Confederation of Tanzania Industries (CTI) has published a landmark
report that presents gristly details of the huge financial and
manpower losses the manufacturing sector bear due to intermittent
power supply.
Hard copies of the report titled “Challenges of Unreliable Electricity
Power Supply to Manufacturers in Tanzania, ” will be available in Dar
es Salaam, from today, December 1st 2011.
For about 20 years, Tanzania has been vexed by power crisis, which
this 20011 went out of hand. Through this publication CTI informs the
Government and other stakeholders how the issue affects manufacturing
sector by providing data and evidence on the magnitude of the problem.
With financial support of BEST AC, CTI commissioned the Institute of
Management and Entrepreneurship Development (IMED) in Dar es Salaam to
undertake the study, which is a product of policy research. In great
details, it examines the major reasons for unreliable electricity
supply to manufacturers and draw strategies to overcome the
challenges. Several documents were reviewed, a study of 60
manufacturing firms undertaken and views of a cross-section of key
stakeholders in the sector taken in consideration.
According to the publication, despite all the efforts by the
Government, manufacturing sector has been experiencing obstacles of
intermittent power supply, frequent rationing and outages and the
future does not look rosy either unless radical measures are taken to
contain the situation.
Some major findings
i. Power supply interruptions cost manufacturers Tsh 31 billion per
annum loss of income despite use of generators to tame power woes.
ii. 24 hours of work are lost per month and 7,341 jobs are terminated
annually owing to electricity problem in manufacturing firms greatly
reducing productivity and undermining competitiveness.
iii. The risk of machinery damages resulting from high fluctuations
and instabilities of the supplied current is high .
iv. Each manufacturing firm loses 24 working-hours of labour and all
other employed factors of production per month owing solely to
electricity supply interruptions.
v. There is frustrations to the prospects and plans for new
investments and business expansions as investors are not optimistic as
regards industrial sector because of hindrances like unreliable power.
vi. Industrial workers’ morale is low as they see job losses due to
electricity supply problems.
vii. The taxman ‘loses’ Tsh 9.5bn per year due to intermittent
electricity supply alone in the manufacturing sector
viii. About 18.9% of the total cost of production is accounted for by
energy cost.
The demand for power, which is already beyond the supply, will
steadily worsen and by year 2020 as demand is expected to rise to 42
per cent from the current 14th per cent of the population. Current
efforts to tackle the problem are not adequate in meeting the future
demand, and other strategies should be used to increase power supply.
The publication calls for quick solution to the electricity supply
problem facing manufacturers in the country and recommends the
following policy changes:
i) The Government is advised to speed up implementation of the
projects that are underway to quickly redress the problem of
intermittent electricity supply.
ii) TANESCO is better divided into two main organizations: Public
power generation entity/to exist alongside private producers: and
transmission and distribution entity/ this has to be done by TANESCO.
iii) For the short term, the Government should facilitate TANESCO in
capitalization of the new power generations planned for the interim
period of 2010-2013.
iv) Government needs to foster its commitment to speed up
implementation of the Electricity Act 2008 in order to encourage
private investments in mini power grid operations. The ACT also should
be reviewed as it greatly restricts private sector investment of power
generation.
v) The government should waive import taxes on equipment used in the
generation, transmission and distribution of electricity. This can
reduce cost of electricity as most of such equipments are expensive
and contributing to high cost of electricity.
vi) Exploring and utilizing other potential existing sources of
electricity in Tanzania
including coal, natural gas, solar, biomass, wind, geothermal and
petroleum/oil is highly
recommended.
vii) Energy policy can be reviewed to accommodate recent developments
and to provide
incentives for the private investors who are interested in energy
sector so as to participate
effectively.
viii) Promotion of Public Private Partnership (PPP) in the power
sector is recommended to
encourage the private sector to work closely with the Government in
rectifying power
problems.
ix) TANESCO should improve its institutional capacity to deliver
services to its customers satisfactorily.
x) TANESCO should also rehabilitate transmission infrastructure.
It should be noted that the recommendations made by this publication
are developed in such a way that they can suffice to form a policy
brief on the issue of unreliable electricity supply to manufacturers,
and CTI hopes the government and other stakeholders will take it
seriously.
The full report is available at www. best-ac.org/site/REPORTS.html