Tanzania Electric Supply Company Limited (Tanesco) eyes miners in new revenue plan

Musoma. The government is banking on mining firms to raise revenues for Tanzania Electric Supply Company Limited (Tanesco) as the utility firm starts operating profitably.

Large mining companies produce hundreds of megawatts of electricity using subsidized diesel for to meet their significant demand for better power alternatives.

For instance, the government-owned Stamigold, which is found at Biharamulo, Kagera, spends Sh1 billion every month on diesel for electricity generation.

But with improved generation and distribution capacity as Tenesco’s financial muscles improves, the government believes it was about time all mining companies were connected to the national electricity grid.

Energy minister Medard Kalemani told tanesco’s regional managers here yesterday to stop a tendency of waiting for customers to knock on their doors and instead, go out to look for business.

“Instead of waiting for customers to come to you, you are supposed to go to where they are. Go and knock on their doors. Give them forms to fill,” he said, adding that with enough capacity, there was no reason for mining firms to use expensive diesel-generated electricity.

He said it was through delivering electricity that’s connected to the national grid that mining firms will have their operating costs lowered hence, more revenues to the government.

He said in Geita for instance, all 32 mining projects have been connected to the national grid.

He said with Tanesco becoming a profitable entity, it was high time the money started being re-injected into power generation to meet demands of various segments.

“We no longer depend on government subsidies. We expect to register a Sh9 billion operating profit this year. In 2015, Tanesco’s revenues stood at Sh9 billion per week but this year, we are making Sh46 billion per week. If we can connect large mining companies, we will raise our earnings,” he said.

He urged mining companies to present their transformer requirements to Tanesco so the latter can avail them to the companies accordingly.

According to Mara Regional Commissioner Adam Malima, the region was home to a total of ten large scale mining projects, noting however that it was only Barrick Gold’s North Mara that was connected to the national grid.

During the debate for his ministry’s budget for the financial year 2019/20 in Parliament in May, this year, Dr Kalemani said Tanesco registered a loss of Sh349 billion in 2017 but the amount was reduced to Sh122 billion in 2018. Despite an improved in financial performance, Dr Kalemani noted that Tanesco was still wallowing in massive debts.

“In total, Tanesco’s debts stand at Sh957 billion. We are reviewing the debts but we remain confident that by 2026, we will have settled them all,” he said.

Most of the debts were acquired during the days when Tanesco purchased oil-fired electricity from independent producers.

“Some of these contracts have since been revoked,” he said in may, noting that the past tendency of importing electricity transmission poles from South Africa also contributed to the accumulated debts.

“At present, the poles are sourced domestically. The presence of companies that manufacture electricity metres (popularly known as Luku metres) and wires in the country has also significantly reduced the amount that Tanesco used to spend in importing the products,” he said.

Data from the ministry of Energy show that Tanzania’s demand for Luku metres currently stands at 450,000 units annually.

Tanzania’s two Luku metre manufacturers are capable of producing twice more than the market demand.

An imported single-phase Luku metre retails at Sh170,000 while those produced locally cost Sh120,000 per gadget.

Similarly, a three-phase metre was purchased abroad for Sh700,000 but the same costs Sh450,000 locally.