Trou­bled Tanesco risks los­ing ac­cess to gas pipe­line

The East African - - NEWS - By KILASA MTAMBALIKE Spe­cial Cor­re­spon­dent

TAN­ZA­NIA POWER util­ity Tanesco risks los­ing rights to a cru­cial gas pipe­line deal if it does not pay Tsh248 bil­lion ($109 mil­lion) to Tan­za­nia Petroleum De­vel­op­ment Cor­po­ra­tion (TPDC).

TPDC has said that the debt is caus­ing it fi­nan­cial dis­tress, as it also owes the EXIM Bank of China. Con­troller and Au­di­tor Gen­eral Prof Mussa As­sad has ad­vised the gov­ern­ment through the Min­istries of Fi­nance and Plan­ning and En­ergy to bail out Tanesco and help TPDC meet gas pur­chase and other op­er­a­tional costs.

“TPDC may not be able to ser­vice the loan ob­tained to fa­cil­i­tate con­struc­tion of Mt­wara-dar Gas Pipe­line from EXIM Bank of China and their re­spec­tive in­ter­ests, if Tanesco does not set­tle this li­a­bil­ity,” Prof As­sad said in an au­dit re­port.

He fur­ther said that fail­ure to re­pay the loan shall sub­ject the cor­po­ra­tion to a com­pounded in­ter­est of 0.8 per cent charged on the un­paid loan bal­ance which will in­crease fi­nan­cial cost to TPDC and the gov­ern­ment.

“Fur­ther, fail­ure to pay the loan shall amount to trans­fer of TPDC rights un­der the Gas Sales Agree­ment (GSA) to EXIM Bank of China as per Clause 2 of the Se­cu­rity As­sign­ment Con­trac­tual Rights, which forms of the Agree­ment signed be­tween TPDC and EXIM Bank of China,” he added. Tanesco en­tered into a Gas Sales Agree­ment in Septem­ber 2015 whereby the the power util­ity com­pany buys nat­u­ral gas from TPDC for power gen­er­a­tion at Kiny­erezi, Ubungo II and Sym­bion Power Plants.

“I have noted that be­tween Septem­ber 2015 and De­cem­ber 2017 monthly in­voices to­tal­ing to Tsh567,514,961,312.95, ($254, 448,796.08) were is­sued by TPDC to Tanesco with re­spects to the nat­u­ral gas sup­plied to Tanesco for power gen­er­a­tion.

“My au­dit noted that by De­cem­ber 2017, Tanesco had man­aged to set­tle Tsh318,904,743,618.61 ($142,982,887.87) equiv­a­lent to 56 per cent of the to­tal amount of in­voices leav­ing Tsh248,610,217,694.34 ($111,465,908.21) un­set­tled,” Prof As­sad said in the re­port.

There are also con­cerns that if the state util­ity com­pany is not as­sisted to pay the out­stand­ing bills, it is likely that it would pass on the bur­den to con­sumers in the long run.

TPDC may not be able to ser­vice the loan ob­tained to fa­cil­i­tate con­struc­tion of Mt­wara-dar Gas Pipe­line from EXIM Bank of China.” Mussa As­sad, Con­troller and Au­di­tor Gen­eral

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