AfDB may finance Tanesco after reforms

HENRY LYIMO

The bank’s Chief Country Economist, Chidozie Emenuga, told the ‘Daily News’ in Dar es Salaam last Friday that the multilateral development finance institution could finance the power utility firm or provide guarantee if it secures finances from other banks when the unbundling process is completed and it improves its financial viability.

“If they unbundle Tanesco, still owned by the government but it can stand on its own financially, it can borrow from us or it also can borrow from other banks and we guarantee,” he said in an interview on the sidelines of two-day Powering Africa: Tanzania conference in Dar es Salaam.

The government is focusing on unbundling electricity generation segment from transmission and distribution segments by December 2017 to improve efficiency and attract private investments in the electricity generation as part of reforms under Electricity Supply Industry Reform Strategy and Roadmap 2014 - 2025.

Under the reforms, Tanesco, which faces chronic financial difficulties and is dependent on public subsidies, will be unbundled into separate entities where six new entities are planned for electricity generation by 2022, the Commissioner of Energy and Petroleum Affairs, Hosea Mbise, told reporters in Dar es Salaam on Thursday.

Tanesco is expected to continue to be responsible for transmission and distribution until when distribution is unbundled by June 2021, according to the roadmap. “Our business is to make it easy for the entity to secure finances for its operations.

It can secure it from other funds and we guarantee,” the AfDB Chief Economist said noting it could be full or partial guarantee depending on the agreement and viability of the entity.

He said they have been indirectly financing Tanesco through general budget support where it has been used to bail out the state-owned power utility firm. AfDB is among 12 development partners who provide aid to the government through General Budget Support. Others are World Bank, Finland, Germany, Britain, Norway, Sweden, Denmark, the European Commission, Ireland, Canada and Japan.

Mr Emenuga said AfDB were looking to when Tanesco improves its weak financial viability and attracts investment capital from financiers. “For TANESCO in particular, we’re looking towards a situation when the entity stops being a drain to public purse... Our initial target it to have TANESCO stand on own feet. It can’t continue being a drag to development,” he said.

The government aims to increase installed electricity capacity from 1,583 MW to at least 10,000 MW by 2025 and expand transmission and distribution system to help in transforming the nation into semi-industrialized economy as envisaged in the Vision 2025.

About 200 key global power investors were in Dar es Salaam for a two-day Powering Africa: Tanzania conference organised by a UK based EnergyNet Limited to explore investment opportunities in the booming Tanzania’s energy and industrial sectors.

Participants included representatives from a number of local and international banks, power developers, technology providers and engineering and construction companies.