The government has said it can do nothing at the moment to help factories and ordinary customers out of the looming power crisis as water levels at Mtera dam remain low due to poor rains.
This includes the shutdown of the Songo Songo gas flow for maintenance of the wells and the plants, from May 19 to 26.
“Both issues are sensitive and complex. We (government) cannot increase the level of water at Mtera dam and we cannot prevent maintenance plans of Songo Songo gas fields,” said Energy and Minerals deputy minister Adam Malima in an interview with 'The Guardian' yesterday.
“What do you think the government can do under such circumstances?” asked the minister.
The government's reaction comes as a nationwide power crisis looms following decreasing water levels at Mtera dam, one of the country’s strategic hydro-power stations, and an expected shutdown of the gas-for-electricity Songo Songo system.
Already, Tanzania Electricity Supply Company Ltd (Tanesco) has announced a 16-hour power-rationing, from May 19 to 26, to pave the way for extensive maintenance of the Songo Songo gas fields in Kilwa District.
As of yesterday, the Mtera dam water level had reached 691 metres, which the minister said could hardly support efficient production of power required by industrial and ordinary consumers.
Malima said the government had no alternative at the moment to rescue power consumers from the problems triggered by Mtera dam's water shortage and Songo Songo's technical inspection.
“We cannot increase the amount of water in the dam (Mtera), nor can we stop the maintenance of gas fields at Songo Songo. If we do that it will adversely affect the gas plant and systems. In short, it will cause irreparable loss to the investors of the gas plant, the government and the general public in terms of revenue lost and a worse power crisis in the future,” said Malima.
According to Tanesco Managing Director William Mhando, the maintenance of gas wells and the plant was geared at improving the quantity of natural gas produced and transported from Songo Songo Island to Dar es Salaam for power generation and industrial use.
However, economists say that Tanesco’s planned 15-hour daily power blackout will hit not only small and medium-sized enterprises (SMEs), but also the overall national industrial sector into 2012.
An 8-day manufacturing shutdown will send the industrial sector as a whole into a tailspin, according to Small Industries Development Organization (SIDO) Director General Mike Laiser.
Tanesco announced on Saturday that from May 19 to 26 it will be cutting off electricity between 8am and 11pm as a result of scheduled maintenance of the Songo Songo gas plant by its operators, Pan African Energy Tanzania Limited.
Many factories will be forced to operate using alternative and undoubtedly more expensive energy sources, and most will have to plan for higher production volumes in the run-up to May 19.
Confederation of Tanzania Industries (CTI) administrator Hussein Kamote told 'The Guardian' that some large factories might have to resort to 24-hour shifts in the days leading to the planned blackouts.
Research indicates that the manufacturing and light industry sector alone contributes a full 22.6 per cent (2009 Statistics) to Tanzania’s gross domestic product (GDP). Of this, 50 per cent is from SMEs, according to a 1997 paper by chief economist of Productive Sectors Cluster at the President’s Office: Planning Commission (POPC) Erick Kirumba.
Laiser acknowledged that SMEs are most at risk because they lack the capacity and resources to invest in alternative energy sources, echoing sentiments expressed by CTI’s Kamote, who said he expects SMEs to be most affected by Tanesco’s planned 16-hour outages.
However, the SIDO chief sees chronic power supply problems as having far greater consequences for the state of the nation’s overall manufacturing industry.
“Power-rationing over eight days means no production,” he said, adding that calculated over a one-year period, the losses from a one week shutdown could easily translate into 5 per cent shrinkage across the entire industrial sector.
“It is simple arithmetic,” he stressed.
He added that the biggest problem is the fact that power interruptions trigger a chain reaction of negative outcomes that reverberate throughout the national economy.
The loss of 8 production days, for instance, means a week during which none of the people working for the affected companies makes any money. Income loss means a decline in consumption, according to Laiser, because most will have little discretionary income.
"It becomes a vicious cycle where factories that are forced to stop production because of power cuts can’t pay anybody, and those that can produce can’t sell anything to anyone. In other words, it’s the very definition of an economic slowdown," Laiser said.
The only way forward, according to Laiser, is for power utilities to become more efficient, stabilising power supply to local industries.
“Total energy output is far below production capacity,” he said, adding that he recently learned that Independent Power Tanzania Limited (IPTL), which supplies power to Tanesco, operates at a mere 30 per cent of production capacity.
The SIDO chief argued that a review of the energy tariff structure is one way to bring about production efficiencies. “How do we know these (electricity) charges are at all necessary?” he said, adding that energy security for industry is possible only if utility companies such as Tanesco become better at generating and supplying electricity.
No comments:
Post a Comment