Tanzania: Why govt should bail out Tanesco

Electricity17 December 2013 -AN application by the Tanzania Electric Supply Company Limited (TANESCO) for a multi-year tariff increase of 67.87 per cent from the government’s energy regulator, the Energy and Water Utilities Regulatory Authority (EWURA) has been received with mixed feelings by Tanzanians from all walks of life.

Following the application made in October this year for a review of existing power tariffs, EWURA held a series of public hearing meetings last month in Shinyanga, Iringa, Bagamoyo and Dar es Salaam to get views from stakeholders.

The Confederation of Tanzania Industries (CTI), in its presentation at the public hearing in Dar es Salaam, proposed a reasonable tariff increase that would take care of the prevailing inflation rate and/or depreciation of the shilling, whichever was higher.

Later, CTI was co-opted into a task force of the Tanzania National Business Council (TNBC) and recommended cent, following detailed analysis of TANESCO’s application to EWURA.

Furthermore, the task force recommended that the government should exempt duties and taxes on fuel used by power generators.

TANESCO’s key argument supporting the proposed power tariffs increase is that the current electricity prices in Tanzania, which are the lowest in East Africa, are below actual power generation costs.

In November 2011, the lossmaking TANESCO submitted an emergency tariff application for an urgent tariff increase averaging 155 per cent across all customer categories, to be effective on 1 January 2012.

Recognizing TANESCO’s difficult financial situation, EWURA’s Board of Directors approved an emergency electricity tariff increase of 40.29 per cent pending determination of the final tariff.

EWURA opted to carry out a Cost of Service study which could be the basis for multi-year tariff increases for TANESCO for the period between 2013 and 2015.

A consultant, AF-MECADOS EMI from Spain, was engaged to develop a rate setting methodology (RSM) for the electricity sub-sector in Tanzania and a cost of service study (COSS) for TANESCO.


– Tanzania Daily News

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