoir modelling to assess the deliverability of the Songo Songo Main and North Fields.
In its design for the National Natural Gas Infrastructure Project, NNGIP, the government had contemplated total Songo Songo Protected Gas and Additional Gas production of approximately 190 millions of cubic feet per day to feed the new pipeline under construction.
“In this context, management delivered a development plan to the Ministry of Energy and Minerals in mid-July to meet the anticipated demand for gas and infrastructure capacity,” Mr Lyons said.
The plan contemplates a combination of work overs and capital drilling to fully exploit the Songo Songo Main and North Fields. It would require initial reworking and recompletion of four wells through 2014.
– Tanzania Daily News