State sheds lights on Songas licence extension

DODOMA: PUBLIC interest will take centre-stage in negotiations for licence extension of the state-owned power utility firm, TANESCO and Songas.

The Government Negotiation Team (GNT) formed last year to look at the extension of a contract between SONGAS and the state-owned power utility firm, TANESCO will consider public interests before the official re-signing, the House was told here yesterday.

The Deputy Minister of Energy, Judith Kapinga told the National Assembly yesterday that the government had formed the GNT which kicked off fresh negotiations in April 2023 and that it expects to complete the said negotiations before the contract expires.

“The government will make sure that the interests of the country are highly considered before putting pen to paper for the next contract,” she said when responding to a question from Special Seats Member of Parliament, Jesca Kishoa (CHADEMA) who wanted to know how far negotiations between the government and Songas had reached as the contract expires later this year.

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Responding, the deputy minister said already, the government had formed the GNT which kicked off fresh negotiations in April 2023 and that it expects to complete the said negotiations before the contract expires.

One of the aspects in the current contract is that the SONGAS deal operates under a Build-Own-Operate arrangement, meaning that when the contract expires, Songas will retain ownership of the assets.

As SONGAS has already collected capacity charges from the government and the infrastructure investment has been effectively paid off, this provides an opportunity to negotiate even more favourable payment terms than before.

Despite SONGAS’s efforts to secure a contract extension, the government has been indecisive for a considerable period.

Songas is a leading Tanzanian gas-to-power company which generates 190 megawatts (MW) of electricity using gas from the Songo Songo gas reserves.

The gas-to-power company where the government controls more than 40 per cent of shares, through TANESCO, TPDC and TDFL, sells all the electricity it produces to TANESCO.