How Tanzania natural gas users are saving millions

Summary

The Citizen has established that Serena Hotel has been saving up to Sh39 million a year by switching its cooking and heating machines to natural gas systems. Previously it used diesel.

The hotel uses 0.03 million cubic feet of natural gas a day.

Dar es Salaam. Factories, hotels, households, cars and power generations that use natural gas have reduced their operational costs by an average of 40 per cent, it has been revealed.

A survey by The Citizen has established that has been the case unlike users of expensive fuel such as heavy furnace oil (HFO), diesel, petrol and jet fuel, which have been imported.

Serengeti Breweries Limited (SBL) is among 37 factories that use natural gas.

It was connected in 2007, switching from HFO and diesel. It consumes at least 0.09 million cubic feet of natural gas daily.

Since then, it has reduced its operational costs at between 15 and 20 per cent, according to SBL director John Wanyancha.

SBL uses natural gas for heating and power generation in the factory, according to him.

“We currently save a lot of money,” he said, without giving figures.

The Citizen has established that Serena Hotel has been saving up to Sh39 million a year by switching its cooking and heating machines to natural gas systems. Previously it used diesel.

The hotel uses 0.03 million cubic feet of natural gas a day.

The hotel’s assistant engineer, Mr Shaaban Seif, said some Sh60 million used to be spent annually on diesel, but the amount had fallen to Sh21-22 million.

“The operational burden was too high while the profit was little. But the situation has now changed as the hotel generates enough profits.”

The gas is friendly to the environment, according to him, as workers of his department no longer complain about smoke disturbances as it was before.

A recent report by the Tanzania Petroleum Development Corporation (TPDC) shows local factories that use natural gas as a source of energy saved up to Sh2.1 trillion between 2004 and 2017.

Until December 2017 according to TPDC, 37 factories consumed a total of 71.647 billion cubic feet of natural gas worth Sh1.23 trillion.

Such factories could consume 1.865 billion litres of imported liquid fuels during the period and would have to pay at least Sh2.6 trillion ($1.156 billion) as free on board fees.

They would also be required to pay Sh683.8 billion as insurance for freight and other local charges.

Additionally, TPDC acting managing director Kapuulya Musomba said they would have used dollars to import fuels.

By using gas, they simply used shillings, according to him.

Capital woes remain a nightmare for many industries to access natural gas although gas is less costly.

According to Mr Musomba, although Tanzania has 49,243 industries, only 37 use natural gas.

“Demand for industries to be connected with natural gas is too high, but we’re short of funds to do so,” he said.

According to him, currently companies provide funds for constructing infrastructure to their plants, and being refunded in operational returns.

The lack of specific industrial areas is a bottleneck for connecting natural gas.

“Factories are scattered! We find it difficult to construct infrastructure to every single plant,” he said.

He believes that, if factories were in a single area, it will be easy to provide them infrastructure.

Tanzania Electric Supply Company (Tanesco) is a major consumer and buyer of natural gas, taking an average of 90 million cubic standard feet every day, according to Mr Joseph Kavishe, an officer from Gas Supply Company Limited.

In 13 years, 337.58 billion cubic feet of gas worth Sh1.8 trillion were consumed to generate electricity, a TPDC report shows.

Has Tanesco, imported fuel it would have to pay at least Sh15.1 trillion ($6.65 billion) during the entire period to import 10.934 billion litres.

It would also have paid Sh8.7 trillion ($3.848 billion) for fuel insurance, freight and other local charges.

“So, Sh22.1 trillion, equivalent to $9.7 billion, was saved between 2004 and 2017,” the report reveals.

Ms Enerica Nyinje, is a resident at Mikocheni in Dar es Salaam. She uses natural gas cooking, after shifting from using liquefied petroleum gas (LPG) and charcoal.

With a family of five, she used to spend at least Sh20,000 to buy six kilos of LPG or Sh60,000 for charcoal a month.

Currently, she has been spending Sh10,000 a month since she started using natural gas in May this year.

“One unit of natural gas is sold at Sh1,000, which takes up to three days. Only 10 units are enough for a whole month,” she said.

Switching to natural gas, Ms Nyinje said, had reduced the amount of money she used to spend on LPG by a half and over 66 per cent for charcoal.

The TPDC report reveals that a household of 6-8 people can save up to Sh65,324.39 a month by using natural gas for cooking instead of charcoal.

This means the household can consume natural gas worth Sh30,000 a month.

The same family may also consume 90 kilos of charcoal worth Sh92,177 a month, according to the report.

The same family can save up to Sh55,086.6 by using locally sourced natural gas instead of imported LPG.

The report shows that one kilo of LPG costs beSh3,000-3,400 and such household may consume at least 0.8 kilos of LPG a day.

At the end the family is able to consume about 24 kilos a month costing Sh72,000-Sh81,600.

TPDC report shows that in 13 years, the government has saved $401,176 for using natural gas in institutions, households and vehicles.

The majority of Tanzanians still use charcoal and firewood for cooking although the country has more than 57 trillion cubic feet of natural gas.

According to data by Energy Access Situation Report (EASR 2016), 71.2 per cent of households still use firewood and charcoal for cooking.

The statistics also reveal that 7.2 per cent of Tanzanians use LPG while others use other sources of cooking energy such as electricity, kerosene and wind.

Tanzania has 9.36 million households, according to the national census of 2012, but only 32 households have been connected to the natural gas system.

Only two institutions use natural gas and only 70 cars which have been connected to natural gas.

Natural gas is the main and preferred raw material for urea fertiliser manufacturing, but there is no single such factory.

Three fertiliser companies have shown interest to establish plants due to high pricing of the commodity.They are Helm AG of Germany, Ferrostal Industries Project GmbH of Germany and Capital DW Fertiliser Company of Egypt.

Mr Musomba told The Citizen that the fertiliser plants cannot afford the existing price unless they get subsidy from the government.

“After prolonged discussions between government and the companies, agreement was to sell natural gas at $2.6 per cubic feet but manufacturers said they could not afford,” he said.

According to him, fertiliser plants demand huge amounts of natural gas during operations, making them difficult to operate if the price is high.

The gas will be used as electricity in factories and at the same time as raw materials to produce fertilisers especially Urea.

They are afraid that farmers could bear the burden at the end by purchasing fertilizers at exorbitant prices, according to him.