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The East African : Aug 4th 2014
12 11-YEAR TURNAROUND STRATEGY Tanesco to go public, be split into three firms after $1.15b reforms At least 75 pe≥ cent of Tanzanians will be connected to elect≥icity afte≥ full implementation By ERICK KABENDERA The EastAfrican T he government plans to invest $1.15 billion in the next 11 years to implement its turnaround strategy for the Tanzania Electricity Supply Company, which includes selling part of the utility to the public. At least $412 million of the amount will be used to pay Tanesco’s debts in the immediate term, while $635 million will be used to pay capacity charges for existing independent power producers (IPPs). The strategy — one of the biggest energy reforms in recent years — will involve the private sector in raising the funds. Its full implementation will see at least 75 per cent of Tanzanians connected to electricity. According to the blueprint, the government hopes to increase installed generation capacity from the current 1,583MW to over 9,000MW, by expanding sources of electricity. Nearly 4,000MW will be generated from natural gas and 200MW from geothermal. The newly released energy blueprint dubbed Electricity Supply Industry Reform Strategy and Roadmap 2014-2025, shows that the implementation of the plan will engage the private sector in a shift that will see the financing of power projects move away from government hands. “A state-owned generation company will be established through unbundling from the transmission and distribution segment by December 2017. This is expected to intensify competition in power generation. The state generation company will be listed on the Dar es Salaam Stock Exchange, with the government retaining at least 51 per cent shareholding,” the blueprint reads. Currently, only 24 per cent of Tanzanians are connected to the grid. In rural areas, only 7 per cent of people have electricity due to low purchasing power. The government aims to increase the connection level to 30 per cent by the end of 2015. The implementation of the plan, which will start this The implementation will engage the private sector in a shift that will see the financing of power projects move away from government hands.” Blueprint President Jakaya Kikwete and officials from the Ministry of Energy and Tanesco inspect the Ubungo Power Plant in Dar es Salaam. Picture: File year, will see the generation function split from transmission and distribution by December 2017, with further plans of listing the three independent companies on the stockmarket in 2025. According to the roadmap, the government will adopt consumer-driven competition under which generators of electricity will compete in selling directly to distributors, retailers and final consumers. “Generators have access to both transmission and distribution wires based on regulated prices. Trading rules and arrangements are required for both transmission and distribution. Final customers may purchase power from the retailer or directly from a generator,” the document reads. Transmission companies will be owned by the government and will facilitate the supply of electricity from generators to distributors who will operate as separate companies. The companies, which will either be public owned or private, will sell power to retailers in their territories. This is expected to improve services and lower prices. Tanzania will be the third country in the region to implement such an unbundling after Kenya and Uganda. Tanzania is looking to learn from Kenya where similar reforms undertaken in 2009 helped the country attract private investors into the geothermal sector and significantly increased access to electricity from 16.1 per cent in 2009 to 29 per cent in 2013. The report says similar reforms in Uganda helped BLUEPRINT The government hopes to increase installed generation capacity from the current 1,583MW to over 9,000MW, by expanding sources of electricity. Nearly 4,000MW will be generated from natural gas and 200MW from geothermal. A state-owned generation reduce losses from 38 per cent to 26 per cent. The government has until next year to establish a taskforce to monitor the implementation of the roadmap and carry out a valuation of Tanesco’s generating, transmission and distribution segments. Furthermore, it will seek to reduce system losses from 19 per cent to 18 per cent by June 2015. Debt burden However, the blueprint warns that implementing such a plan without paying Tanesco’s debts would have an adverse outcome. Tanesco managing director Felichesmi Mramba told The EastAfrican that the introduction of the new tariff of 40 per cent in January has helped reduce the company’s deficit and improve its financial status. Losses have gone down by half, and it is expected that Tanesco will have paid off all its debts, currently amounting to Tsh450 billion ($270 million), by the end of 2015, and will start making profits from 2016, according to Mr Mramba. Mr Mramba said the com- company will be established through unbundling from the transmission and distribution segment by December 2017. The state generation company will be listed on the Dar es Salaam Stock Exchange, with the government retaining at least 51 per cent shareholding. pany is expecting to phase out most of the emergency power producers (EPPs) after the completion of the Kinyerezi 1 power project, which is expected to add 100MW to the grid by the end of this year. “Symbion Dodoma and Aru- sha, which produce 105MW, have been paid off, and efforts are underway to convert two EPPs, Symbion Ubungo and Aggreko, to gas, thus reducing costs,” said Mr Mramba. Jacques Morisset, the World Bank’s lead economist for Tanzania, Burundi and Uganda, said the decision by the government to increase tariffs, borrowing from commercial banks and receiving transfers from the central government seems to have improved Tanesco’s financial standing, and the level of arrears has stabilised. “The government has been investing in different projects to reduce the electricity production costs by shifting from fuel to gas. It is expected that the implementation of these investments will lead to lower production costs that will be aligned to existing tariffs,” said Mr Morisset. The EastAfrican NEWS AUGUST 2-8,2014 I am innocent, maintains Mutabazi By A SPECIAL CORRESPONDENT The EastAfrican LT JOEL Mutabazi, who is facing charges of terrorism, treason and conspiracy to murder, told a military court this week that he is innocent as prosecutors sought a life sentence for him. The former member of President Paul Kagame’s presidential guard, who was controversially extradited from Uganda last year, told the court as submissions from all sides closed Thursday that he is not guilty on a total of eight charges he is facing, once again reiterating his earlier position that he made statements under duress. Making his final submissions to the military high court in a seven-month long trial marred by retractions and change of heart by the majority of the 15 of his co-accused, Lt Mutabazi said that the judges should not consider the request of the prosecution. “The judges should clear me on all charges and order my immediate release because there has been lack of evidence to implicate me throughout the trial. Prosecution has been basing its arguments on the statements that I made under duress,” said Lt Mutabazi. Evidence He pointed out that the main evidence being relied on are statements he made during the interrogation process, during which he admitted to almost all the charges. He has since distanced himself from the confessions. “How can the same people who used all means available to them to kidnap me from a foreign country fail to use similar force to make me write a statement confessing to crimes I did not commit?” Lt Mutabazi asked. Lt Mutabazi said that he did not desert the army as prosecutors allege but that he fled the country in 2011 to save his life, which was under threat. Lt Mutabazi told the court that he knew that his request to leave the Rwanda Defence Forces officially would not be granted and he decided to flee. “I was detained incommunicado at Kami Military Barracks for 17 months where I was subjected to torture. My family did not know where I was. Upon release, I was not allowed to return to my home but I was put in another facility,” said Mutabazi, who at the time of his extradition had secured refugee status in Kampala. “I decided to find a way of escaping.” To date, it is not clear how Lt Mutabazi, who was in a United Nations High Commissioner for Refugees facility, ended up in the hands of Ugandan police officers, who handed him to their Rwandan counterparts, who effectively returned him to Rwanda to face trial.
July 28th 2014
Aug 11th 2014