By Deodatus Mfugale

Tanzania’s potential as a coveted investment destination has not fully been exploited because the country has unreliable power supply, investors and economists attending the Economist Conferences’ Business Roundtable discussion said in Dar es Salaam on Monday.

During the discussions most of the delegates acknowledged that Tanzania has some of the best investment attractions in the region highlighting peace, political stability and a fast growing economy but decried the erratic electricity supply which often interferes with industrial production and quality service delivery. Unreliable electricity supply has been a major setback to investors in Tanzania.

The participants who comprised delegates from the mining, tourism and hospitality, energy and other sectors raised concern that the problem has been recurrent since the early 1990s when economic liberalization started in the country and it seems the government is doing much to rectify the situation.

Bitter memories.

Between 1993 and 1994 the country faced severe electricity problems after water levels in its Mtera, Kidatu, Pangani, Nyumba ya Mungu and Hale dams fell drastically, thus reducing electricity production in the hydropower plants. The country then experienced power rationing for the first time and while the production sector suffered heavily, the business community capitalized on the situation to embark on the importation and sale of electricity generators of various capacities.

With abundant rainfall in the subsequent years, the crisis eased off but was never eliminated. With things seemingly coming back to normal, the government did not work to find a lasting solution to the problem.

A severe drought again hit the country in between 2005 and 2006 sending water levels in the dams to their lowest levels ever and completely arresting electricity production. Mtera dam for example, which has four turbines had to close three of them and run only one, for hardly eight hours a day. Load shedding went as far as 12 hours a day and he situation affected people from all walks of life.
Early this year, Zanzibar had to go without electricity for about four weeks after a marine cable that connects the island to the national grid blew up. And only two weeks a go the country’s power supply company, TANESCO, instituted power rationing after two turbines at a gas-to-electricity power plant blue up and greatly reduced the country’s electricity supply. This situation has made local and foreign investors reluctant to make any significant investments in the country.
“There is no doubt that Tanzania is today the preferred investment destination in the region but we don’t see many investors coming in mainly because of this energy crisis. It is important for the government to look into this problem and so benefit from the potential that exists,” said Gareth Taylor, Vice President for Barrick Gold Tanzania.

Taking the President’s word?

However President Jakaya Kikwete who gave a keynote address at the conference assured investors that electricity supply in the country is set to stabilize in the near future as the government would no longer solely depend on hydroelectricity power.
“We are working on alternative sources of electricity … and I can assure that we will soon be ready to counter any electricity crisis,” the President said.
He cautioned, however, that even with all the measures being put in place thee is no way accidents could be avoided.
“A turbine might breakdown or a generator could fail at some point. These are accidents like any and should not be taken as serious challenges. We will be able to handle them immediately,” he assured the investors.
ENDS