Power consumers to pay more as Tanesco seeks tariff hike

Tanzania Electricity Supply Company (TANESCO) envisages applying for power tariff hike as a result of government’s resolve to limit subsidies to the financially crippled public power utility firm from this financial year.

The government, in its letter of intent to the International Monetary Fund (IMF) in June this year, said it would limit subsidies to TANESCO to 105 million US dollars (about 200bn/-) in the 2013/14 financial year against the company’s projected financial needs of 352 million dollars (over 560bn/-).

The ailing power company have to submit fresh application to Energy and Water Utilities Regulatory Authority (EWURA) to request for power tariff hike to bridge the gap through additional revenue from electricity consumers.

TANESCO’s Acting Managing Director Felchesmi Mramba confirmed to the ‘Daily News’ in Dar es Salaam on Wednesday that the power firm intends to re-submit application for power tariff hike to Ewura, the energy and water sector regulator, after its proposal for a 155 per cent power hike was rejected in January.

Mr Mramba said the rationale behind the new proposal is to bridge the gap between revenue collection and operational costs, saying the company spends averagely 5.4bn/- daily on fuel to produce 365 MW of electricity from emergency power plants. The firm, however, collects only 2.34bn/-, daily.

He said TANESCO buys emergency thermal power at 50 US cents per kilowatt hour and sell the same at 12 US cents, creating losses that accrue to billions.

According to World Bank estimates, TANESCO’s arrears have jumped from 270 million US dollars as at the end of last year to about 500 million dollars, with the figure said to be growing at 30 million dollars monthly.

Mr Mramba said the new proposals would also seek to change the structure of the tariffs to have domestic and industrial users pay in accordance to their consumption. Under the current structure where TANESCO is subsidized from the state coffers, the entire public whether or not they use electricity, pay for running operations of the company, he said.

According to latest statistics it is only 20 per cent of the population estimated at 45 million has access to electricity. 

“Under the current system, the nonusers and small users are subsidizing large consumers of power. Our new proposals will seek to change that and have large customers subsidize the small users,” he said.
Source: The Daily News, reported from Dar es Salaam

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