Electricity woes:It’s do or die for Tanesco

 

 

In Summary

• They are subjected to unnecessary bureaucracy, thanks to the government’s vested interests in the power firm. Yet they are filling in for the government in many ways.

The government’s decision to restructure the Tanzania Electric Supply Company (Tanesco) is long overdue. According to Energy and Minerals minister Sospeter Muhongo, the move will split Tanesco into three autonomous firms. Tanesco will be responsible for electricity distribution while power generation and transmission will be handled elsewhere.

While not all of Tanzania’s power problems are solely of Tanesco’s making, this move will encourage private investment in the sector. Though the Electricity Act of 2008 allows private sector players to invest in power generation, those doing so are Tanesco’s direct competitors. They are subjected to unnecessary bureaucracy, thanks to the government’s vested interests in the power firm. Yet they are filling in for the government in many ways.

Numbers do not lie. Although Tanesco has been around for almost five decades, Prof Muhongo’s latest figures show that only about a fifth of Tanzanians have electricity. Things are even worse in the rural areas, where the rate drops to seven per cent. The World Bank estimates that only 15 per cent of households in the East African region are connected to the national grid.

At 7.2 million households without electricity, Tanzania has the highest number of families that are not connected to power. This is followed by Kenya at 6.2 million, Uganda at 5.5 million, Rwanda at 1.7 million and Burundi at 1.4 million. To reverse these figures, both the public and private sectors need to actively engage in power generation and transmission.

Restructuring Tanesco is a good place to start. It will likely create healthy competition. If it is well regulated, this competition could help lower power tariffs. We have an example in telecommunication: Tariffs dropped significantly when the monopoly of the state-owned Tanzania Telecommunications Company Limited came to an end. Shifting things around at Tanesco will not only inject new life into the firm but also make it more efficient--and we’ll all benefit.