State asks for more gas to Tanesco

Mr Maswi

The government has directed Orca Exploration Group to increase  supply of gas to Tanesco to ensure that there is adequate power in the country.

"We have issued the directive because Ocra is not meeting the agreed quota for supplying gas to Tanesco for power generation purposes," the Permanent Secretary in the Ministry of Energy and Minerals, Mr Eliakim Maswi, told the 'Daily News'.

He, however, said that does not mean the country was facing imminent power shortage following reports of dwindling water levels in hyro-power generation dams.

The Orca's Chairman and Chief Executive Officer, Mr W. David Lyons had earlier said the ministry of energy issued the order on Monday to redirect all gas produced to Tanesco.

"Seeking to avert a serious power shortage, the Ministry of Energy and Minerals issued an order to the company to redirect all gas volumes to Tanesco … including volumes earlier reserved for industrial users to aid in emergency power generation," Mr Lyons said.

The CEO said Orca was in active discussions with Tanzania Petroleum Development Corporation (TPDC), the ministry and other affected parties to assess the implications of complying with this order.

"As the situation unfolds, the company will issue further details," Mr Lyons said  in a financial statement of this year's second quarter.

The Confederation of Tanzania Industries (CTI) was not in position to comment on the impact of the move on the manufacturers using gas as a source of energy for firing their plants.

Mzumbe University's Dar es Salaam School Senior Lecturer, Dr Honest Ngowi, said though the move was good to avert another power crisis but might have legal complications if gas buyers possess legally binding supply contracts.

"In short term the move will fuel inflation and job layoffs as it will push the cost of production up," Dr Ngowi said, "but also disrupt investors' plans as the government arm is interfering in the operations of the private sector."

"This might (also) lead to the taxmen to miss collection target as the period concerned is about one-third of fiscal year. This is too long a period to upset projections," Dr Ngowi said.

The move, as Dr Ngowi said, has more benefits to power producers than gas users because the latter are not many compared to manufacturers.

Source: The Daily News, http://www.dailynews.co.tz, reported by Abduel Elinaza

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