Energy and Minerals Minister Sospeter Muhongo
Tanesco should honour its contract with power supplier Songas and pay its debts, the government declared yesterday.
Speaking on the phone from Britain, Energy and Minerals Minister Sospeter Muhongo expressed surprise that Tanesco had failed to live up to its obligations. “I know Tanesco has a contract with Songas,” Prof Muhongo told The Citizen. “It should stick to it.”
Tanesco owes Songas Sh80 billion ($51 million) in outstanding bills covering the past six months. Songas has threatened to switch off Tanesco’s power supply if the state-owned firm does not pay up.
Prof Muhongo said the government was not involved in the transaction. “I wonder why the ministry should intervene when the contract is between the two,” he added. “You should go back to Tanesco and they should not escape from their duty…..I do not know how much the public utility owes Songas.”
Songas supplies about a quarter of the electricity Tanesco passes on to its own customers. Should it go ahead with the threat, most of the country will be plunged into darkness. According to Mr Chris Ford, managing director of Songas, the firm needs the money to maintain its facilities and it may have to shut down if it does not receive payment soon.
Tanesco Acting Managing Director Felchismi Mramba admitted that there was an outstanding debt but maintained that some of it had been cleared though he did not have precise figures. He added: “I understand that we have a contract with Songas but it is not proper to talk about the details in the media….we are bound by the contract. It’s true that we owe Songas billions and there is no way we can run away from that fact.”
Since Tanesco has a contract with Songas, Mr Mramba said, the public should not worry. He added: “Things are under control. Tanesco needs services from Songas and, as at yesterday, they were still consuming power from the firm.”
The face-off comes against a backdrop of reports that Tanesco is experiencing a severe financial crisis. There have also been unexplained power cuts lately.
Mr Ford was quoted saying Songas was trying to avoid switching off its plants because it was likely to result in significant disruptions of the power supply and the economy.
Throughout 2011 and 2012, he said, Songas patiently operated its facilities while working with the government and Tanesco to craft a solution to the problem. “Unfortunately,” he added, “the situation has continued to deteriorate and neither the government nor Tanesco can provide any clarity on when Songas can expect to receive any payments or when Tanesco’s financial crisis will be resolved.”
With such high levels of uncertainty on the prospects of receiving money from Tanesco, he explained, Songas was unable to commit to purchasing critical spare parts (many of which require many months to manufacture and deliver) and the safe and reliable operation of Songas’ facilities are now in jeopardy.
“This decision (to suspend operations) is not being taken lightly and Songas has already made the government and Tanesco aware of the situation,” Mr Ford said. Songas also delivers natural gas to another 225MW of additional generating plant (on top of its own 180MW) from the processing plants on SongoSongo Island and through its natural gas pipeline. Power generation from natural gas is less expensive than using liquid fuels.
Seventeen regions are currently served by the national grid and the demand stands at around 800 megawatts. If Songas were to take away 180mw, which is 22.5 per cent of the total generated, regions connected to the national grid would face an acute power shortage. Songas sent out a distress signal in June last year threatening to switch off its plant if Tanesco failed to settle a $30 million (about Sh48 billion) bill for services provided that year. source the Citizen
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