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December 11, 2012

Tanesco Proposal To Hike Tariffs Challenged

  Consumers complain of unbearable burden
  Consultant suggests lower rate of increase
Energy and Water Utilities Regulatory Authority director general Haruna Masebu stresses a point at an electricity stakeholders meeting called to discuss power charges recommended by Tanesco. (Photo: Omar Fungo)
The Energy and Water Utility Regulatory Authority (EWURA) Consumer Consultative Council has challenged the proposed automatic power tariff adjustment by the regulator, saying it implies over- protection of state-owned Tanzania Electric Supply Company (Tanesc0) at the expense of consumers.
The recommendations of automatic tariff adjustment were given by Spanish Based Company AF- MERCADOS EMI commissioned by EWURA to prepare a formula of calculating power tariffs and evaluating actual costs by Tanesco in providing power services in the country.
Speaking yesterday in Dar es Salaam at a public hearing of the Tanesco application, EWURA- CCC Chairman Saidi Mohamed said adjusting power tariffs whenever there was a rise in fuel prices, inflation or poor exchange rates protected only Tanesco, forgetting its consumers.
He added that allowing automatic adjustment formula into the Rate Setting Methodology implies that electricity charges will automatically change on regular basis (monthly or quarterly) depending on three highly volatile parameters, namely fuel prices, inflation and the foreign exchange rate.
“The resulting price fluctuation will defeat the fundamental objectives of price stability stated in the Electricity Act of 2008,” he said. Other power stakeholders rejected the proposed 155 percent increase in power tariffs by Tanesco, arguing that the company should abandon the traditional system of depending on one source of income which was a burden to power consumers.
One of the stakeholders Flatern Kashanga from the University of Dar es Salaam criticised the company, saying it sought to exploit the ordinary people by proposing high power tariffs.
He said power was a social service similar to health and education and thus should be accessed by the majority of the people.
He challenged the government to not only subsidise the company, but also look for ways to reduce power tariffs especially as the country had discovered gas.
He said Tanesco’s plans to reach about 80 percent of the total population could not succeed with the imposition of the proposed tariffs.
Abduel Elinazi a resident of Ilala said that the company should make sure that its services are improved to meet customer expectations, advising Tanesco to use social media to hear their views.
For his part Confederation of Tanzania Industries Director of Policy and Advocacy Hussein Kamote said there should be thorough discussion before endorsing the proposed tariff rise of 81 per cent as it could kill local industries.
EWURA Director General Haruna Masebu said the regulatory body was seeking stakeholders’ views on the increase of power tariffs by 155 per cent as proposed by Tanesco on November 9, last year.
He said that on their proposal, Tanesco requested the change of the power tariffs by 155 percent so as to cover the cost of emergency power generation and operational costs.
He explained that Ewura by taking into consideration suggestions from stakeholders such as power consumers, research institutions, Tanzania Meteorological Agency (TMA) approved the interim increase of power tariffs by 40.29 percent.
However, Masebu added that the Authority hired a consultant firm AF- MERCADOS EMI from Spain to prepare formula for calculating the power tariffs and evaluating the costs of Tanesco in providing power services in the country.
He said the report has already been submitted by the consultant specialist and has indicated new power tariffs for the period of three years to come from the year 2013 to 2015.
According to him, the consultant report proposes that the average power tariffs should increase from the current average of 195.97/= per kilowatt hour (kWh) to the average of 253.76/= kWh for the year 2012 equals to 29.5 percent.
He said for the year 2013 it should increase to the average of 265.65/= kWh equal to 4.7 percent and for the year 2014 it should increase to the average of 268.03/= kWh equals to 0.9 percent while for 2015 it shall increase to the average of 291.19 kWh which is also equals to 8.6 percent.
For his part Tanesco Acting Managing Director Felchesmi Mramba said that the company decided to propose the increase of power tariffs after the drought which hit the country causing the shortage of about 350 megawatts of electricity.
He said the situation forced the company to enter into contracts with companies generating emergency power of 400 megawatts by using of oil which according to him was very costly.

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