TANESCO in talks to end monopoly

BAK · 2008-02-25T10:35:46+00:00

Do we know anything about this company? Do they know anthing about electricity? I hope it won't be another UFISADI project. TANESCO in talks to end monopoly -Set to lease part of national power grid to Canadian private operator THISDAY REPORTER Dar es Salaam AS the financial crisis in the state-run Tanzania Electric Supply Company Limited (TANESCO) continues, talks are now underway to lease part of the national power grid to a foreign company to deliver electricity to several regions south of the country. TANESCO Managing Director Dr Idris Rashidi confirmed to THISDAY that the public utility is currently negotiating a long-term lease agreement with Canadas ARTUMAS Group Inc. Under the proposed 20-year agreement, ARTUMAS will lease the power supply infrastructure in southern Tanzanian regions such as Lindi and Mtwara, and deliver electricity to consumers there. It is unclear when the negotiations on the lease agreement between TANESCO and ARTUMAS will actually be concluded. However, if all goes according to plan, this will be the first time that TANESCO leases its infrastructure in such a large scale to a private operator. Mtwara and Lindi Regions cover a combined area of 24,000 square kilometres, and are home to approximately two million Tanzanians. Although details of the planned lease of part of the national power grid to the foreign company are still sketchy, officials are confident the move will help ease the pressure on cash-strapped TANESCO. The public utility currently has a monopoly over power supplies throughout the country, with the governments stated plans for its privatisation to create three different entities - covering power generation, transmission and distribution respectively - still quite a long way off. Also still unclear is the question of whether ARTUMAS will be allowed to introduce its own tariffs, or maintain TANESCOs prevailing rates as approved by the Energy and Water Utilities Regulatory Authority (EWURA). The state-owned TANESCO generates around 560 megawatts of mainly hydro-powered electricity, and acquires an extra 200MW from independent power producers. The average peak demand of electricity in the country is approximately 700MW. TANESCO is currently hampered by a number of controversial agreements with private companies, including Songas, Richmond/Dowans, Independent Power Tanzania Limited (IPTL), Wartsila, Aggreko, Alstom, ZESCO and Kiwira, for the purchase of power. Apart from having to pay expensive energy charges whenever these mostly foreign-owned companies deliver electricity to the national power grid, TANESCO is also obliged to pay around 20bn/- in capacity charges every month, regardless of whether these companies actually generate electricity or not. ARTUMAS is currently developing an initiative dubbed The Mtwara Energy Project (MEP), which is an integrated gas-to-power project aimed at providing electricity to end users in Mtwara and Lindi Regions. The Canadian company holds an 80 per cent ownership position in the MEP, with the Netherlands Development Financial Institution (FMO) holding the remaining 20 per cent equity position. First electricity was generated at the ARTUMAS power generation facility in Mtwara on December 24, 2006. A subsidiary of ARTUMAS Group Inc., known as Artumas Group and Partners Power Company Limited (AG&P), has already been granted a provisional licence to operate an 18MW gas-to-electricity power plant. ARTUMAS is currently in discussions with the government, TANESCO, the Tanzania Petroleum Development Corporation (TPDC), and mining interests for the construction of a large-scale, 300MW generation facility in Mtwara and associated high-voltage interconnection to the national power grid. This proposed generation plant is to be fuelled by natural gas from Mnazi Bay, and is expected to link Mnazi Bay/Mtwara to the East African integrated power grid, encompassing Tanzania, Kenya and Uganda.

Thread starter BAK
Start date Feb 25, 2008

BAK

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TANESCO in talks to end monopoly

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