Tanzania’s energy regulator said today it would invite stakeholders to a discussion on plans by the country’s power distributor to increase tariffs by almost 20 per cent.

Tanesco’s application for the review to cater for changes in fuel, inflation and exchange rates had since last week sent shock waves across the various categories who said the increase would make life harder.

The Energy and Water Utilities Regulatory Authority (EWURA), however, says there will be consultations to determine if the 18.19 increase that would have come into force in January 2017 is justified.

Tanesco Managing Director Felichesmi Mramba said the proposed tariffs were for automatic adjustments which are reviewed on a quarterly basis.

“These adjustments will enable Tanesco to fund its operational costs, capital investment programme, to demonstrate its bankability to donors offering concessionary loans and grants, to increase capacity needed to meet system peak demand and to adequately fund and ensure a consistent and stable supply of electricity on Tanzania”, Mr. Mramba said.

The proposed tariffs would have raised power supply costs from Tsh242.21 to Tsh286.28 per kilowatt hour (kWh).

“We see no reason to increase power tariffs. This is against the government of Tanzania’s promise to harmonize power costs as to stimulate industrial production and business”, said Confederation of Tanzania Industries (CTI) Director of Policy and Advocacy, Hussein Kamote.

Power consumption costs between 20 to 40 per cent of the total production costs to manufacturing industries in Tanzania.

Mr Kamote said higher power costs would derail Tanzania’s industrial development plans and make businesses less competitive in regional markets.

Tanzania government has announced in June its plans to invest nearly $ 1.2 billion (Tshs 2.4 trillion) in the Tanzania Electricity Supply Company (Tanesco) over the next 11 years in a move to help improve the investment potential of the utility company by attracting private sector investors to support improvements to generation, transmission and distribution facilities.

Energy reforms are expected to attract enough investments to increase the company’s generation capacity to at least 10,000MW and will connect at least 75 per cent of Tanzanians to electricity.

Tanzania Electricity Supply Industry Reform Strategy and Roadmap 2014 to 2025, the financing of power projects will move away from the government to the newly engaged private sector.