Dar rejects Tanesco tariff rates hike

MOVE by the Tanzania Electric Supply Company (TANESCO) to raise tariff rates and connection fees received a blow yesterday after all stakeholders rejected the proposal sent to the Energy and Water Utilities Regulatory Authority (EWURA).

EWURA Consumer Consultative Council and Government Consultative Council was firm like most other stakeholders in the meeting which was organised by the former to seek public opinion in Dar es Salaam.

They said the power utility’s move to hike tariff rates and fees would adversely affect the public, industrial sector, Foreign Direct Investment (FDI) inflow and lower customers’ base and revenue. TANESCO had proposed to increase tariff rates by 40 per cent and connection fees by between 196 and 280 per cent—which has caused huge public outcry challenging the firm’s proposals.

Presenting EWURA Consumer Consultative Council official stand, the Vice-Chairman, Mr Said Mohammed, said the council does not see any logic for TANESCO to hike connection charges from 280,000/- to 1.06m/- without submitting to EWURA a proper cost for purchasing equipment used for connections.

Mr Mohammed said the council had recognised that failure to collect its debts from customers, vandalism in infrastructure; thefts and electricity loss were among reasons for failure to operate efficiently.

He also cited the expensive contracts of Independent Power Tanzania Ltd (IPTL) and Songas as among the heaviest burdens thrown onto TANESCO adding that it was unfair for such burdens to be passed onto ordinary consumers.

TANESCO pays ITPL about 3bn/- every month regardless of whether the electricity is consumed or not. “TANESCO failed to submit to EWURA its master plan that would give a detailed analysis of the cost of services they are going to offer and failure to do so has made the Council also fail to satisfy itself on the viability of their programme,” said Mr Mohammed.

The Council also challenged TANESCO to reduce unnecessary expenses that have made the firm’s operational costs to continue skyrocketing which in the end affect the ordinary consumer. The Chairman for Power Crisis Committee from Tanzania Confederation of Industries (CTI), Mr Focus Laswai, advised the government to buy-off IPTL immediately and not by 2009 as earlier proposed.

The Chairperson of Government Consultative Council, Ms Juliana Lema, said the TANESCO request on tariff increase gives the council a hard time, and raised a lot of questions on how to advise EWURA board of Directors on the matter. “This is because TANESCO has failed to show us how they arrived at 40 per cent tariff rates increase while connection fees go up to between 196 and 280 per cent,” said Ms Lema.

She said the performance of TANESCO in collecting bills continued to go down whereby in 2004 it collected 108 per cent, dropping to 97 per cent and 87 per cent in 2005 and 2006 respectively.

“This trend goes contrary to the utility’s expectation to collect revenue of 96 per cent in the coming five years (2007-2011). The Council is keen to understand the programmes put in place to reverse this situation,” she said adding; “The Council would like TANESCO to state categorically whether or not the increase will affect the industrial sector in the East African market and if the country will remain favourable for FDI especially in the sector”.

Closing the meeting, the EWURA Director General, Mr Haruna Masebu, said they are going to make decisions based on the stakeholders’ opinion saying any dissatisfied party would be free to appeal before Fair Competition Tribunal.

Dar es Salaam was the last point for EWURA to seek public opinion on the matter after convening such meetings in Mbeya, Dodoma, Arusha and Mwanza --representing various zones in the country.

Source: Daily News, 23/11/2007