| DAR ES SALAAM
DAR ES SALAAM Dec 31 Tanzania's energy
regulator has approved a power tariff hike of 8.53 percent by
the state-run utility, less than half of what the utility said
it needed to stem losses.
The Tanzania Electric Supply Company (TANESCO) had sought an
18.19 percent tariff increase to snap a loss-making trend and
clear debts to independent power producers and fuel suppliers.
The tariff hike takes effect from Jan. 1, the Energy and
Water Utilities Regulatory Authority (EWURA) said in a statement
"The proposed tariff increase intends to cover TANESCO's
cost of operation and fund its capital investment programme,"
said the regulator.
"The increase will also enable TANESCO to demonstrate its
bankability to donors offering concessionary loans or grants."
The regulator said the average tariff would now be increased
from 242.34 Tanzania shillings ($0.1114) per kilo-watt hour to
The cash-strapped public utility has been seeking loans from
the World Bank, the African Development Bank (AfDB) and
commercial lenders to turn around the company and return to
TANESCO said it was currently selling power at a loss,
causing it to be unable to clear its long-standing arrears and
invest in new power plants.
Energy costs are among the biggest drivers of inflation in
Tanzania. The country's overall inflation rate edged higher to
4.8 percent year-on-year in November, from 4.5 percent in
EWURA said the power tariff increase initially sought by the
power firm would have hurt users from commercial, industrial and
A local cement maker, Simba Cement Company Ltd, had opposed
the tariff hike, saying it would increase production costs while
the quality of power supply remained poor.
TANESCO has not addressed the issue of operational
inefficiencies and poor cost management, said EWURA.
Despite having reserves of over 57 trillion cubic feet (tcf)
of natural gas, Tanzania has been facing chronic power shortages
over the past decade due its reliance on drought-prone
($1 = 2,176.0000 Tanzanian shillings)
(Editing by Elias Biryabarema and Stephen Powell)