Tanzania's erratic power supply hurts economic growth

The role of electricity in business is unquestionable, since power is most important energy form for small, medium and large-scale operations. Secured supply of electricity, high and well-defined quality standards are crucial to economic growth - and whole way of life.

On that background, erratic power supply harms badly businesses - especially industrial output thus lowering its contribution to economic growth. In this year second quarter (Q2) industrial contribution to GDP slowed to 6.9 per cent, according to the National Bureau of Statistics (NBS), from 10.1 per cent of the similar quarter last year.

There are several reasons behind the fall, but among them is erratic power supply that started to be experienced in May. The availability of stable power supply to industries started to deteriorate and plummetted to worse supply in the Q3.

The Confederation of Tanzania Industries (CTI), Director for Policy and Research, Mr Hussein Kamote, said manufacturing sector contribution to GDP in Q3 was expected to slow even further down.

“The sector contribution in this quarter (Q3) to GDP will be poor since power supply was rampant,” he said. “Even if the supply increases between now and end October, it is already too late to reverse the trend and boost output-simply because the quarter has ended,” Mr Kamote said.

The sector, according to Mr Kamote is sensitive to erratic power supply since manufacturers incur a number of extra costs to maintain smooth output with poor supply. The situation went from bad to worse after water levels in its hydro dams dropped drastically following long dry spells. The power supply firm, Tanesco, has cut its power generation capacity by up to 250 megawatts, resulting in rationing.

Tanesco said power generation at five hydro power stations had been drastically cut, while a sixth hydro power plant was shut down due to prolonged drought. However, Tanesco expects power supply to stabilise from October 20 when more gas-fired power turbines are going to be switched on.

Tanzania needs to generate 1,332 megawatts of electricity to avoid power cuts, but the current total power output is just 719 MW. Last week a 1.33 billion dollar project was inaugurated to pipe natural gas to Dar es Salaam and help to relieve chronic power shortages.

A fore challenge is to create supply ahead of demand. In 2012 study by the UK based firm Parsons Brinkerhoff indicates that the country’s power demand by 2038 is expected to increase to 7000MW.

Recent statistics by Tanesco show that Tanzania’s current power generation stands at 719MW while the demand is estimated at between 600MW and 829MW per day. 

In 2014, Tanesco released a new energy blueprint dubbed Electricity Supply Industry Reform Strategy and Roadmap 2014-2025. The blueprint plans to spend around 1.4 billion US dollars a year on power generation in a bid to propel the country’s energy sector forward.

The 2014-2025 roadmap shows that the government hopes to increase installed generation capacity from the current 1,583 MW to more than 10,000 MW over the next 11 years. The document shows that nearly 4,000 MW will be generated from natural gas and 200 MW from geothermal.

As of May 2014, Tanzania’s total installed generation capacity was 1,583 MW composed of hydro 561 MW (35 per cent), natural gas power plants of 527 MW (34 per cent) and liquid fuel power plants of 495 MW (31 per cent).

Manufacturers have it that the country has the lowest electricity tariffs in East Africa, but erratic power supply increase energy costs. They estimate that a big industry that is forced to install a big generator with 1000kVA capacity that guzzles 1,000 litres of diesel for ten hours roughly costs 2.0m/-.

This means if power is cut by 100 hours a month it has to cough up 20m/-. And worse, if power cuts persists factories closes down thus impacting negatively on people’s welfare and lowering their purchasing power.
Source: Daily News, reported from Dar es Salaam, Tanzania
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