Identifier
Created
Classification
Origin
06DARESSALAAM412
2006-03-02 11:20:00
CONFIDENTIAL
Embassy Dar Es Salaam
Cable title:  

TANZANIAN ENERGY MINISTER BRIEFS INTERNATIONAL

Tags:  EFIN ECON ENRG EPET TZ 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 DAR ES SALAAM 000412 

SIPDIS

DEPT AF/E FOR B YODER AND C PELT, AF/EPS FOR M NORMAN
ALSO AF/RSA FOR J NAY AND FOR EB
DEPT PASS TO MCC FOR L BLACK AND G BREVNOV
TREASURY FOR L KOHLER
LONDON FOR J YOUNG
PARIS, BRUSSELS FOR AFRICA WATCHERS

E.O. 12958: DECL: 03/01/2011
TAGS: EFIN ECON ENRG EPET TZ
SUBJECT: TANZANIAN ENERGY MINISTER BRIEFS INTERNATIONAL
DONORS ON POWER CRISIS

REF: DAR ES SALAAM 00312

Classified By: Mary B. Johnson, Economic Counselor, for reason
1.4(d).

SUMMARY
---------
C O N F I D E N T I A L SECTION 01 OF 03 DAR ES SALAAM 000412

SIPDIS

DEPT AF/E FOR B YODER AND C PELT, AF/EPS FOR M NORMAN
ALSO AF/RSA FOR J NAY AND FOR EB
DEPT PASS TO MCC FOR L BLACK AND G BREVNOV
TREASURY FOR L KOHLER
LONDON FOR J YOUNG
PARIS, BRUSSELS FOR AFRICA WATCHERS

E.O. 12958: DECL: 03/01/2011
TAGS: EFIN ECON ENRG EPET TZ
SUBJECT: TANZANIAN ENERGY MINISTER BRIEFS INTERNATIONAL
DONORS ON POWER CRISIS

REF: DAR ES SALAAM 00312

Classified By: Mary B. Johnson, Economic Counselor, for reason
1.4(d).

SUMMARY
--------------

1. (U) On February 28, Ambassador Retzer attended a meeting
called by the Ministry of Energy and Minerals to provide an
official briefing of Tanzania's power crisis to all Heads of
Mission and donor agencies. Minister of Energy, Ibrahim
Msabaha, provided an overview of the power crisis. In Dar es
Salaam, power shedding has increased from eight hours in
early February to 16 hours toward the month's end. According
to Msabaha, successive years of drought, power distribution
problems, and rising fuel prices have triggered the need for
significant load shedding on the national power grid.
Msabaha outlined various steps the Government of Tanzania
(GOT) would take in an effort to restore power supply. Heads
of Mission and donors questioned the timeline for the GOT's
plans and the economic impact of the power cuts. A brief
exchange also took place between the World Bank
representative and the Deputy Minister of Energy regarding
potential use of Millennium Challenge Corporation (MCC) funds
to assist the power sector in the longer term. END SUMMARY.

DWINDLING WATER LEVELS FORCE POWER CUTS
--------------


2. (U) Given the worsening power situation, Minister Msabaha
explained that the GOT thought it would be prudent to
officially brief the diplomatic and donor community on the
GOT's point of view with respect to the problem. He admitted
that Tanzania's over-dependence on hydro-power was at the
heart of the current power crisis. Three or four years of
successive drought have resulted in a crippling deficit of
water at key sources of hydro-power such as the Mtera Dam.
The minimum level for power generation at Mtera is 690 meters
above sea level (the dam normally operates at 698 meters).
Msabaha said that they are currently operating below the

minimum level for generation; the first stage was to operate
the dam at 688 meters, but they have been forced now to
operate at 687 meters. "We thought by this time we would
have seen the rains, but unfortunately, that is not the case
and we have had to undertake load shedding," Msabaha said.

FAULTY SONGAS TRANSFORMER EXACERBATES LOAD SHEDDING
-------------- --------------


3. (U) TANESCO and the GOT first reached a load shedding
agreement on February 4, initiating eight hour power cuts to
save 60 Megawatts (MW). This experiment failed as consumers
shifted their consumption to different hours of the day. One
week later, on February 11, load shedding deepened to 12
hours per day to save 120 MW. On February 17, the situation
worsened when a transformer broke down at Songas' Ubungo
gas-to-electricity power plant. This mechanical failure
resulted in an additional loss of 75 MW and forced even
further load shedding up to 16 hours per day. Despite the
best efforts of TANESCO, Msabaha noted that load shedding has
not been as reliable as it should be.


GOT PURSUES EMERGENCY GENERATION SCHEMES, REQUESTS ASSISTANCE
-------------- --------------


4. (U) Msabaha emphasized that the GOT was not standing idle
during this crisis. He outlined the following steps which
the GOT was pursuing to increase generation:

-- Leasing gas turbines using proceeds from canceled debt (as
allowed by the International Monetary Fund). The gas
turbines are expected to be in place within the next two to
three months.

-- Purchasing gas turbines, which would be TANESCO owned, to
provide another 100 MW of power. The purchase and
installation of these gas turbines is estimated to entail
approximately eight months to one year of work.

-- Using coal resources in Kiwera to generate 50 MW by
October 2006 and potentially 100 MW by the end of 2007. The
Kiwera project will be primarily a private undertaking with
the GOT holding only 22 percent of the investment.

-- Working with the Dutch on a power project in Tageta
(nearby Dar es Salaam) to generate 45 MW by the end of 2007.


5. (U) After outlining the steps which the GOT planned to
undertake, Msabaha explained that the GOT had pursued options
in the past to diversify Tanzania's power regime. By 2005,
Tanzania managed to have two sources of thermal power
operating: the Ubungo natural gas power plant and the IPTL
diesel fired power plant. "Tanzania needs to increasingly
rely on thermal generation to make sure there is enough
mixture in the sources for power generation." He urged
renewed interest in diversification and asked the meeting
participants to put their heads together to overcome the
problem.


6. (U) Asking for ideas, renewed interest, and any help which
might be possible for donors to give, Msabaha was not
particularly specific in his request for assistance. In
terms of how Heads of Mission or donors intended to provide
assistance, the public response was not specific either. The
Swedish Ambassador, Mr. Torvlag Akesson, noted that Sweden
had been cooperating with Tanzania in the power sector for
over 20 years on rural electrification and was prepared to
look at prospects for increased generation. Sheku Sesay of
the African Development Bank, noted that the AFDB had
recently completed a USD three million study on rural
electrification and was prepared to work with the World Bank
on generation-related issues.

BEYOND GENERATION: LONG TERM PROBLEMS OF
TRANSMISSION/DISTRIBUTION
-------------- --------------


7. (U) During the brief discussion which followed the
Minister's overview, the issue of power transmission and
distribution emerged in addition to the power generation
problems. Bashir Mrindoko, Commissioner for Energy at the
Ministry of Energy and Minerals, spoke up by adding that
Tanzania also had significant transmission and distribution
problems which needed to be rectified for proper functioning
of the power regime. He referred to a World Bank study which
determined that an investment of USD 750 million over the
next five years could be used to reduce the amount of power
lost through transmission from 26 percent to 14 percent.
Msabaha said that he was happy Mrindoko raised this "very
important point."


8. (U) Judy O'Connor, Tanzania's World Bank Country
Representative, suggested that after the immediate problems
of generation were handled, the Ministry of Energy might
consider the possibility of using Millennium Challenge
Corporation (MCC) funds to address longer-term issues in the
power sector. Deputy Minister, Lawrence Masha, responded
that he was aware of the MCC compact process and that the
Ministry was currently working on a proposal for the power
sector. Masha also approached the Ambassador at the close of
the meeting, emphasizing his interest in the MCC process and
stating that beyond power generation issues, transmission and
distribution were critical problems hindering the sector.


9. (U) The impacts of the prevailing power crisis were of
primary concern to the meeting's participants. The Swedish
Ambassador Akesson, for example, inquired about budgetary
implications associated with the power crisis while the
Representative of the European Commission on Infrastructure,
Guy Rijcken, inquired about implications for private sector
growth. The short answer from the Minister was that there
would likely be implications for the GOT's budget as well as
private sector growth, but that the extent of the impact was
not yet known. Although TANESCO is trying to reach
compromises with many businesses, Msabaha noted that given
the scale of the problem, compromising is not always
possible. Highlighting the worrisome but unknown impact of
power shedding, Msabaha posed the rhetorical question, "How
can we speak of economic or social development without power?"
RETURN TO NORMALCY? HOPEFULLY BY END OF RAINY SEASON
-------------- --------------


10. (C) COMMENT: While the GOT pursues emergency generation
schemes and the country prays for the long rains to begin
(typically in early to mid-March),the private sector will
surely suffer negative impacts from deepening power cuts
(reftel 00312). Manufacturers face increased production
costs, service-oriented businesses face spiraling power
bills, and the traffic light on investment has turned yellow,
if not, temporarily blinking red. According to Mayank Malik,
Managing Director of Citibank (please protect),Twiga Cement
has put an investment of USD 100 million investment on hold
due to the unreliable power situation. When will Tanzania
return to some semblance of normalcy or "get back to where it
was before load shedding?" asked Andrew Massey, Head of the
Political Section of the British High Commission. While the
February 28 headline of the Guardian Newspaper read, "10 More
Days of Long Power Cuts," Msabaha predicted normalcy would
return only by the end of the rainy season - July or August -
at the soonest. END COMMENT.
RETZER