March 4, 2013 / 2:51 PM / 7 years ago

Tanzania seeks $100 mln World Bank loan for emergency power

DAR ES SALAAM, March 4 (Reuters) - 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 ($251 million) 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 megawatts per day and peaks at around 850 megawatts.

“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 megawatts of idle power plants because we don’t have enough natural gas supply.” ($1 = 1623.0000 Tanzanian shillings) (Reporting by Fumbuka Ng’wanakilala; Editing by Richard Lough and Patrick Graham)

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