Sh2.93tr: What taxpayers paid to avert power crisis

BY RODGERS LUHWAGO

22nd June 2013

  But, the billion-dollar question is: where did the Sh2.93 trillion come from?

Ministry of Energy and Minerals under Professor Sospeter Muhongo

It’s a fact that the Ministry of Energy and Minerals under Professor Sospeter Muhongo and permanent secretary Eliakim Maswi lived their promise of July, 2012 -- that the nation would not face another power rationing.
 For the period between June last year and June this year, power rationing has been reduced drastically, thanks to the hefty price paid by taxpayers amounting to $1.8 billion (Sh2.93 trillion) to buy heavy furnace oil (HFO) from independent power producers.
But the reduction raises a billion-dollar question -- where did the trillions come from -- because during the 2012/13 budget for ministry, the procurement of heavy furnace oil was allocated only Sh50 billion ($30 million)?
By the end of June, this year, the bill will surge to a whopping Sh2.93 trillion or 20 percent of last year’s national budget as the country continues to rely heavily on independent power producers to curb the power deficit.
According to another report tabled in Parliament by the Standing Committee on Budget on Monday this week, about Sh1.2 trillion would be needed just to buy heavy furnace oil, meaning there will be more spending in the power sector.
For the past twelve months – since the plan was fully adopted -- the cash-strapped state power utility firm, Tanesco, has been spending an average of $150 million monthly to avert power rationing, which is three times the firm’s monthly revenue collections.
This doesn’t include the $22m monthly capacity charges charged by the Independent Power Producers (IPP) who have procured and installed their electricity generation plants in Dar es Salaam and Mwanza to help Tanesco curb its power rationing in the past seven years.
According to Tanesco’s financial analysis report for 2012, the company earns just $50 million (Sh80 billion) a month.
 Irked by the massive spending, some MPs now demand explanation on how Treasury could spend such huge amounts of money without parliamentary approval.
However, a quick survey by the Guardian shows that the lawmakers are divided: those who support massive spending because it saved the nation from severe power rationing and those who see the move as a clear violation of the ‘checks and balances’ between the State and Parliament.
As a result, Simanjiro legislator Christopher Ole Sendeka yesterday said he would seek the Speaker’s permission to table a private motion to question the government’s tendencies to reallocate funds passed by Parliament without the watchdog’s approval.

The outspoken MP’s move has been prompted by a report that Tanesco had been spending over five billion shillings a day in 2012/2013 just to buy heavy furnace oil.

According to the report on the state of the economy tabled in Parliament by the Parliamentary Standing Committee on Budget on Monday this week, Tanesco was last year allocated some Sh50.39bn for buying heavy funnel oil but ended up spending over Sh 1.2 trillion.

Now Ole Sendeka says the government must explain where Treasury got that money, accusing it of diverting funds from other areas without approval from Parliament, which he said undermines the powers of the House.

“It is sad that the government is lying to the House … in its 2012/2013 national budget proposal it allocated Sh47.96 billion in domestic funds and Sh2.43 billion in foreign money to run Tanesco … but it ended up spending over Sh1.2 trillion without approval from Parliament,” he said.

The report on the state of national economy tabled early this week by Budgetary Committee Chairman Andrew Chenge (CCM -- Bariadi West), says Tanesco may need up to Sh 2.2 trillion to procure heavy funnel oil if all oil-powered plants were switched on.

Chenge confirms that the government had to divert money allocated for other projects to Tanesco to avoid another power crisis.

Still worse, the power utility has been allocated only Sh 273 billion for the 2013/2014 fiscal year, meaning that diversion of funds from other projects would continue without Parliament approval.

When the Guardian sought clarification from Prof Sospeter Muhongo on where the government got the money to buy heavy funnel oil, the minister simply disputed the figure of $5m as the amount that Tanesco had been spending a day to purchase oil.

The Minister for Finance, Dr William Mgimwa, wasn’t available for comment on the massive spending as well as the plan by Simanjiro lawmaker to table a private motion next week.

A former cabinet minister who preferred anonymity said there was no way the government could tell the truth about possible power rationing.

“Neither Prof. Muhongo nor Dr Mgimwa can tell the truth because the massive spending … though it saved the nation … also affected other development projects negatively … this is because Treasury cancelled some projects in order to fund heavy furnace oil purchases.”

SOURCE: THE GUARDIAN