Electricity – the pursuit of excellence
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Transcript of Electricity – the pursuit of excellence
> Context – overview of the sector
> Poor performance – symptoms and diagnosis
> Solutions – medium term and immediate
Customers
Customers
Customers
Customers
Generation650MW
Transmission
distributionIPTL
100MW
Songas180MW
New genco?
New genco?
Policy and regulation by MEM
Tanzania’s electricity sector is dominated by TANESCO
Customers
Customers
Customers
Customers
Transmission
distributionAggreko
50MW
OFPC380MW
Bujagali200MW
Regulated by an independent regulator
Government retains some ownership in Uganda’s electricity sector but mostly it is commercially driven
New 100MW
Customers
Customers
Customers
Customers
Transmission
distribution
Genco
Genco
Genco
Regulated by an independent regulator
UK, like many European, US and Latin American countries has no government ownership
Genco
distributiondistribution
distribution
We are all familiar with the problems…
> poor reliability
> higher prices
> low access
> load-shedding
…and the impact on our businesses and homes
> unable to operate
> loss of production batches
> damage to equipment
> high cost of back up generation
cost of lack of electricity supply is estimated at between 50c and $2.00 for each unit not supplied
Tanzania’s generation capacity is mostly hydro-electric and dependent on rainfall…
80
200
180Kidatu
Mtera
Kihansi
rain rain rain
…and today long term water levels are critically low (though ‘run-of-river’ stations are OK)…
0
120
180Kidatu
Mtera
Kihansi
rain rain rain
…so when the rains stop, we will be back to where we were a few weeks ago…
10
20
20Kidatu
Mtera
Kihansi
rain rain rain
…and without hydro generation TANESCO cannot meet daily demand
Daily demand
0
100
200
300
400
500
600
1 2 3 4 5 6 7 8 9 1011 1213 1415 1617 181920 2122 2324
Demand
Without immediate short term generation demand will outstrip supply for between three and five years
Average capacity v demand
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011
Year
MW
CCGT
Tegeta EPP
Kinyerezi
IPTL
EPP
Songas
Hydro
Supply is just about enough to meet demand if two new emergency plants are brought on line this year
Average capacity v demand
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011
Year
MW
CCGT
Tegeta EPP
Kinyerezi
IPTL
EPP
Songas
Hydro
Reasons for poor performance
> Historical under-investment
> TANESCO is under-resourced
> Management has not been performance-focused
> Poor planning process
Reliable electricity supply is achievable within five years
> commercial management focused on bottom line performance
> rules based regulation setting targets for efficiency and reliability
> set tariffs to reflect actual costs of the sector including cost of capital
> step back, let managers manage and reward/penalise success/failure
Tanzania has the lowest average electricity price in East Africa
Comparative electricity prices in East Africa
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Domestic General Small industrial Large industrial
Type of customer
US
ce
nts
/ k
Wh
Kenya
Tanzania
Uganda
Today’s load-shedding and ongoing poor reliability are the result of a prolonged historical failure of the sector investment process
Forecastgrowth, and
reservemargin
Identify investment
needs
Identify capital
available
Structureprojectsand getcapital
Implement
Causes of failure to invest:
• bankrupt sector• donor / subsidy reliant• insufficient experience• political decisions / indecisions
Capital is available:
• Commercial banks• Institutions / pension funds• Dar Stock Exchange• Strategic investors• Development Finance • Multi-laterals