Tanzania needs emergency loan to cover hydropower losses

http://www.engineeringnews.co.za/article/tanzania-seeks-100m-world-bank-loan-for-emergency-power-2013-03-04

Tanzania seeks $100m World Bank loan for emergency power


By: Reuters
4th March 2013

Tanzania is seeking a $100-million loan from the World Bank for
emergency electricity generation after low water levels hurt output at
hydropower stations in east Africa's second-biggest economy, a senior
official said on Monday.

State-run power monopoly Tanesco last year negotiated a syndicated
loan of 408-billion shillings from a consortium of banks led by
Citibank and has received part of the funds.

The power utility is awaiting the completion of a pipeline that would
allow cheaper gas-based production.

But with that still around two years away, the unreliable nature of
its hydro generation is currently forcing it to spend more than two
times its daily earnings on a mixture of diesel, jet A1 and heavy fuel
oil for mini-generators.

"Tanesco currently spends 5.4-billion shillings a day on fuel to
produce 365 megawatts of electricity from emergency power plants. The
company's total daily revenue is just 2.34 billion shillings,"
Tanesco's acting managing director Felehesmi Mramba told Reuters in
Dar es Salaam.

"It's very difficult for any company to operate in that situation," he
said.

The country's average power demand stands at 750 MW a day and peaks at
around 850 MW.

"Tanesco made a loss of around 200-billion shillings in 2012 and we
expect to make a loss of 100-billion shillings in 2013. The year after
that we as well expect a similar loss," he said.

Mramba said Tanesco expected to break even in 2015 after the
completion of a $1.22-billion natural gas pipeline, which is expected
to boost generation of cheaper power.

Although Tanzania has vast deposits of natural gas, it has been
plagued by frequent power outages, which led to a slowdown in economic
growth in 2011/12.

"The gas pipeline will give a major relief not only to power
generation but to the entire economy of Tanzania. We currenty have 170
MW of idle power plants because we don't have enough natural gas
supply."

Edited by: Reuters
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