 HISTORICAL BACKGROUND |
The Tanzania Electric Supply Company Limited (TANESCO) is a parastatal organization under the Ministry of Energy and Minerals. The Company generates, transmits, distributes and sells electricity to Tanzania Mainland and sells bulk power to the Zanzibar State fuel and Power Corporation ( ZSFPC) which in turn sells it to the public in islands_ Unguja and Pemba. TANESCO owns most of the electricity generating, transmitting and distributing facilities in Tanzania Mainland, which has an estimated population of 30 million.
The German colonialists established the first public electricity supply in Tanzania (which was then called Tanganyika) in 1908 at Dar es Salaam. It served the railway workshops and a part of the town where the colonialists were mostly staying. When the Tanganyika territory was mandated to Great Britain in 1920, a Government Electricity Department was formed to take over and operate the public supplies left by the Germans.
In 1931, the Government handed over the undertaking at Dar es Salaam and those elsewhere upcountry (Dodoma, Tabora and Kigoma) to private enterprises. One of these companies was the Tanganyika Electric supply Company Ltd. (TANESCO) which was established on 26th November 1931 and the other company was the Dar es Salaam and District Electric Supply Company Ltd (DARESCO).
TANESCO commenced operations in 1933 by operating a diesel power station at Kange in the outskirt of Tanga; for supply to that town. It later developed the first hydropower station at Pangani Falls to supply sisal estates with reliable electricity.
DARESCO's early years of operation were occupied in constructing a new power station at kurasini in Dar es Salaam, upcountry i.e.1936 (Mwanza), 1937 (Moshi), 1944 (Arusha) and in the 1950's new branches were established at Tabora, Dodoma, Mbeya, Iringa, Lindi, Mtwara and Morogoro.
After Tanganyika go its independence on December 9, 1961; three important steps took place. The government showed its interest to purchase shares from two private companies.
Between 1964 and 1975 the government purchase all the shares from the two companies.
Since then the government owned 100 percent of the shares.
TANESCO and DARESCO decide to merge into a single organization, TANESCO, which exists today. It was in 1968 that the name Tanzania Electric Supply Company Limited was adapted. The Government is currently the sole shareholder in TANESCO.
Finally, after independence, TANESCO started planning new power projects in order to meet the increasing industrial, commercial and rural township power supply demands.
TANESCO is incorporated under the country's Company Ordinance (Cap.212) of 1932.
| STRUCTURE |
A nine-member Board of Directors directs TANESCO. The President of the United Republic of Tanzania, Honourable Benjamin William Mkapa, has appointed the Board Chairman, Mr. Aboud M.Maalim. The current Minister of Energy and Minerals has appointed eight members of the Board, Honourable Dr. Abdallah Omar Kogoda (Member of Parliament). The Board operates under the Ministry of Energy and Minerals as well as the Treasury.
Its Managing Director, who is the Chief Executive, manages TANESCO. Currently Mr. Baruany Elijah Luhanga is TANESCO's Managing Director being assisted by two Deputy Managing Directors.
| ACTIVITIES |
TANESCO's core business is the Generation, Transmission, and Distribution of Electrical energy and related services
 Generation |
The generation system is made up of hydro and thermal plants. As of December 1999 the installed capacity on the interconnected grid is about 650MW of which 439MW, or 67.5%, are hydro and the rest thermal. The hydro installed capacity will increase by 120MW with the commissioning of the remaining two units at Kihansi hydropower plant in year 2000. The hydro available capacity varies according to the hydrological conditions. With the exception of the gas turbines, the other thermal plants are old and lack of running spares affects their availability most of the large load centres are interconnected to the major generating stations. Areas not connected to the grid are fed from isolated generators with a capacity of 30MW. The old age of the machines and lack of running spares affects the operation of these plants. TANESCO supplies bulk power to Zanzibar through a 132KV overland line submarine cable.
| Transmission |
The transmission voltages are 220KV (2,525 km), 132KV (1403km) and 66KV (136km). These lines connect the load centres with the major generating stations. TANESCO imports power from Uganda to feed Kagera region through a 132KV-transmission line and from Zambia to feed Mbozi district through a 33KV transmission line.
| Distribution |
Distribution voltages are 33KV, 11KV and lower voltages supplying consumers, depending on the nature of their electricity use i.e. whether residential, commercial or industrial. Distribution activities are the most intensive in terms of geographical coverage. TANESCO operates distribution networks in a number of urban and rural areas.
| Organisation structure |
Prior to September 1999, TANESCO structure was decentralised with the distribution activities divided into seven Zones. The structure has recently been reviewed whereby the Zones have been abolished retaining the regional set-up. The organisation structure as at January 2000 is given in appendix A attached.
| BUSINESS PLANNING |
TANESCO established a business planning process in 1996 and the first corporate business plan was out in 1997. The main objective of the Corporate Plan is to collectively assess and manage risks in aspiring to achieve organisational long-term goals. It helps management to assess the company's capacity to survive shocks, to adapt to sudden change, and to capture new opportunities. In the course of preparing this integrated planning process a strategic plan was developed with the following elements:
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Vision and mission statement
Corporate Values
| Vision and Mission statements |
TANESCO's Vision is to be an effective and efficient organisation, commercially focused, supplying cost effective electrical energy and related services to its customers.
TANESCO's Mission is to generate, transmit, distribute, and supply electricity in the most safe reliable, cost effective, and environmentally friendly manner
| Corporate Values |
In carrying out its mission, TANESCO believes that:
Our customers are entitled to adequate, safe and reliable electricity at a competitive price.
The service we provide is the end result of our operations and therefore it should be of the
Highest quality since it is our public image.
Our entire staff is the source of our strength, and they are the corporate portraits. Teamwork through effective communication, consultation, openness and respect for one another; coupled with pride in and loyalty to the company, are the only way which the company can achieve its objectives.
Our success as a company is measured by our financial performance. Profits are a measure of how efficiently we conduct our operations. We have to make profits if we have to survive and grow as company. Highest standards of business ethics and spirit of innovation are of paramount importance to our success as a company.
We have responsibilities to guard the resources entrusted to us by utilising them efficiently and effectively to carry out our mission.
| PERFORMANCE REVIEW FOR THE 1999 BUSINESS PLAN |
The review for the year 1999 has been carried out according to the activities of the company namely generation, support services and transmission and distribution. The generation function is carried out by the hydro power plants while the head office directorates perform the support services to other units. The TANESCO regions perform the functions of transmission and distribution and generation for those with thermal plants.
| Regions |
TANESCO operates 22 regions mostly according to political administrative boundaries with the exception of Dar es Salaam, which is divided into four TANESCO regions, and Coast region, which is administered under Dar es Salaam. TANESCO regions carry out the core business for the company, that is generation, transmission, and distribution. They are the ones that are in direct contact with the customer everyday.
Generally safety level has improved as measured by reduce accidents at work places among the staff and the public. A decrease in accident was due to safety awareness campaign carried out by the Company through the media. The safety of property was enhanced by strict adherence to technical standards in construction and maintenance.
| Security and reliability of supply |
The number of blackout hours were reduced relative to 1998 records thus ensuring guaranteed power supply to customers due decrease in planned outages caused by maintenance works carried out on the distribution networks. Reliability in power supply was due to relieved overloaded transformers and voltage improvement in various parts of the distribution networks.
There was adequate power supply attributed to routine maintenance work and major overhauls carried out in some regions. In achieving sufficiency optimisation, effort was directed towards expansion of some distribution networks to new townships according to electrification projects and availability of line materials.
Overhead costs such as expenditure on official travels, motor vehicle fuel and repair, telephone etc were reduced significantly following tight control over these expenditures.
The responsibility for revenue collection lies with the Head Office and the regions. In 1999 there was an increase in both energy sales and revenue from sales.
Concerted efforts were made to connect electricity to all district headquarters in the country to widen our customer base. Emergency and front desk services were improved and concerned staff had undergone customer relation courses. A new billing programme (Custima) has been implemented to enable the regions to produce customers' electricity bills. A marketing section has been established and will be in charge of devising ways to increase our sales and improve customer service.
| Generating Plants |
Electricity generation is the first step in TANESCO's " manufacturing process". Electricity has to be first generated before being transmitted and finally distributed to the customer. Reliable operations of TANESCO's generating facilities are crucial to meeting the expectations of our customers. TANESCO 's generating facilities can broadly be categorised into hydroelectric plant and thermal plants. In year 1999, the total generation was 2,325 million units of which 2,161.7 million units were from hydro plants and the rest from thermal plants. TANESCO imports power from Zambia and Uganda. It has also entered into Power Purchase Agreements (PPA) with smaller producers such as Kiwira Coal mine and Tanwat Limited. Total electricity purchases from non-utility generation were 53.3 million units.
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The hydro plants are located on three main rivers of Great Ruaha, Kihansi and Pangani. A new plant Lower Kihansi is on river Kihansi . The first unit (60MW) at Kihansi was put into commercial operations on 22 December 1999. The hydro power plants are used as base load and during the year 1999, their performance was good.
The thermal plants are located in a number of grid centres with the largest installed capacity being in Dar es Salaam. The plants are of varying age, the newest being the gas turbines installed in Dar es Salaam. Given their high cost of operation, they are used for peaking. During the year, the plants on the grid operated at very low load factors due to utilisation of the hydro plants and the gas turbines in Dar es Salaam. Operations of the thermal plants in isolated load centres continued to be affected by insufficient spares for routine maintenance.
With the commissioning of Kihansi power plant, the upcountry thermal stations will be on stand by. The ownership of the Ubungo gas turbine will be transferred to Songas upon the commission of the Songo Songo gas to electricity project.
TANESCO imports power from Zambia through a 33KV line to feed parts of Mbeya region. A project is underway to construct a 66KV line from Zambia to supply power to Rukwa region. TANESCO imports power from Uganda through a 132KV line to feed Kagera region. Such power trading is facilitated by Power purchase Agreements.
With the opening up of the power sector to competition, a number of private generators are engaged in the business. These generators have relatively small installed capacities and supply power to both the grid and isolated centres. The trading is also facilitated through Power Purchase Agreements between TANESCO and the suppliers. An independent power plant in Dar es Salaam. Negotiations between IPTL and TANESCO on a tariff based on actual costs prudently incurred have ended in deadlock and the dispute has been referred to arbitration.
| Future generation development |
To ensure that future power demands are met TANESCO recently completed the Power System Master Plan Study covering the period to 2025. The study has identified the short term and long term plans. In the short term the supply option is construction of 330KV tie line with Zambia. The other options refer to gas fired generation from the proposed Songo Songo gas to electricity project.
| THE ACTIVITIES OF THE HEAD OFFICE |
The head office units provide a number of support services to the operations group. The directorates at the Head Office are:
Finance
Personnel and Administration
Projects, Design and Construction
Corporate Planning and Research
System Control and Transmission
Company Secretary
Security
Internal Audit
Operations
Information Systems
Public Relations Department which is under the Managing Director
Generation
| Finance |
The main responsibility of the Directorate of Finance is to maintain the financial integrity and viability of the company and carry out materials management. The unit is also responsible for maintaining an efficient financial reporting system to assist management in controlling the company's operations. The unit has computerised systems in some of its processes such as payroll, billing general accounting and material management.
| Personnel and Administration |
The Directorate is responsible for all issues related to human resources development, utilisation and development. It also has responsibility of managing the transport functions of the company. As of November 1999, the company's staff numbered 6903 out of which 1449 were employed at the head office with the rest in the regions and hydro power plants. As we start this new millennium, the company needs qualified and motivated staff with requisite skills to execute its mission.
| Projects |
The Directorate is responsible for supervision and management of major projects being undertaken by the company. It is also responsible for maintenance of company estate and design and approval of structures.
The unit is supervising the implementation of the lower Kihansi hydropower plant, the Shinyanga_Bulyankulu 220KV-transmission line and the Mbala-Sumbawanga 66KV-transmission line. It has been involved in supervising a number of repair and civil construction works on the company's estate.
| Corporate Planning and Research |
The Unit is responsible for strategic planning, marketing, research and development activities related to energy issues. The second major objective is undertake studies, research and environmental activities aimed at improving the company's performance, efficiency and cost effectiveness through the development of appropriate technologies, design specifications and applied methods for the generation, transmission and distribution systems.
During the year 1999, the power Sector Master Plan Study was completed while studies for SongoSongo gas to electricity and the Zambia - Tanzania Interconnection are ongoing. Research and Development activities were implemented covering environment, rural electrification, and minihydro.
| System Control and Transmission |
The Directorate has responsibilities to carry out power dispatch and system operation. It ensures proper maintenance of all substations. The unit is responsible for short term generation planning which involves dispatching plants to achieve system optimisation.
| Company Secretary |
The main responsibility of the secretariat is to advise on all legal aspects of company's operation and ensure that all assets have been insured.
| Internal Audit |
The Directorate of Internal Audit (DIA) is responsible for providing services to all parts of TANESCO operations by ensuring that all the financial and operating information are reliable.
| Security |
The Directorate of Security is responsible for carrying out the preventive security and investigation of cases (whether Criminal or Civil) involving the company, and advise management on appropriate measures to be taken. The unit is also responsible for ensuring security of the company's physical infrastructure and protection of locations from unauthorised entry. It acts as a link between the company and other law enforcing organs in the country. The directorate received and investigated customers' complaints and ultimately gave feedback to management or regional authorities.
| Operations |
The operations division is responsible for co-ordination of activities vested with the regions. It supervises /co-ordinates the company's operational activities to ensure highest degree of efficiency. The unit is responsible for formulating and enforcing company's regulations on engineering and safety and implementation and supervision of rural electrification projects. It ensures that there is sufficient stoking of distribution materials to facilitate smooth operations. The unit undertakes testing, repair and certification of electricity meters.
| Public Relations |
The main responsibility of the department is to create a positive public image of the company to the public so that the public understands and accepts the company's mission. The department acts as a link between the company and the key stakeholders.
During the year 1999, the unit continued to air the radio program "Bwana Umeme" to educate the public on a number of issues related to electricity use. The unit has been involved in advising the public on a number of events happening in the company
| Information System |
The Directorate is responsible for all activities relating to information systems and information technology within the company. The company has installed information systems in areas of accounting, billing and materials management. Information Systems Unit provides Information Technology support services for company-wide computer users.
In 1999 the Unit was pre-occupied with installing the systems of billing and materials management. The unit was responsible for the co-ordination of the millennium bug (Y2K) programme to ensure that all the company's IT systems were free from the danger, i.e. Y2K compliant/ready. No Y2K problems were encountered during the roll over.
| Generation |
This unit is responsible for co-ordination of generating plants operations. It co-ordinates the activities of the hydro and thermal plants. The unit was established recently following the changes in the company structure.
| PRIVATISATION ASPECTS |
In 1992, the government of Tanzania established the Parastatal Sector Reform Commission (PSRC) whose main responsibilities are to ensure smooth privatisation of the public corporations with the aim of enhancing their efficiency. Since then the government has removed TANESCO's monopoly as the sole power generating and distributing company.
Early last year, a team of government officials went to study tour of three Latin American countries-Argentina, Bolivia, and Jamaica- to learn how these countries restructured their electricity sectors. The intention was to draw their experiences on the privatisation reforms. Subsequently, there was a workshop in Tanzania, where all the shareholders and key people interested in the power were invited. At the end of the workshop various recommendation that made on how to privatise TANESCO. Among them is recommendation that TANESCO should be unbundled into several private marketing and distribution companies, and have a dispatch company (transmission).
The PSRC and the Ministry responsible for energy have prepared a power policy and restructuring policy which will help the government and investors to start up the privatisation process. Currently the company has only 3000,000 customers countrywide.
Given the significant role the power sector has on the economy, the government will put up a premium on the reputation, experience, technology and financial strength of the preferred investors. The government in due course will be seeking expressions of interest in each of the segments of the power sector. The process of sale will involve competitive international bidding and the timing is scheduled for the later quarter of the year 2000.
The government will also establish an independent regulatory body for the power industry.
For future details on the privatisation of TANESCO please contact
TANESCO
The Managing Director
P.O Box 9024
Dar es Salaam
Tanzania
PSRC
The Executive Chairman
P.O Box 9252
Dar es Salaam
Tanzania |
