1. TANZANIA ELECTRIC SUPPLY COMPANY LTD
Presentation on the performance of the Company to Development Partners By
Eng. Felchesmi Mramba
Managing Director- TANESCO

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Contents
Background
Current Power Situation
Internal Reforms and Status
Recent Improvements
Financial Performance
Conclusion
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3. Background
Tanzania Electric Supply Company Limited is a parastatal organization under the Ministry of Energy and Minerals (MEM) established in 1964.
The Company’s core business is Generation, Transmission and Distribution.
The Company also sale electricity to the mainland and bulk power supply to the Island of Zanzibar.
Vision
To be an efficient and commercially focused utility supporting the development of Tanzania and to be a power house of East Africa.
Mission
To generate/purchase, transmit and supply electricity in the most effective, competitive and sustainable manner possible.
Company Values
Ethical
Excellence
Receptiveness

4. Current Power situation
Generation
Installed capacity in the grid is MW. Hydro: MW (37.43%); Thermal: 939 MW (62.57%).
Capacity of thermal plants (Gas: 501MW; Oil: MW)
Off-grid stations total capacity is 92.4 MW
Highest grid system demand is recorded in November 2013.
Transmission System :
Transmission network comprises of 2,732 km of 220kV lines; 1, km of 132 kV lines; and km of 66 kV lines, totalling 4,866.85km by the end of November 2013.
Distribution System :
Comprises of 17,021 km of 33 kV lines, 5,375km of 11kV lines, 34,513km of LV and 11,124 distribution transformers.

5. Internal Reforms and Status
Main Focus Areas
Operational Efficiency
Customer Service Improvement
Business Growth
Our people
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6. 1. Operational Efficiency
Build Effective Procurement function by:
Decentralizing procurement function
Restructuring the PMU
Build PMU Capacity
Effective Management of Stock items by:
Enhancing Stock Management
Enhancing Stock Monitoring
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7. Operational Efficiency …
Strengthening ICT systems to support the business
Implement Corporate Management System
Automate most of the Operations
Improve on collection of electricity revenues
Replace all post-paid meters with prepaid meters in three years time
Use Banks for collection of payments from customers
Establish electronic payment systems for credit systems
Stretch collection targets with attractive incentives to best performers
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8. Operational Efficiency …
Improve revenue protection
Increase severity of penalties to electricity thieves
Enhance education to customers on electricity theft
Enhance partnerships with customers to provide information on electricity theft
Institute Stern disciplinary action on staff any colluding with customers to steal electricity
Use modern tools, technology and improved technical design
Acquire modern tools to standardize workmanship
Use Low cost but good quality designs and materials
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2. Customer Service …
Improve quality of power supply to customers
Improve maintenance of the system
Complete the ongoing Distribution Projects to improve reliability and improve voltage
Improve electrical safety
Monitor compliance on safety measures in distribution lines e.g. use of insulators, cutting of trees and use of PPE
Institute friendly process and timely compensation to affected customers
Enhance Monitoring of safety compliance
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Customer Service…
Enhance customers relations management
Establish one stop shop under reviewed customer processes
Enhance monitoring and evaluation of Customers Service Charter implementation
Enhance Customer Service Training
Improve Customer Communication
Use more efficient communication channels including sms and social media to communicate with customers
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Customer Service …
Enhance stakeholder relationship and engagement including functional PR
Develop communication policy and strategy
Capacity building
Provide adequate tools and equipment
Provide strategic guidance for stakeholders Relations Management at various organizational levels i.e. Corporate, zonal, regional and plant levels
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3. Business Growth …
Build a Lean Head office structure focused on supporting regional operations
Decentralize Operations and empower zonal and regional offices
Increase access to electricity in Urban areas
Source commercial financing for network expansion and rehabilitation
Implement urban electrification program
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Business Growth …
Expand Customer base
Outsourcing distribution network expansion and rehabilitation
Stretch connection targets for all region
Allow Customer Group payment to speed customer connection and reduce connection costs
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Our People
Involvement of regional/plant management in setting performance objectives
Participatory driven performance contracts
One Minute Goals
PDP (Performance Development Program)
Inculcate business management orientation and sense of responsibility and accountability
Enhance Management and Leadership Capacity
Establish accountability through regular financial reporting and operations monitoring and evaluation
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15. Internal Reforms - Status
PMU
Specialized Units within PMU operational
All posts advertised
Interview of shortlisted candidates in progress
ICT
Establishment of CMS is in progress
Use of Banks customers payments started in May 2014 and being rolled out to all regions. Completion: July 2014
Use of SMS to inform customers in progress
Online application for new connection is in progress
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16. Internal Reforms - Status
Revenue Protection
Installation of meter on substations and feeders completed by 100%
Installation of meters on transformers and feeders completed in Dar es Salaam, Tanga, Coast and Iringa
Installation of AMR meters to all T2 & T3 customers is 100% completed
Inspection Vehicles procured for all Class A regions
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17. Internal Reforms - Status
Access to electricity
Connection to outstanding applications of more than 30 Working days completed.
Areas to be electrified under Urban Electrification Programme has been identified negotiation for funding of the same is in progress.
Use of Modern Tools and Technology
Procurement of necessary tools and equipment is in progress.
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18. Internal Reforms - Status
Involvement of regional/plant management in setting performance objectives
Performance Contracts for 2014 signed with subordinates
All regions and plant managers have submitted their business plan that will be used to set their next year Performance Contracts.
One Minute Goal Targets agreed with Subordinated
PDP Group Targets agreed with all regions and Power Plants
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Recent Improvements
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Recent Improvements …
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Recent Improvements …
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Recent Improvements …
Reasons for loss reduction
Replacement of post paid meters with pre paid meters
Energy metering at substations, feeders boundary and transformer
Replacement of defective meters
Enforcement of meter inspections
Enhanced maintenance
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Recent Improvements …
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Recent Improvements …
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Recent Improvements …
Mobile payment systems:
TANESCO has continued to use Banking Institutions and Mobile Phones Operators for convenience of payment
This mode of payment is simple, safe and user friendly.
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Recent Improvements …
Debt Recovery Strategy
TANESCO has started a three years program for replacement of post-paid meters (which is 36% of all customers meters at the moment) with pre-paid meters.
This will allow TANESCO to earn revenues upfront as well as ease recovery of 50% of the arrears for every purchase.
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Recent Improvements …
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Recent Improvements …
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Recent Improvements …
Group Performance Targets
TANESCO has implemented a Performance Development Program (PDP) with collective performance targets for regions/plants whereby after meeting targets reward is given and when target is not met a penalty is instituted.
Great performance improvements have been achieved using this strategy
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Recent Improvements …
Bonus and Performance …
TANESCO has also established individual performance contracts from top management to principal level and One Minute Goal (OMG) for the rest of the cadre which is also connected to a reward/penalty after evaluation of the achieved performance.
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Recent Improvements …
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32. Financial Performance
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34. Financial Performance …
The rise of outstanding arrears to creditors in the first quarter of 2014 is the result of higher usage of liquid fuel in the fourth quarter of 2013 due to lowest water levels in Mtera and Kidatu Dams.
Note: Mtera Dam was completely shut in October 2013 while Kidatu was shut in December 2013.
This was the most severe drought impact for a period of four years since drought started
As a resulted it derailed the trend of arreas decrease observed during 3rd quarter of 2013.
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35. Financial Performance …
Starting from January 2014, the water inflows to Mtera dam increased due to better rains in 2014 and production from Mtera and Kidatu plants increased and hence use of liquid fuel was minimized.
This contributed to reduced cost of generation
TANESCO’s revenue showed improvement from January 2014 due to tariff increase and reduced generation costs
Payment of outstanding arrears to EPPs and IPPs from TANESCO revenues had consistent improvement
TANESCO has also managed to buy enough distribution materials and connect the customers who were pending  
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36. Financial Performance …
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37. Financial Performance …
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38. Financial Performance …
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39. Financial Performance …
Assumptions:
Generation plan assumes an average hydrology
Cost of Generation will go down in year 2015 due to replacement of EPPs and IPPs which generate by liquid fuels with gas fired plants.
The Financial Support from the Development Donors will continue in 2014 and the Government will disburse to TANESCO the promised USD 100m and 80 from the Development Partners in the months of July and October respectively.
The Demand will continue to grow at a steady rate of less than 8% for 2014.
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40. Financial Performance …
Assumptions:
In the year 2016 there will be a slight increase in cost of sale resulting from the carried costs of newly commissioned IPPs and PPPs.
No tariff increase forecast from 2014 – 2017 but revenue growth will depend on new customer connections and increased consumption.
The provision for bad debt will start decreasing in year 2017 following replacement of postpaid meters by pre paid meters throughout the country.
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41. Financial Performance …
Impact of the following on TANESCO’s financial situation:
Tariff increase; Revenue collection increased from TZS billion in March 2013 to TZS billion in March 2014 – which is an increase of 33.4%
Rain; Cost of production dropped from TZS billion (in January 2014) to TZS billion (in February 2014) – which is a decrease of 25%.
DPs disbursement. Reflected under “Arrears status” in financial performance.
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Other Success Stories
Establishment of two Subsidiaries:
The following two subsidiaries have been established under TANESCO:
TGDC – Tanzania Geothermal Development Company. This is a Company created with the purpose of developing (studying, exploring and drilling) Geothermal Potentials in the Country.
TCPC – Tanzania Concrete Poles Company: This a Company created to deal with manufacturing of concrete pole for transmission and distribution uses in the country. The purpose being to adress the issue of deforestration as well as supplying poles which are enviromentally friendly and in a sustainable way.
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43. Conclusion
TANESCO’s Financial situation has shown strong signs of recovering and as per the projections the outstanding arrears should be fully liquidated in 2015
Consequently TANESCO has started retiring of EPPs. Two Symbion plants in Dodoma and Arusha have been decommissioned in June 2014.
Two more which are Aggreko Ubungo and Aggreko Tegeta will be decommissioned in November 2014.
TANESCO will soon start to negotiate with Symbion Ubungo to change from Emergency to long term IPP contract arrangements in order to further bring down generation costs.
TANESCO and IPTL will soon start negotiation on the conversion from liquid fuel to natural gas usage.

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Ahsante Thanks
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