Consumers to dig deeper into their pockets as Tanesco raises tariffs

Power lines. Tanzanian manufactures have said they are being forced to set new prices for basic commodities following a 40 per cent increase in power costs beginning January 2014. FILE  Nation Media Group

By ADAM IHUCHA Special Correspondent

In Summary

• Manufactures have said they are being forced to set new prices for basic commodities following a 40 per cent increase in power costs beginning January this year.
• Tanesco has been struggling under a heavy weight of debt and system losses, which include revenue leaks brought about by inefficiency in the power flow system and meter tampering or outright electricity theft.
• Economists say price hikes of key commodities, particularly foodstuffs such as rice, flour, sugar and milk, will fuel inflation, currently at around 5.6 per cent.

Tanzanians could soon dig deeper into their pockets to obtain basic commodities if manufacturers make good their threats to increase prices.

Manufactures have said they are being forced to set new prices for basic commodities following a 40 per cent increase in power costs beginning January this year.

The new tariffs, which were announced by the Energy and Water Utilities Regulatory Authority (Ewura) a month ago as a result of an application by the loss-making Tanzania Electricity Supply Company (Tanesco) in October last year, have increased production costs for industries.

READ: Ewura: New power tariffs subject to reviews

Tanesco has been struggling under a heavy weight of debt and system losses, which include revenue leaks brought about by inefficiency in the power flow system and meter tampering or outright electricity theft.

Tanesco’s losses soared from Tsh43.23 billion ($28.08 million) in 2011 to Tsh178.25 billion ($115.75 million) in 2012 due to high operating costs.

It is against this backdrop that the utility firm had proposed to increase its charges by at least 67.87 per cent from January this year and by 9.17 per cent from January next year to fix its books. However, the government approved only a 40 per cent increase.

Under the new tariffs, domestic consumers are paying Tsh100 or ($0.065) per unit, up from Tsh60 ($0.039). Large domestic consumers and small business operators are paying Tsh306 ($0.199) per unit, up from Tsh221 ($0.144).

The approved price for the group of customers connected to the high voltage, which uses 66,000 units and above (T3-HV) is Tsh 159 ($0.103) from Tsh106 ($0.069) per unit, an increase of Tsh53 ($0.034).

This group comprises the Zanzibar Electric Company, major plants like Bulyanhulu gold mine and Twiga Cement.

Customers whose demand exceeds 7,500 units are now paying Tsh205 ($0.133) per unit, up from Tsh132 ($0.086) per unit while large-scale users, including large industries, are paying Tsh166 ($0.108) per unit from Tsh121 ($0.079).

Producer of anti-malaria bed nets, A to Z Textile Mills Ltd, said its cost of production has soared by 75 per cent, which has forced it to look for ways of covering the cost.

“We used to pay Tsh400 million ($259,740.3) as on power bill per month, but now the charges have have gone up to Tsh700 million ($454,545.5), I don’t know how to raise additional cash,” said Anuj Shah, the company’s chief executive officer.

A to Z is the largest manufacturer of long lasting insecticidal nets (LLINs) in Africa, producing 29 million bed nets annually.