‘Hiked power tariff to affect industrial output’

The industrial sector output is likely to decline next year due to hiked power tariff, the Confederation of Tanzania Industries (CTI) has said.

Statistics show manufacturing sector posting more than 9 per cent growth rate in 2013 with most industries attaining over 50 per cent of its capacity utilization.

The sector also contributed over 20 per cent of the foreign exchange earnings after the mining sector and around 10 to 15 per cent of the formal employments generated during the period under review.

“There is little expectation for the industrial sector to perform well in the year 2014 due to increased power tariffs coupled with other hurdles like high transport cost, poor port services and too many regulatory bodies,” Hussein Kamote (pictured), the CTI Director of Policy and Research told ‘Daily News’.

He said increase of power tariffs would raise production cost and prices of various products, the burden to be passed to the final consumers.

To remain in the business, manufacturers have to either cut down production or increase prices to cover the cost, which at the end will affect profits.

The CTI official said the adjustments in the power tariffs would also push up inflation which remained stable in 2013. 

He said the government should take immediate measures to rescue the situation by implementing the Big Results Now (BRN) initiative particularly by ensuring the project intended to make the central railway line revitalized becomes a reality.

“Currently, ferrying goods by trucks from Dar es Salaam to upcountry regions is very expensive, the situation that could be eased by establishing an efficient railway line which is cost efficient,” he added.

Similarly, the gas pipeline project in progress would help to stabilise the availability of power, a necessary element in industrial production.

Also efforts should be directed to harmonizing the fees charged by regulatory bodies. 

Commenting on the decision to hike power tariffs, the Mzumbe University Dar es Salaam Campus lecturer Dr Honest Ngowi said it was a necessary evil as the state owned power utility firm, Tanesco needed the increased tariff to survive and be able to provide better and reliable services.
Source: Daily News, reported from Dar es Salaam, Tanzania
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