Early this month, TANESCO applied for a 38 per cent tariff hike but was only allowed 18 per cent. In 2007, the power company was only allowed a 21 per cent hike down from their 40 per cent request.At present, customers under the Domestic Low Usage Tariff (D1), which covers domestic customers who, on average, have consumption pattern for 50 kWh pay 283/- per unit for units exceeding 50 kWh. The first 50 kWh are subsidised by the company.
The tariff hike application stems from emergency power projects run by Aggreko, Symbion and Independent Power Tanzania Limited (IPTL) which use heavy fuel oil for power generation.Thermal power generation has proved to be costly and greatly attributed to higher energy costs as a result of the widening deficit of electricity from hydro plants. Now, if the new hike comes into effect, a common citizen will be directly affected in many ways.
Foremost, prices for most of the essential goods will go up sharply to offset production costs. Again, the costs will be passed to the end user with no discrimination between the rich and the poor.The manufacturing sector which has been recording impressive performance in the past two years, employing thousands of people, is probably going to be the hardest hit.
Secondly, the energy costs are likely to remain high for many years to come as the shilling has continued to perform badly against the major currencies.Most of TANESCO purchases including power from the local private producers are pegged in US dollars. This means that the end user will bear the burden if the shilling continues to depreciate against the US dollar.
And finally, TANESCO has to introduce tight spending policies internally to reduce overheads. It's undeniable fact that the power utility has been paying its top executives mouth-watering packages unjustifiably.It's from the backdrop of these scenarios that more concrete measures are needed in place to make power affordable to all.