Orca lowers gas price to industries

Average industrial gas price has gone down by 9.0 per cent in the first quarter of this year, but local manufacturers say the reduction is not yet a big deal.

Orca Exploration Group Inc. that operates the Songo Songo natural gas field said in a statement that on average the price went down to 7.78 US dollar per 1000 cubic feet of gas (Mcf) in first quarter this year from 8.56US dollar/ Mcf of last year fourth quarter.

The firm said the decline in price was partly a result of applying contract terms applicable for 2013 as agreed with the largest industrial off-taker of natural gas. The agreement between Orca and largest industrialgas consumers took place in January, this year, the firm said in its first quarter financial statement.

But local manufacturers said the reduction in price of gas was insufficient to bring relief to consumers. They said it would only increase manufacturers' competitiveness edge locally and regionally.

Confederation of Tanzania Industries (CTI) Chairperson Felix Mosha said that the reduction would only increase the competitive edge instead of lowering prices as "is very little to be felt by heavy producers."

"It will slightly send relief to manufacturers but not to consumers... the chances of seeing a relief to consumers is when the reduction is at least between 15 to 20 per cent," Mr Mosha told the 'Daily News' in an interview.

"It is a relief, but not substantially high to be felt by end users... Remember manufacturers also use electricity, which its tariffs are higher compared to other players in the (East African) bloc," he said.

The firm, which its subsidiary, PanAfrican Energy, is a sole distributor of natural gas in the country, said on average power sector gas price went down by 2 per cent. 

The prices for power sector gas declined in the first quarter to 3.55US dollar/Mcf over last year fourth quarter of 3.61 US dollar/Mcf.

"... (This is) a result of slightly lower volumes to the power sector which combined for a lower price under the terms of the PGSA (Portfolio Gas Sales Agreement)," Orca said. 

On other hand the industrial sales volume increased by 7 per cent to 13.1 million cubic feet (MMcfd) from 12.2 MMcfd in the fourth quarter in 2012.

However, power sector sales volumes essentially unchanged over the previous quarter at 48.5 MMcfd. During the quarter under review Orca said "there were no payments received from TANESCO."

At 31 March 2012, TANESCO owed Orca 48.8 million US dollars that included arrears of 44million US dollars compared to 33.3million US dollars--including arrears of 28.4 million US dollars as at the end of December 2012.

"Capital cost pools were depleted in fourth quarter 2012, which resulted in a significant reduction in net revenues, earnings and funds from operations," the statement shows. 

Accordingly, revenue was down by 36 per cent to 13.2 million US dollars in the first quarter of this year over fourth quarter in 2012, 20.7 million US dollars.
Source: The Daily News, reported from Dar es Salaam
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