Why Tanesco halted talks with investors

Dar es Salaam. The Ministry of Energy has revealed the reason why the Tanzania Electric Supply Company (Tanesco) suspended discussions with prospective private investors who had shown interest in investing in power generation using various sources.

The acting assistant commissioner for energy development at the ministry of Energy, Mr Juma Mkobya, has confirmed that discussions with private sector operators on production of power using wind, water, coal and natural gas as sources have been halted.

“The private sector wanted the government to fully guarantee the projects, and also for Tanesco to pay the capacity charges that would arise. However, the government was not ready to take up the burden – and that was the main reason for suspending the discussions,” Mr Mkobya told BusinessWeek.

Apparently, the government welcomes investors to produce energy and sell same to consumers. But, it is not ready to take up any part of the burden.

“But, because we already work together with the private sector, there is a committee that was formed during the latest Tanzania National Business Council (TNBC) meeting to work on all concerns raised then – and we hope that it will come up with workable plans in due course,” Mr Mkobya said.

Mr Mkobya was responding to the directives given during the 11th TNBC meeting which brought together over 200 business operators, and which was chaired by President John Magufuli, whereat a number of concerns were raised by energy stakeholders.

During the meeting, Mr Salum Shamte – who represented energy stakeholders – said they had a long discussion with Tanesco that ended in May last year without reaching a working solution.

Noting that lined-up projects included ‘Wind-East Africa Energy (100MW); Masigira Hydro (70MW); Songo Songo natgas (60MW); Kilwa natgas (320MW), and Mbeya Coal (300MW), Mr Shamte said the government’s target is to generate 5,000MW by year-2020 – and 10,000MW in 2025.

“We are worried whether we can achieve that if private sector projects will not be part of the overall production,” he said.

There is a real possibility for industries to lack electricity as Tanzania still lags behind.

World Bank statistics show that South Africa generates 4,228KV per person, and Kenya: 116KV – while Tanzania generates only 99KV per person. The country needs to generate at least 400KV per person if we are to meet the set industrialisation goals.

“We want the government to finalize the discussion on those projects” Mr Shamte said.

Last year, the College of Engineering and Technology (CoET) revealed that there was a potential of 480MW which can be produced by using small hydropower technologies.

And, while the current potential in small hydropower is 480MW, large hydropower potential stands at 4,700MW – including the envisaged Stigler’s Gorge power plant (2,100MW).

Tanzania also has at least 500MW potential for wind energy. But the government is still struggling to develop the wind energy sub-sector.