August 8 2012:
Zanzibar private sector has decried increased power tariffs, over 50 percent higher than in Tanzania Mainland and all in face of unreliable supply due to obsolete infrastructure.In a private-public sector dialogue led by Zanzibar National Chamber of Commerce, Industry and Agriculture (ZNCCIA), it has emerged that high cost of power and lack of its reliability is a major stumbling block to improved business environment.According to both ZNCCIA Vice President, Mr. Ali Aboud and the Executive Director, Ms Munira Hamoud, high cost of power does not only hurt the average consumers, it may force industries out of the isles.They noted that the surge in electricity charges could further stoke inflation in Zanzibar and raise the cost of doing business.Dr. Mohammed Hafidh Khalfan, a renowned economist, who had been commissioned by ZNCCIA to look at the issue said:“Electricity cost is the leading obstacle in Zanzibar enterprise development, operation and growth. Without finding a lasting solution to this obstacle, Zanzibar\’s dream of having a middle class economy by 2020 will be difficult to attain, with the situation likely to deteriorate further.” He has the opinion that Zanzibar is capable of attracting high potential investments but the costs of production due to power issues among others, defeat the aspirations embedded in the Zanzibar Investment Policy.“The impact of high electricity prices can be correctly guessed: high tariff increases operation costs, reduces production and profits,” he said.New power tariffs The Zanzibar Electricity Company (ZECO) from 1st June, 2012 increased power tariffs as follows: lifeline tariff (including domestic users) is 161/- from 120/-, Small industries (172/- from 140/-), large industries (169/- from 142/-), and street light tariff (141/- from 105/-). All customer service charges increased from 1,500/- to 2,000/-.Implications ZNCCIA holds that in the current settings the set increment is unproductive.-Unproductive increment may chase away potential investors- Increase in tariff will eventually disrupt production capacity, lead to wastage and underutilization of resources. – Culminates into an increase in imports leaking much needed foreign currency- Slowly kills the remaining but struggling Zanzibar infant industrial sectorChallenges – Unguja, Zanzibar was connected to the national grid in 1980 through a 132kV 45MW sub-marine cable. The cable is still in use despite expiry of itsfunctionary life.-Only in May 2010, Pemba was connected to the Tanzania National Grid through submarine cable from Tanga, but cost and reliability is still a concern. In future, ZNCCIA wants the private sector to be fully consulted as the leading consumers of electricity before any new tariff are set.
ZECO is an independent parastatal, gets its power from TANESCO, it has been making losses for years, and faces many challenges from obsolete supply infrastructure, huge unpaid bills by some of the institutions to electricity loss and theft. The position of ZNCCIA on this is that, the government addresses those woes by modernizing ZECO and start working on its long term plans for independent and cheaper power generation project to reduce dependency on TANESCO.
About ZNCCIAThe Zanzibar National Chamber of Commerce, Industry and Agriculture (ZNCCIA) is a membership-based private sector organization registered in Zanzibar. The mission of the ZNCCIA is to promote business growth in Zanzibar by articulating well developed proposals for removing constraints facing business, Industrial & Agricultural community; promoting unity of stakeholders within the private sector; enabling Zanzibar enterprises to access skills, market, partnership, investment opportunities and financial resources. ZNCCIA also strives to collaborate with the government to make Zanzibar more attractive to investors.
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For any question or queries, please contact: Zanzibar National Chamber of Commerce, Industry and Agriculture (ZNCCIA)Contact Person: ZNCCIA Executive DirectorPhone: 025 24 223 4713Fax: 025 24 223 1710E-mail: info@znccia.org