Local firms up in arms over Tanesco international tender

Dar es Salaam. A misunderstanding is simmering between Tanzania Electric Supply Company Limited (Tanesco) and players in the electric and electronic manufacturing sub-sector as the state-owned power utility firm floats a new tender.

The bone of contention between the two sides stems from a tender for supply of distribution materials under a two-year framework agreement.

Foreign competitors

While Tanesco is convinced the terms and conditions of the tender are meant to help the firm to serve Tanzanians better, electric and electronic manufacturers are of the view that they [the terms] are simply meant to deny them business to the advantage of their foreign competitors.

Members of the Tanzania electric and electronic manufacturer (Teema) told The Citizen that the new tender system threatens the survival of the domestic industries and jobs of over 20,000 locals.

Teema chairman Mahende Mugaya said they didn’t seem to understand why the utility company decided to make an international competitive tender inviting foreign companies whilst the domestic suppliers have the capacity in terms of quantity and quality to provide the meters at an even cheaper price.

“For the past five years, we have been supplying Tanesco even without being paid a cent in advance, because while payment must be scheduled 45 days after delivery they can even delay to 60 or 100 days, but we have never complained,” he said.

“So, while we’re still owed by them, they still want to take this money outside, so we think they are strangling us,” he said.

According to Mr Mugaya, there are ten domestic manufacturers in the country who have invested over $20 million in their factories and are both certified by Tanzania Bureau of Standard (TBS) and meet the basic international specifications.

He said most of the companies were established between the past five to six years as the government implemented its industrialisation policy, while assuring support to local manufacturers.

Better terms

“International suppliers are mostly big, and economics shows major companies have less financial limitations thus they might have not only cheaper but better terms than us,” said Mr Mugaya.

Teema member Saiyed Abbas Bukhari said in the new tender where Tanesco has announced three lots, they will ultimately cause job losses as some manufacturers and supplies would remain idle for the next two years without business forcing them to retrench.

“It is going to harm us and specifically our staff. Manufacturers employ between 1,000 and 2,000 workers. These are firms owned by Tanzanians and some foreign nationals who came to Tanzania to invest,” he said.

Responding, Tanesco managing director Maharage Chande said the firm was in no way trying to minimise opportunities for local manufacturers but observing the law as per the regulations set by Public Procurement Regulatory Authority (PPRA) directed all tenders above Sh5 billion to be open for international bidding.

Local companies

In addition to that he said still the local companies have an advantage as per the Section 37 of the Public Procurement Act (Cap.410) local goods and firms must be awarded margin of preference of up to fifteen percent in any international competitive tendering.

“In this way, the law protects local suppliers and at the same time deters curtails,” he said.

Expressing existing challenges on using local suppliers, Mr Chande said: “At the moment we have 84,000 customers who are waiting to be connected, reasons being we have suppliers who have orders but are not supplying timely to Tanesco. For example, out of 263,000 LPOs that are sitting with suppliers as of May, 2022 they have supplied less than 100,000. This has to stop,” he said.

According to Mr Chande, the utility firm has been emphasizing on improving customer service and experience which include but not limited to connecting new customers, resolving faults for customers and providing information on a timely basis.

“To deliver these services we use meters, cables, transformers and poles. It is therefore imperative that we streamline the way we source these items,” he said.

Sort out concerns

Mr Chande said the firm was very much ready and open to have a discussion with the local manufacturers to sort out the concerns that exist and find a way forward.

“The management wants local companies to win, and as Tanzanians we also want our domestic manufacturers to be able to do business, thus I am ready anytime they can call and arrange a meeting with me to discuss,” he said.