Songas grappling with high operational costs

HENRY LYIMO

SONGAS one of key players in the energy sector, is struggling to cope with operational costs as payments for power purchase from the Tanzania Electric Supply Company (TANESCO), are delayed.

Its new Managing Director, Mr Nigel Whittaker told the Business Standard in an interview that the that the power utility firm has deferred payments for the electricity it buys from the investor for 12 months, affecting its operations and jeopardizing its ability to continue providing power to TANESCO. Songas generates about 180MW of power to the national grid using gas from the Songo Songo Island gas fields.

“TANESCO is now more than 12 months behind in its payments schedule which means capital has not been available for maintenance of the plant equipment, a factor likely to affect the plant’s ability to safely and reliably operate,” he said in an interview.

He said they have been following up the matter with the power utility firm and the government but until last week there has been no solution to the problem. “We encourage both TANESCO and the government to urgently address this serious situation and we already have started working closely with the new Minister to attend to this ongoing issue,” he said.

According to him, Songas has been providing essential electricity to Tanzania since 2004 using local gas resources, which has saved the country more than 5 billion US dollars. It is the lowest cost thermal power producer in the region.

He, however, said despite the setback, they were encouraged by the government’s efforts to promote investments from private players in the energy sector and they were focusing to expand their investment portfolio in the sector.

Songas under Globeleq, its majority shareholder, has a project investment in Tanzania of 320 million US dollars which provides more than 100 jobs opportunities, according to information from its website.

“The ongoing key sector initiatives such as the Electricity Supply Industry Reform Strategy and roadmap-which is targeted to improve the environment for private investment in electricity generation and distribution-and the ’Big Results Now’ initiative-aimed at accelerating development in the sector-are proof that the government is keen to promote and enhance investment and growth of the sector,” he said.

TANESCO Managing Director, Eng, Felchesmi Mramba said he would not comment on the claims when contacted yesterday as their contract with Songas does not allow anyone to divulge information to the media.

My comment is very brief. We and Songas have business contract which does not allow divulging its information with the media. Whenever there is an issue we sit and discuss. We are not allowed to speak to the media,” he said.