Tanesco to go public in Tanzania plan to free energy sector

Saturday January 2 2016

Tanzania Electric Supply Company Ltd main

Tanzania Electric Supply Company Ltd main station in Dar es Salaam. Tanzania is encouraging investors to generate electricity from coal, gas, hydro, solar, wind and thermal energy. PHOTO | FILE 

By APOLINARI TAIRO

The listing of Tanzania’s power utility firm on the Dar es Salaam Stock Exchange will be the highlight of the government’s plans to attract private investors to the energy sector this year.

The government aims at increasing power production sevenfold — from 1,400MW to 10,000MW by 2025.

It has come to the conclusion that the sector needs to be liberalised to expose Tanzania Electric Supply Company Ltd (Tanesco) to competition. In addition, the company will be split into two arms — one handling generation and the other transmission and distribution.  

“We invite local investors capable of generating 100MW to 5,000MW or more to come up. This will ensure the country has sufficient power supply for 10 or 20 years to come,” Energy and Mining Minister Sospeter Muhongo said.

Prof Muhongo said the investors would be encouraged to generate electricity from coal, gas, hydro, solar, wind and thermal to realise an energy mix that delivers reliable and cheap power.

He said that up to 49 per cent of the company would be sold to the public, with the government retaining a controlling stake. The majority ownership of the utility would support the company with sovereign credit guarantees for expansion capital.

The move by the Tanzanian government to attract private investors in the power sector has been driven by the increasing demand for electricity. Although 750,000 households are connected to the national grid, Tanzania has a supply deficit of 1,000MW that has led to loadshedding.

The government plans to invest $1.2 billion (Tsh2.4 trillion) in Tanesco over a decade, giving three in four of the country’s households access to electricity.

Under the Tanzania Electricity Supply Industry Reform Strategy and Roadmap 2014 to 2025, the financing of power projects is to be left to the private sector.

Tanesco will be unbundled into transmission and distribution and generation units by December 2017. A special department has been set up at the ministry to find ways of easing investor entry into the sector.

During a meeting with President John Magufuli a month ago, investors expressed frustrations over unreliable and inadequate electricity.

Tanzania Private Sector Foundation chairman Reginald Mengi said local investors should be given the opportunity to invest in the energy sector.

“Poor power supply and higher prices increase the cost of production, which in turn makes our businesses uncompetitive internationally,” said Mr Mengi.

National Social Security Fund director general Dr Ramadhani Dau said the pension fund would generate 300MW from coal, gas and sisal by-products to feed the national grid once modalities for investing in the sector are concluded.

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