Electricity: Why govt means business next financial year
Dodoma. Energy minister Medard Kalemani yesterday asked Parliament to approve Sh2.142 trillion for the ministry for the 2019/20 financial year.
A whopping 95.1 per cent of the entire budget will be spent on three strategic projects.
This partly explains the importance that President John Magufuli’s government attaches to projects that are key to Tanzania’s industrialisation agenda
The three strategic projects that will take the lion’s share of the ministry’s budget are Stiegler’s Gorge hydroelectric dam, the third phase of rural electrification and extension of the Kinyerezi I gas-to-power project.
A joint venture comprising Egyptian firms Arab Contractors and Elsewedy Electric is currently building the $2.95 billion (Sh6.6 trillion) Stiegler’s Gorge dam, which will add a total of 2,100MW to the national grid upon completion.
The project last month received a boost when CRDB Bank Plc and United Bank for Africa (Tanzania) joined Africa Export-Import Bank (Afreximbank) and some Egyptian lenders in extending $737.5 million in bank guarantees to Tanzania Electric Supply Company (Tanesco), paving the way for the project’s execution.
Speaking in Parliament yesterday, Dr Kalemani said Sh1.86 trillion would be set aside for the three projects in the coming financial year.
Going by the 2019/20 budget framework unveiled earlier in the year, the three projects will gobble up 15.12 per cent of next financial year’s development budget.
The framework put the total budget at Sh33.1 trillion, of which Sh12.3 trillion will be for development expenditure.
Sh1.44 trillion is to be set aside for the Stiegler’s Gorge project, while rural electrification and the Kinyerezi I extension will receive Sh363.11 billion and Sh60 billion, respectively.
Dr Kalemani said Sh2.11 trillion would be set aside for development expenditure during 2019/20, with Sh1.95 trillion of the funds being sourced locally, while Sh160 billion will come from foreign sources.
Only Sh26.33 billion, equivalent to 1.2 per cent of the budget, will be for recurrent expenditure.
Well funded
While some ministries have received tiny fractions of their development budgets, the Energy ministry was well funded during 2018/19.
According to Dr Kalemani, until May 15, 2019, the ministry had received Sh1.22 trillion of its entire Sh1.66 trillion budget for the current financial year.
“The money includes Sh688.65 billion in advance payment to the contractor for the Rufiji Hydroelectricity Dam (Stiegler’s Project) and Sh169.71 billion in foreign financing for Rea projects as well as Tanesco’s Sustainable Energy for All (SE4All),” he said.
Opposition’s voice
But the Opposition demanded that the government submit the Stiegler’s George contract to Parliament for scrutiny.
The Opposition’s spokesman on energy, Mr John Mnyika, said there was suspicion surrounding the environmental impact assessment report for the project.
He added that the government should also bring to the House the contract for the laying of the natural gas pipeline between Mtwara and Dar es Salaam.
The Opposition also called for a status report on implementation of the findings of the committee appointed by Speaker Job Ndugai to investigate the prospecting and extraction of natural gas.
End of power rationing?
During 2018/19, the installed capacity for electricity generation rose by 84.43MW to 1,601.9MW.
“Out of the 1,601.9MW, 1,565.72MW have been connected to the national grid, while the remaining 36.18MW is outside the grid,” Dr Kalemani said.
This means that Tanzania now has 300MW of surplus electricity.
“That is why we did not have power rationing in 2018/19. We now have 300MW of surplus electricity. In 2015, we had a generation deficit of 100MW,” Dr Kalemani said.
