TPDC: This is why we made Sh830bn loss
TPDC acting managing director Kapuulya Musomba. Photo |File.
What you need to know:
Despite of experiencing a loss of Sh829.5 billion in three years, Tanzania Petroleum Development Corporation (TPDC) is projecting to pay Sh100 billion as dividends to government in 2019.
Explaining the reasons for experiencing the loss, TPDC Acting Managing Director Mr Kapuulya Musomba said the firm plans connect six companies with natural gas to recover the loss and making profits.
Dar es Salaam. Tanzania Petroleum Development Corporation (TPDC) has explained why it incurred a loss of Sh829.5 billion during a period of three years, promising to give dividends to the government this year.
The loss, which occurred between the 2014/2015 and 2016/2017 financial years, was announced on February 2, 2019 by the Parliamentary Public Investment Committee (PIC) chairman Raphael Chegeni.
Explaining in a telephone interview with The Citizen, Mr Kapuulya Musomba, the acting managing director of TPDC said that the loss was mainly due to huge investments by the government in the construction of natural gas infrastructure in 2013 to 2015.
“We took a loan of Sh2.409 trillion, equivalent to $1.25 billion, from Exim Bank of China to fund the construction of natural gas infrastructure including the pipeline and processing machines at Lindi and Mtwara,” he noted.
According to him, it was difficult to realise profits in financial statements within a short time of three years after engaging in such huge investments.
The public firm recorded a loss of Sh341 billion soon after the completion of construction of the infrastructure in the financial year of 2015/15, according to him.
The other reason for the loss, according to him, was a depreciation of Tanzania’s currency (shilling) against the dollar. The shilling’s exchange rate went down to Sh2230 in 2016 per dollar, from Sh1600 per dollar in 2013.
“Due to appreciation of dollar against dollar a loan values increased by Sh170 billion, which is equivalent to 50.4 per cent of the whole loss,” he noted.
Again, Mr Musomba said that the loss was due to interest rate payments which reached Sh71.05 billion in 2016, contributing a 21 per cent of the total loss.
Further, the investment Si hivyo tu, depreciation was among the reason, as it contributed a loss of Sh61.50 billion, equivalent to 18 per cent of the total loss in 2016.
However, TPDC is confident that it will make profits this financial year 2018/19 and pay Sh100 billion as dividends to the government.
The hope is real as PIC committee showed a decline of loss to Sh157.2 billion in the 2016/17 financial year, well below than Sh293.7 billion in 2014/15.
“In making it possible, we have deducted our spending and some operational costs in order to make profits in this year,” he noted.
It again, projects to connect 6 newly large companies with natural gas before the end of this year in order to increase returns of the corporation.
