Songas to cut power off if debt-ridden Tanesco doesn’t pay the Sh80bn it owes

Tanesco’s power supply if the state-owned utility does not pay a $51 million (about Sh80 million at the current exchange rate) bill for the past six months.
The firm supplies about a quarter of the electricity Tanesco supplies to its own customers. Should it go ahead, most of the country will be plunged into darkness. “Songas needs the money to maintain its facilities and it may have to shut down if the payment is not made soon,” Managing Director Chris Ford told The Citizen yesterday.
The face-off comes against a backdrop of reports that Tanesco is experiencing a severe financial crisis. There have been unexplained power cuts lately and our sources told us that Songas officials and the Permanent Secretary for Energy and Minerals, Mr Eliakim Maswi, were locked all day in talks aimed at resolving the crisis—to no avail.
Mr Maswi could not be reached on his cellphone but Mr Ford said Songas was trying to avoid switching off its plants because it was likely to result in significant disruptions to the power system and economy.
Throughout 2011 and 2012, he said, Songas has patiently operated its facilities while working with the government and Tanesco to craft a solution to the problem. “Unfortunately,” he added, “the situation has continued to deteriorate and neither the government nor Tanesco can provide any clarity on when Songas can expect to receive any payments or when Tanesco’s financial crisis will be resolved.”
With such high levels of uncertainty on the prospects of receiving money from Tanesco, he explained, Songas was unable to commit to purchasing critical spare parts (many of which require many months to manufacture and deliver) and the safe and reliable operation of Songas’ facilities are now in jeopardy.
“This decision (to suspend operations) is not being taken lightly and Songas has already made the government and Tanesco aware of the situation,” Mr Ford said.
Songas also delivers natural gas to another 225MW of additional generating plant (on top of its own 180MW) from the processing plants on Songo Songo Island and through its natural gas pipeline. Generation from natural gas is inexpensive, compared to liquid fuels.
Tanesco spokesperson Badra Masoud said she was not aware of outstanding payments and added that, at any rate, the firm should contact Tanesco and not anyone else even if there were any delayed transactions. She added: “We have paid them…I wonder where these new claims are coming from. They (Songas) should come to Tanesco if there is any kind of delays or outstanding payments.”
She would not reveal the amount paid and instead turned on our journalist, saying: “You should be patriotic to your country since Tanesco is for you Tanzanians.”
Tanesco Acting Managing Director Felchismi Mramba was unavailable for comment.
In another development, the Energy and Water Utilities Regulatory Authority (Ewura) yesterday expressed concern over the chronic problems at Tanesco, including mounting debts arising from bills for running expensive thermal power.
Ewura Spokesperson Titus Kaguo said Tanesco was operating as it did in the 1970s, when Tanzania had a smaller population and fewer power consumers. “Tanesco needs heavy investment and better management,” he added. “We hope the government is working on ways to rescue this power firm.”
Ewura had apparently sought to assist Tanesco in exchange for a slight increase in power tariffs but Tanesco reportedly withdrew the application prematurely.
Seventeen regions are currently served by the national grid and the demand, as of yesterday, was 800 megawatts. If Songas were to take away 180mw, which is 22.5 per cent of the total generated, regions connected to the national grid would face an acute power shortage.
Songas sent out a distress signal in June last year threatening to switch off its plant if Tanesco failed to settle a $30 million (about Sh48 billion) bill for services provided that year.