7 August 2012 - With various people involved in a Tanesco corruption scandal having been fired, the Tanzanian power utility continues to find itself under pressure. Tanzania’s minister for energy and minerals, Sospeter Muhongo, recently described past episodes of power shedding as a façade to mask well-designed projects of some dishonest Tanesco management staff working in collusion with some businesspeople.
According to the minister, some businesspeople undertook dirty deals with Tanesco to siphon large amounts of money out of the utility. The minister says that the performance of top Tanesco management was so pathetic that some of the decisions on power rationing were not genuinely made, considering that the power company had been collecting substantial revenue.
Tanesco was also criticised because of reports that half of the company’s revenue was being spent on what are described as exorbitant capacity charges to independent power producers (IPPs). Capacity availability charges are paid to the independent power producers irrespective of whether the power is taken up or not by Tanesco.
However, that does not hide the fact that substantial abuses have taken place within Tanesco. Narrating how Tanesco workers were sabotaging the company, Muhongo cited a case of electricity poles from the Mufindi, Iringa region, saying these were transported to Mombasa in Kenya before the same poles were transported back to Tanzania with documents showing that they originated from South Africa. He also said the government had since noted that while Tanesco claimed to have purchased spare parts from the UK at a cost of £50,000 investigations showed the box merely contained nails.
Muhongo also said that suspended Tanesco boss, William Mhando, awarded a tender worth US$9.5 million for the supply of office stationery to a firm known as Santa Clara Supplies Co. Ltd – which was, in fact, his own family venture, knowing it was against public service ethics. The shareholders, according to the minister, were the children of the suspended Mhando – who is under investigation by the Controller and Auditor General (CAG) for abuse of office, among other allegations.
The minister also said Tanesco had been losing million of shillings through its digital power meters, mainly phantom vending systems, used by some vendors to sell power to the firm before they were duly registered to do so. In other cases, meters in some customer accounts were said to hold huge amounts of units of electricity when they had not paid anything to the power company.
Muhongo talked of a possibility of dissolving the Tanesco board in the wake of the current management problems. He said that once the board was dissolved, he would place adverts encouraging capable individuals to apply, saying the same arrangement had since worked well for the Tanzania Petroleum Development Corporation (TPDC).
The results of the blatant corruption at Tanesco are also putting pressure on IPPs because of the payment of capacity charges. Muhongo has argued that Tanesco doesn’t need any fiscal assistance from the central government. According to a financial analysis and forecast, the biggest winners in what is described in the local Guardian newspaper as a spending spree by Tanesco are Songas, Independent Power Tanzania Limited (IPTL), Symbion and Aggreko, with capacity charges in some cases said to outweigh the ability of their capacity to sell power by a significant margin. This hostile approach by politicians, media and citizens as fallout from the Tanesco corruption scandal is likely to put IPPs in Tanzania under pressure in the near term.