Dar es Salaam, Tanzania — ESI-AFRICA.COM — 22 December 2010 – Tanzania’s energy regulator has announced that it will allow the state-run power company to raise tariffs by 18.5% next year, amid increasing chronic electricity shortages in the east African country.
Energy and Water Utilities Regulatory Authority (EWURA) has approved an increase of the tariff to 141 shillings per kWh from next year, against the utility’s requested tariff of 160 shillings per kWh.
The Tanzania Electric Supply Company (TANESCO) said its average tariff was 111 shillings per kilo-watt hour (kWh) against average power generation costs of 152 shillings per kWh.
“The tariff increase starts effectively from 1 January 2011. However, EWURA deferred TANESCO’s proposed three-year tariff hike plan until a credible cost of service study is carried out on the utility,” EWURA spokesman Titus Kaguo said.
As part of the proposed tariff increase over a three-year period, TANESCO asked to raise power tariffs by 34.6% in 2011, 13.8% in 2012 and 13.9% in 2013. TANESCO said it planned to collect around 690 billion Tanzanian shillings (US$480 million) in revenues during 2011, after being granted the 18.5% power tariff increase.
The utility’s tariff application document seen by Reuters yesterday said the company had suffered a financial loss of 21.6 billion shillings (US$10 million) in 2008.
Tanzania has energy demand close to 900 MW in capacity, but produces less than 800 MW.
Acute power shortages in Tanzania have frequently resulted in rolling blackouts, which are undermining growth in the country. Only 14% of its 40 million people are hooked to the grid, while demand grows by 10 to 15% annually.