JK furious over state of IPTL

President Jakaya Kikwete has ordered the immediate resumption of the process meant to see the Independent Power Tanzania Limited (IPTL) plant in Dar es Salaam turn from diesel to gas in the generation of electricity.

He issued the order in the city yesterday after being briefed on the IPTL project by Energy and Minerals minister William Ngeleja at a ceremony to inaugurate a 100MW gas-fired power plant at Ubungo.

The President expressed grave concern and surprise over the ministry`s decision to suspend the process, which was initiated about three years ago.

In brief remarks on the project, the minister had explained that the process was halted because there was a pending court case on the matter.

Malaysia`s Mechmar Corporation, the majority shareholder in IPTL, instituted arbitration proceedings in 2002 against the state-owned Tanzania Electric Supply Company (Tanesco) and the government over, among other things, non-payment of capacity charges.

But President Kikwete was unhappy with the minister`s explanation that the government had suspended the process, designed to see the first privately owned power generation plant in Tanzania start using the country`s rich natural gas deposits to generate power.

``Converting IPTL power generators from using diesel to gas is a process of fundamental importance which should not be stopped because it stands to lead to a five-fold reduction in power generation expenses,`` observed the President.

The decision to convert the IPTL generators was made by the government despite a pending legal dispute pitting it against the plant`s owners.

President Kikwete underlined the fact that the ongoing legal wrangle could take very long to resolve, which would mean consumers continuing to bear needlessly high electricity charges.

He said Tanzania was experiencing ever rising demand for electricity and needed strategies with which to address the problem more comprehensively and effectively than has hitherto been the case.

``One of the government`s plans is to reduce dependence on hydro electricity in preference for other sources of power, evidence of whose implementation is today`s launch of this 99.4bn/- plant,`` he elaborated.

The President assured Tanesco, which will operate the plant, of continued government support.

He promised to use his experience as a former Finance Minister to seek funds the ailing utility company could invest in new power generation and supply projects.

Tanesco managing director Idris Rashidi had earlier told the President that they were committed to making the country depend as little on hydro-electric power generation as practicable.

He said that, as part of the firm`s diversification plans, another 45MW gas-fired plant has been commissioned and was expected to be operational by early next year.

Dr Rashidi explained that Tanesco had already approved the Kinyerezi 240MW gas-fired electricity generation project and a Tanzanian contractor, Pan Africa Company Limited, had been earmarked for the work under the Public-Private Partnerships (PPP) arrangement.

He noted that a number of power generation projects were still at the discussion stage or under the first phase of implementation.

They include the 60MW heavy oil Mwanza one, the 200MW Kiwira coal-fired one expected to become operational between 2010 and 2011, and the 50MW Singida wind-generated one.

According to the Tanesco MD, the 200-300MW Mnazi Bay project now being discussed by the government and the contractor (Artumas Company) could become operational in 2012.

It would supply electricity to both the southern regions and the national grid.

Among Tanesco�s other plans are the construction of transmission lines like the 650-km 400Kv one linking Mwanza to Shinyanga and the 500-km 400Kv one to run from Chalinze to Arusha via Hale to boost power supply in Tanga Region.

Minister Ngeleja said the government was keen to make electricity more accessible to wananchi, thus facilitating their implementation of profitable projects that would help eradicate poverty.

``Electricity is a crucial input in the government`s efforts to eradicate poverty. The inauguration of this 100MW plant, whose power will feed into the national grid, is testimony to this determination,`` he noted.

SOURCE: GUARDIAN, November 5, 2008