AF58 Fn inwiL 1 %7 T R ES T R !CT E D ill% U kilLIIHJ Volume 16lILL UIl Report No. AF-58a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BAN]K FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION INTa~E'CERN'A-d-KTIONALTf DEVELOTPMT OfCIWT1 TINOT N'AC'r A T'A PROSPECTS FOR- ECO. A% %A ;A4WNOI % DEVVL E , ~~ T OPJW AMENT1 IN EAS AFRICA (in four volumes) V'J.LTUMEL IIIL_ - TAINZANi. (in seven parts) PART SIX: ANNEX E - POWER August 31, 1967 Africa Department EQUIVALENTS Clurr-ncvy 1 Tanzania Shilling = U. S. $0. 14 U.S; $1 = T. Sh 7. 14 L 1 = U.S. $2.80 L. 1 = T. Sh. 20. 00 Throughout this report, unless otnerwise stated, tons refers to long tons of 2240 lbs. COMPOSITION OF THE MISSION This report is based on the findings of a Mission to East Africa which did its field work in October, November and December 1966 and consisted of the following: John C. de Wilde, Chief of Mission (IBRD) Cnlin M F= Bruce Dpunitv Chief of Mission and Chief Economist - Kenya (IBRD) KTUi1,niir CT; V Kriqhnq- lonnomist - Kenya (TRRT)) C. G. Akhurst, Agricultural Adviser - Kenya (FAO) Maurice Fenn, AgricuLtural Economist - Kenya (FAO) Per Tveite, Depuity Chief of Mission -and Chief Eco-no-mi - (Consultant) Bruno E. Scheltema, Economist - Tanzania (IBRD) Archie s Agricultural Ads =r- T -Lanzna (FAr) Jacques Kahane, Agricultural Economist - Tanzania (IBRD) OttoUU Maiss chc, "epU uty hULIeLf of IJl.L D.Lso and Chief Economist - Uganda (IBRD) ATichola Carter, ILUcn--i- -4U - UTTganda (ITTLD-)TU David 1T. M. Haynes, Agricultural Adviser - Uganda (IBRD) a1 .TT - _3 - I sr n _- - ._ A na. _ -4 __. . JvloULlau ie lUUet:I1111d, f LLUiULudrl etcoUUInUIIIstL' UU,dhUd \ kUl1oL Udllk , H. David Davis, Adviser on Tourism (IBRD) Bernard H. Decaux, Adviser on Industry (Consultant) Jack Derrick, Adviser on Industry (Consultant) TZ -3 - rT_A. I T1__ n/TT)TT \ Eduwarud V. K. dJaycUx, AdUViLser on T'ransportU kIBDD)l Aristides J. Macris, Adviser on Agricultural Training and Educautiu[n (Innij) David McLellan, Adviser on General Education (Consultant) Lye!i H. Ritchie, Adviser on Industrial Finance (IFC) Gavin Wyatt, Adviser on Power (IBRD) The Missionts findings relate for the most part to the situation as of the end of 1966, although in some respects note has been taken of developments up to the middLe of 1967. TABLE OF CONTENSL Page No. SUMMARY AND CONCLUSIONS Introduction 1 Demand for Electricity 1 Existing Facilities 2 The Company's License 3 Organization 3 Financial Situation 4 Tariffs 5 Future Demand 5 Capital Program 6 Future Strategy 8 Tables 1 Electric Power Sales, 1958-65 2 Industrial Energy Sales, 1958-65 3 Installed Plant and Maximum Demands, October 1966 4 Tanganyika E:lectric Supply Company Limited: Balance Sheet as at December 31, 1965 5 Tanganyika Electric Supply Company Limited: Revenue Account for Year Ending December 31, 1965 6 Tanganyika E:Lectric Supply Company Limited: Market Survey Estimates, 1965-75 - Maximum Demands 7 Large Industrial Power Consumers Expected to be Connected in Next Five Years 8 Capital Program and Sources of Finance of Tanganyika Electric Supolv Company Limited 9 Tanganyika Electric Supply Company Limited: Principal Projects Included in the 1967-1970 Program of Capital Development MAP TANZANIA POWER SECTOR SUMMARY AND CONCLUSIONS 1. The sum of maximum demands for energy at TANESCO's branches through- out Tanzania is expected -to increase at an average rate of about ll percent per annum in the period, 1L967-75. 2. The annual increments of power demand in the Dar es Salaam/Tanga area are now beeoming so Large that it is unreasonable to contemnlate meeting them with additional diesel generating units beyond about 1971 or 1972, b;y which time a new mainor scouire'e ofn energy should be I ommissqnned 3. Preliminarv indlirnt.i;nn are thnt the qnirre cof nower which wOl]li provide the lowest cost energy in the early 1970's is a hydroelectric station at Kidatu on the Great RuIha River. Possible alternatives are another hydro- electric station at Pongwe on the Wami River and a steam station in Dar es Salaam. T- n-.vA~, *$,- irnJA, +'ho I-.inr ,-.act .-.f ~ i(+ninin, rr -riill1 feCn:i. 'J 1IJ+'r 4. ~~ -- -rde -o avo:L the --vn coto btainlng a full feasibility, report on both the Kidatu and Wami Projects an independent consultant should be cal-l-ed l7£n no-w -to prepare a reportC set0ting outL Lthe rival claim,s of Cboth projects on a strictly comparable basis so that a decision can be taken within the next six mo,nths as to which of the two should - be carri feorward t1o 4hefullefeasi- bility report stage, including comparison with the thermal alternative. 5. During the four--year period 1967 through 1970 TANESCO will need to obtain approximately U7 mll.ilon (US$20 milllon equl-valent) for completion of its development program. Of this sum about US$14 million will be required in foreign exchange. 6. The di-vision of responsiblity between the Ministry of Land SuriVey and Water Development on the one hand and the Ministry of Communications, Power end Works on the other, in the matter of development of multlpur-posb hydroelectric projects, requires more precise definition. 7. A hydrological survey of the power resources of the basins of the Rufiji, Ruvu, Wami and Pangani Rivers would be useful, but there would seem to be no useful purpose served by extending the survey beyond these river basins at this stage. 8. Very careful consideration should be given to the geological for-ma- tions in the Kikuletwa River area before deciding to embark on the construction of a storage reservoir. TANZANIA POWER SECTOR 1/ Introduction 1. Public supplles of electrii4ty were first provided ,idn Dar eSalaam Tabora, Dodoma and Kigoma by the German East African Railway between 1907 and 191). These undertakings were taken over by the British authorities luring the first World War arnd were operated and extended by the Public Works Depart- ment until" 1932. 2. I~~n 19,21, 4th,e Tanganyia Electrlc Cul U Co. Ltd4. -(TIAMvqon a fre -L L 1 l1)r bIle ±dAi -Lyr,d JhlL ~1U -L L.) 4-L uO. £j uu. \I21-in L V I A ' u we IUlMeUC with capital provided by The East African Power & Lighting Co. Ltd. (EAP&L) in Kenya, for the pue UrSE of constructing a hydroelectric station on the Pangani River at Grand Pangani Falls, to supply the many sisal estate factorie!s and other de mands in TangE Pro-vlnce At the same tlme a second company knownr as the Dar es Salaam and District Electric Supply Co. Ltd. (DARESCO) was formed, with capital provided b-y TAINESCO, to take over all the go-verment-owned elec- trical utilities in the country. In exchange for the assets handed over to DARESCO, Lhe Governmrent received 45,000 IU shares in the Company and a seat on the Board of Direct;ors of DARESCO. 3. In the ensuing years the companies extended their networks and DARESCO inaugurated a number of new undertakings in important centers through- out the country. In 1957, the two companies were amalgamated under the name of the Tanganyika Electric Supply Co. Ltd. At this time the Company was operating 15 separate undertakings, each having its own generating facilities. 4. Soon after Tanganyika obtained her independence in December 1961 the Government indicated that it would like to purchase the EAP&L's interest in TANESCO, and in April 1964 an agreement was signed under which the Govern- ment purchased at par the EAP&L's 2,955,000 I1 shares in TAVIESCU. Since that time the Government has maintained its position as the only shareholder in TANESCO, though the Commonwealth Development Corporation has an option to convert 1750,000 out of its E3,000,000 debenture stock, into ordinary shares, at any time up to December 31, 1968. 5. The Government has made no material changes in TANESCO other than in appointment of Board members since it obtained the controlling interest and the Company continues to operate as an ordinary commercial utility with the same staff as before. Demand for Electricity 6. The sum of mraximum demands at utility undertakings has grown from 12 MW in 1950 to 44 MWE in 1965, which represents an average growth rate of approximately 9 percent per annum over the 15-year period. 7. Growth in recent years has been largely concentrated in the Dar es Salaam area and has been more rapid than in the past. This is mainly due to the development of secondary industries, but also very recently due to extension 1/ This report relates to the electric supply industry of Mainland Tanzania. of the supnlv network into the sisal-growing areas around Morogoro. following the advent in 1964 of relatively cheap hydro power from the Hale Hydroelectric station on the Panaani River. In the years since 1947 there has been a con- siderable influx of secondary industries to Kenya to meet the requirements of the East African Common Market. Tanganvika obtained onlv a verv small Dro- portion of these industries, but in the early 1960's with independence in view, the Government of Tansanvika set abouit redressing this imbalance by intrnduclng measures to attract new industries and by active participation in promotion of some indiustries. Owingr to it.- sqituaionin as, thep pnrincipal port, -railhPead andl center of the largest market in the country, almost all the new industries have been cnncePntrante9 in thep TDaur es Snlanm nren Tabhle 1 qhrows the incrpeases in total sales of electric power over the eight years 1958 through 1965 by areas. Table 2 sows~r thei develo pment of industrial energy sales over the sam.e period. 8. Tn t1,e period, 1961-65 toal sales in Dar esO alCam increased a an average rate of 14.5 percent, and in the last two years the increases were 15. percent and 18.0 percent respectively. In the same period, industrial sales increased at an average rate of 15.5 percent with increases in the last two years ofi 17.5Z percent and 2C5.`3. pcrcent respcct4vely. 9 -ITn the T anga area, whi chl with tIhuCe Dar es Salaaar.. area accounts . f 4or about 75 percent of the Company's total business, sales in the period 1960 through 196 irs at an average rate of 7.5 percent. Since 1963, ho.Tever they have declined by 3.0 percent, due to the fact that nearly 70 percent of tnUot.all saltes in thIs a ----a aar C to sisal estate UC 4actor i, whid..ch h- I-av been ob ig 4edf to reduce production as a result of the recent recession in the sisal inJustry. C'I _ 1e cu t n r 4 l--------| 4 by -- - - 15 ., Q I;n Uat Uto oti VUlC U ;U )I Ut)IIIICL D l 1. C UCU U tI. t OUU -t UC J 11141 C 1111.114 offset by a fall of 5.8 percent in sales to the sisal industry. 10. In other areas growth has been relatively slow and in the case of Tabora, LiIInudi and IIMWtwara sal.es h ave been aAlmo'st sUtuaticUfo I the past four4U LU ears Existing Facillties 11. The attached map shows the licensed areas of supply, the location of the Company's generating stations and the main transmission lines connecting areas of supply. It will be seen that the only areas oI importance where interconnection has so far taken place are Moshi/Arusha and Dar es Salaam/ Tanga/Morogoro. 12. The capacity of installed generating plant and maximum demand at the different power stations as of November 1966, are shown in Table 3. It will be noted that with the exception of 38,500 kwT of hydroelectric plant in the Tanga area and three small hydroelectric stations totaling 2,720 kW at Moshi, Iringa and Mbeya, all generation is by diesel prime movers. Total generating plant installed consists of: Hydroelectric plant 41,220 kwr *Diesel electric pi-,lantn 30,600 kw Total 71,820 kw * In 63 units varying in size from 35 kw to 3,000 kw 13. Although there are valuable undeveloped coal deposits in southern Tanzania and there is a great hydroelectric potential in the country it has not been possible to utilize these resources to any great extent so far, due to their distance from the load centers and the smallness of the demand. The great distance between centers, which so far has precluded interconnection on account of the cost, except in the two areas previously mentioned, has also contributed to the existing nattern nf developnmnt i4 Supplies are given to low-tension rnnsnumers at 230 volt single phase and 400 volts 3 phase, 50 cycles A.C., and to high-tension consumers at volt- ages iun to 11,000 volts. 15. Transmission line voltages are 33) 000, 66,000 and 132,000. Lil-.es of 66,000 volts and above are generally constructed on reinforced concrete or steel portal structures. For voltages below 6ono ,rlt+a reinforced cor:rete or impregnated wood poles are used. The Company's License 16. The supply areas covered by the Comparny's license are also shown on thke m,ap. Ile present i Jc:ense -was -A4 rsue in 197-- unde M;L, L 4 4 Elcrc ty (r -e-- uuC ma. Lt_ L Liu ±LL.Lk1UIC: WOCD ±_L;DZUU iL1 _L7, I uiiiae £1 ~ L4~ Liu _ U,y \ 1~ ment) Ordinance (No. 3 of 1957) and expires in the year 2012. 17. The license provides for the Company to have first refusal of mny additional areas to be liceUnsed for pub s)ujLppliesb Uo lctrLiLLLy ±in Lthe country. It defines areas of "compulsory supply" within which the Company is obliged to provide a su--pply upo01 paymnenlt Of thIE requlired ch'a1rges by t1he consumers, and it lays down maximum rates which may not be exceeded for sale of energy for lighting and power. It also gives the Government the right to nominate one director to the Board of the Company, which in the period prior to acquisition of all the Company's shares by the Government, was oI consider- able significance. 18. Other provisions in the license provide for the designation of power development reserves at possible hydroelectric sites on rivers throughout the country, water rights on the Pangani River, the right to export power inlo neighboring territories, increases in maximum rates in the event of increases in taxation, the right to charge interest to capital account during construc- tion of projects and the usual rights and obligations to protect the interests of the Company and consumers. Organization 19. The Company's Board of Directors consists of a chairman, a deputy chairman, and six other members. All are part-time members and the present chairman and deputy chairman are the Minister of Communication, Power and Works and his Permanent Secretary, respectively. Of the remaining six members, one is a nominee of the Board of the East African Power and Lighting Co. in Kenya (for reasons given in paragraph 25), another is the East African repre- sentative of the Commonwealth Development Corporation, two are foreign advisers on loan to the Government, and the remaining two are Government officials. 20. In spite of the nredominanee of GonvernmPnt memhbrs in tThe rcomposition of the Board, the Company still operates on strictly commercial lines. A new generanl mnager has recntrly been provided by the British Government under a technical assistance program. With this exception no major changes in staff hnvp nor lrrfl followting acenu]isition of tlhe Cnompnynr bhr +the GrrPovrnmen+ nnt moc+ of the senior technical posts are held by expatriates who have served many vypers with tThe Cn=nrnr> 21= The Company employs consultantr fon-'r all major power station and trans- mission works. Contractors are also employed for all major works but minor pr-ower station extensions and distributionl-1 a~nd~± transmission works-~ up~ to 33,000 volts are normally carried out by the Company's staff. 22. The Company's accounts department is well run, billings are up to date and outstandings are insignificant. Billing isc already mechaized in the larger areas and the purchase of a computer is now contemplated. The Company has 36W,790 consumers of 7hich 22,790 are in the Coastal System Area and i4500 in the Moshi/Arusha area. 23. The Company is efficiently run and by operating on sound commercial principles relieves the Government of a considerable financial and adminis- trative burden. It can be regarded as a satisfactory organization for the m_aintenance and expansion ofP the country's electrical supply iindu stry. Fin n Cia Situa li-rn ,nc, orc n o rS A v-rAo 4rn r4 A i-v nc n_ A n, n u 4r cA -r-- n1 r - - A- - 4- Cu eli1 _lJu 'U L [ .KS U1 uVJILIPCLliy IIUU d Ull _1 iO UZL U . DliCLo v: CJ )1 UCLL U1 E5,347,535 (all of which was owned by Government), loans totaling f3 million an' reserves of 17C15-126. FMlxedu assetus totaled 893815adcretses exceeded current liabilities by f661,036. The Company's balance sheet for 19657 4s shkown 4-rin Tale --A 4and --rvenue account i4n Table 5. .LyI 2 j ,i ,LL) L 11 I ,'~ C J.IU. UL1V -L: ±;V~1LL .I. IS U I L .L OU±1 2 m Theagree,ment Lunder whichL th:e Government purchased the ""P"L's share- holding at par provides for payment over 12 years. Interest is charged at six and one--half percent per ann-rr bringin, the total purchase price o UU4 , 3U1,22 payable in equal semi-annual payments, the last of which is due in December 1975. Under this agreemenrt the EAP&L has the right to nUriurr&te a director to TAI\ESCO's Board until the last payment has been made. 26. A recent Cabinet paper issued by the Government requires the Company to operate at a profit and establishes the principle that if the Company should be required by the Government to carry out sub-economic development projects, the Government will provide subsidies to ensure a satisfactory return to the Company. Up to the end of 1965, no such requests for sub-economic development had been made to the Company but some are shortly expected. The same Cabinet paper endorses the principle that TANESCO should provide a proportion of its development finance from its own reserves and surpluses. 27. Although the return on net fixed assets was only 6.7 percent in 1965, an increase in tariffs introduced in February 1966, should bring this to a more satisfactory level in future years, and provide additional funds for ex- pansion of facilities. -5- 28. During 1966, the Comnanv had difficulty in obtaining the funds neces- sary for the expansion of facilities required to meet the rapidly growing demand. Commercial credits total'ing E792,000 repnnvable over five years hqve been obtained for supply of diesels to augment generating facilities at Dar es Salaam, Arusha and Mvranz2_ A 7--3/4 percent loan of R< nn,000 repayable over 15 years, has bhen obtained from the Governmtent, and a tied loan of $2 million has been obtained from Canada on soft terms. In addition a small loan of ln50,000 repayable over 10 years is under negotiation with The Standard Bank Finance and Develop- ment Corporation LTd. towards the cs of a headquarters ofic bui'ding 29. Most of the Com.pany's present financial difficulties arise frora the suspension of a 19 million British Government loan to Tanzania, following + 1 h+A ei.At-+teAsrA Oovrnels severnc o+E dpot-li rltins w4-1 4-1..- TT.1. -: _1 ni ..c ~ ~ Ji J 1~I~,~ LdAU 3 ~LJAi1dU1L _LLJ1i W ,1-1 bLLle * 1.- _Ln L L~;.J It is hoped that some of these funds will eventually become available to MAT\TTJE C0 f or1 refinancing th U.K - suppllers'I- 44 -4 4 crdt lnt Y, -hthe Company-has ~ I 'L .L I ±~L~±IL ~ U Li. up J4A.L Z) L.. lIIJ. U. L LI Ui VfL±i..I Uiv= JILZa i as d. recently entered. Tariffs 30. As previously mentioned, the Company's license lays down the maximum rates whlich may be charged lfor lighting anu power. hlese ratLes imay be changed with the consent of Government at any time after three years from the date of uith prev-uuf reLvislon. In fact, the pi- Presn iIaxitl1Iuru ha-ve rerula±neu uuniged for many years and are far above the rates presently charged by the Company, leaving plenty of room for adjustment at any rlme required. 31. In 1965, the Company's rate structure was reviewed with the assist- ance of a tariff consultant. As a result of this review, rates were sta:adard- ized throughout the country in February 1966, and revenue was increased by about 25 percent overall. At the same time care has been taken in fixing the new rates to ensure that so far as the business will allow, rates for different categories of consumers are related to the actual cost of supplying them. Attention has also been given to the need to raise the load factor at all undertakings in order to obtain the most effective use of the equipment in- stalled. 32. The new rate structure contains only four standard rates - Residen- tial, Commercial, Small Power and Large Power. In addition, there are two very large consumers on a special power tariff with off-peak concessions and there is a special tariff for street lighting. A fuel surcharge is applied in all areas supplied from thermal generating stations. Future Demand 33. In 1963, the Company commissioned Messrs. Merz and McLellan to carry out a market survey for electric power throughout Tanganyika. These estimates forecast a total demand of 51.2 MW in 1965 compared with an actual demand of 46.5 MW. The reason for the difference is thought to be not so much failure of industrial projects to materialize, but rather delay in completing them. In support of this theory there has been a closing of the gap in 1966. Whereas the 1965 actual demand was 10 percent below the estimate, the 1966 demand was expected to be about 7 percent below the forecast of 57.6 MW. The Company is thereiore continuing to base its pians on the market survey forecast, and for the purpose of its capital program this appears to be a reasonable decision. The market survey deimand estimates for all areas are shown in Table 6. 314. A comnoarison bet-ween the rate of increase in demand forecast by the Company, with the rate of increase in investment in the industrial sector forecast by the Bank Mission, confirms that the Company's estimates are, if anything, on the conservative side. 35. A list of some of the larger power consumers known to be requiring supplies from the Company during the next four years) 1967-1970, is given in Table 7. It will be noted that a large proportion of these are due to com- mence operations in this year, which may well result in the market survey estimates for 1967 being exceeded. The paucity of large new consumers shown after 1968 does not necessarily indicate a falling off in the rate of increase in demand. The list only includes loads which are reasonably firm. Other large loads now known to be in the formulative stage and which may materialize three to four years from now are not shown, either because no firm decision has been taken to proceed with them or because financing has not yet been obtained and their future is in doubt. 36. The Company's rates are not high by East African standards and are competitive with alternative sources of energy, both for residential and industrial purposes. With the exception of wood fuel in relatively smiall outlying centers of population, there is no alternative source of energy available which does not have to be imported. The great distances involved in transport by road and rail within the country may in up-country areas add more than 100 percent to the price at which fuel is available at the coast. At the coast itself) the relatively cheap hydro power available from the two existing stations on the Pangani River is highly competitive with thermal alternatives. 37. The estimates of demand do not include the loads of future sub-- economic projects which could be classified as rural schemes of social and political significance to the Government. The Company of its own initiative in 1965 and 1966 provided supplies to two projects which come within this category, at Tukuyu and Singida. It has also at the Government's request taken over in recent months two small supplies previously operated by the Government for its administrative centers at Fachingwea and Mpwapwa. The only other project of this nature under active consideration by Government is at Songea. However, the Company anticipates that in the next few years similar requests will be received in respect of the nine administrative centers at Njombe, Kasulu, Newala, Miasasi, Tunduru, Handeni, Same, Kondoa and Ifakara. The growth rate of such undertakings is expected to be negligible in the foreseeable future, and their size in relation to the total demand on the Company is insignificant. Canital Program 38. Estimated canital expenditure in the four years 1967 through 1970 is shown in Table 8 together with the estimated sources of funds. It will be - 7 - obhserved thnt in 9d9ition ton the P1 O97 000 1nnn al-redr bhtained and the E2,850,000 available from depreciation reserves and surpluses, the Company will need +o otain------lo_a finance to the extent o bu 1 mlllion o which about 18 million (US$22.4 million equivalent) will be foreign exchange. The principal projects included in the program and their costs are shown in Table 9. Of these projects, the following portions have not yet been financed but are now the subject of an application for a loan whichl was negotiated in July and is expected to be submitted to the Directors of the Bank in early October: Foreign Exchange Total Cost Required X ~~~~~~~~~~11 Uuungo Diesel Suutlon, UniUs 4, 5 and 6 (18 IV total) 829,000 790,000 Mwanza Diesel Station, Units '4 andl ) 3 M\/ total) 1O6%UUU 1OU,UUU Additiornal 33 kv Transmission Lines 1509000 90 ,000 Ubungo Sub-station E,xtensions 78,000 59,000 Minor Distribution W,'orks (1967-1969) 1,837,000 758,000 Total 13,058,000 11,857,000 US$ equivalent $8,562,4oo $5.,199,600 All the above works are scheduled for completion in the three years 1968 through 1970. 39. Of the projects listed in Table 9, the only ones which call for special comment are the Nyumba ya Mungu and Kidatu hydroelectric stations and Ubungo thermal station. 40. The Nyumba ya Mungu station is an adjunct to an irrigation project on the Pangani River in the Same area. It will add only about 8 MW to the gross capability of the M4oshi/Arusha system but nothing to the firm capa- bility. However, in view of its relatively low cost of about $250 per kw installed (excluding the dam) it is fully justified oIn account of the sa:ings it will permit in operation of thermal plant. 41. The Kidatu project has been shown as the next major power station addition to the Coastal Grid System. As discussed later in this report it is by no means certain that Kidatu is in fact the best choice of the possible alternatives, but whatevier project is finally selected, the cost is likely to be of the same order and the incidence of expenditure is not likely to be very different from that of Kidatu. - 8 - 42. The Ubunngo diesel station is required tn fill the gap hetween firm generating capability and demand during the next few years, until Kidatu or snme otlier maior power station development is nnmmiqinnen9 Thereafter this station would be retained for use as a peaking station and for standby pur- poses, and alsno to firm u_p the hydro stations on the Pangani River which have no long-term storage reservoirs. 43. Additional demand in the Moshi/Arusha area is to be met by addition of two 1.5 MJ diesel engines to the existing station at Arusha. These machines should be adequate for the period under review. An 8 MW hydroelectric project, known as Moshi No. 25 on the Kvikletli River i c planne for- c-ome-ncment i 1970 or 1971. There are some doubts as to the desirability of creating storage reservors- -i this area due t- the thinness of the ir,nper--,ic layer1 overly-in highly porous layers of rock. Very careful consideration will have to be given t1o t-h-e geo-loglicall proble1cms beifore clecidi4ng to e,m-bark, on thlis project. O I i nAr 44-'e s Si nvolved inpr o 4 d 1,i - AgA 4- necessary to thermal plants at the smaller branches up country. This has been included 41n Tale e8 Wi t expenditure ondist1r.ibUtiLo mains unerUth.L i heading M4inor Extensions to Power Stations and Mains.'' Future Strategy 45. With the exception of the Dar es Salaam/Tanga and Moshi/Arusha areas, which together accounted for 85 percenlt oL the Comnpan-y's sales inl 1965, there is little alternative but to continue to develop supply areas inr isoiation. with thermai plants, until such time as the loads have grown sufficiently large to warrant the high cost of interconnection due to the great distances involved. 46. With the completion of the Hyumba ya Mungu project in 1968 there will be a gap of only abou-t 70 miles between the Moshi/Arusha network and the Dar es Salaam/Tanga network. Although the voltages of the networks are inadequate to provide useful interconnection at the nearest points, a 132 kv interconnection about 170 miles long between the Hale Power Station in the Tanga area and the Kikuletwa Power Station in the Moshi area is likely to be more economical than further extension of local generation in the Moshi/Arusha area in the early nineteen seventies. 47. In the Dar es Salaam/Tanga area the annual increments in demand are reaching proportions where it is no longer reasonable to consider meeting these with a multiplicity of diesel units. The Ubungo station is only planned to meet the system's additional needs up to 1971 or 1972. There is therefore no time to lose in deciding on the next major generating project to be devel- oped. With this in nmind, the Company has obtained from its consultants, Messrs. Balfour Beatty & Co. Ltd of the U.K., a preliminary study of the hydro- electric possibilities in the area. Ten different sites have been considered. Of these9 two are on the Wami River, two on the Great Ruaha River, three on the Kilombero River and three on the Rufiji River. All these sites are shown on the map attached to this report. Of these schemes, six can be eliminated from present consideration because of their high cost, large size and/or -9- rer1,oteness from 1loa1 U centUers. OflI the rteml- 1airi1lnlg four,IU Uie ULo Wait VYdiAL LXi Ver. at Pongwe and another on the Great Ruaha River at Kidatu justify comparison on the gro-uLds of size, location and estimated cost of power produced. Both are capable of development in stages to about 150 MW capacity. 48. The Wami project has been investigated by SWECO, a Swedish firm of consultants commissioned by the Water Development and Irrigation Department (W4DID). It is a multipurpose project intended to impound water for irrigation of the lower Wami basin and generation of electric power. The total cost for the first stage of 80 MW including the dam but excluding interest during con- struction) would be about 116 million, and for the final development to 160 MW with an output of 700 million kwh would be 125 million. The cost of the ("am has been entirely charged to power because in the Bank's view, it is unlilkely that significant irrigation benefits would be realized for a long time. 49. The Kidatu scheme, which has been investigated by TANESCO's consul- tants and is recommended by them for immediate development, could provide irrigation benefits at a later date but has been costed as a straight powe!r project. The total cost of the first stage of 80 MW, including the dam, transmission line and substations, would be 113.43 million, including interest during construction, engineering and contingencies, and 119.7 million for the final development to 160 MW, with an output of 800 million kwh. The cost per kwh at full development is estimated at 4.4 cents (Tanzanian) compared wit;h 5.8 cents from a major steam station, assuming an interest rate of 6 percent on the capital invested in the project, and fuel at Sh85.00 per long ton. 50. The WDID has in the past been anxious to proceed with the Wami project under the impression that TANESCO will buy power from the project. On the other hand, TANESCO prefers to proceed with the development of Kidatu, Both schemes are regarded as multipurpose projects though the irrigation benefits are not likely to be realized until many years after commissioning of the power portion of the projects, Judging from experience with similar projects in Africa and other countries which do not have a long tradition of irrigation farming. Since the investigation of the Wami project is some way ahead of Kidatu and the two schemes have not been costed on a strictly comparable basis, it is recommended that a third consultant should be asked to review the existing data, supply any additional information considered necessary, and draw up a comparison of the costs and benefits of both schemes, before any further work is undertaken on either of them. This comparison should be carried out a, quickly as possible in order that the power company can commission without delay a full feasibility report on the better of the two schemes, to enable them to raise the necessary finance. 51. The extent to which the WDID has carried its investigations on the Wami project, with little regard to the requirements and alternatives available to the power authorities or to their investigation of other schemes, indicates a need to delineate more precisely the functions of this Department in relation to multipurpose projects. The planning, construction and operation of multipur- pose projects in which power interests are important are best carried out by the power authorities concerned in consultation with other interested parties, since the economics of such schemes and their operation usually depend on them to a - 10 - major extent. Power benefits are realizable from the outset in multipurpose projects whereas irrigation benefits are usually slow in developing, difficult to evaluate, and less certain of success. 52. A recent proposal to carry out a complete hydroelectric survey of the country would seem to have little merit at the present time. Such a survey would be expensive and since it would cover vast areas of territory remote from any development on a large scale likely to occur in the foreseeable future, it would seem to be a waste of money. A limited survey covering areas within reach of centers of development or river basins where developments are scheduled to occur would be most valuable. In particular, a detailed survey restricted to the basins of the Rufiji, Ruvu, Wami and Pangani rivers with a view to identify- ing power development sites and estimating the broad parameters of projects at these sites, would be most valuable in planning development programs. 53. Interconnection with neighboring countries' networks is not feasible on a large scale at the present moment; however, both the Tanzanian Government and TANESCO have indicated their intention to keep such a possibility in mind and favor cooperation where it could be shown that this would be to the benefit of Tanzania. Tanzania has in the past exported surplus power from Pangani Falls to Mombasa in Kenya, and is currently importing small quantities of power from Uganda in the Bukoba area. There is a 700-800 MW1 hydroelectric project capable of development on the Rufiji River about 100 miles southwest of Dar es Salaam at Steiglers Gorge, but the cost of developing this project could not be supported by the anticipated revenue from the Coastal Area for some years. When this project can be justified however, an interconnection of the Tanzanian coastal system with the Nairobi/Mombasa system will warrant careful examination. It is probable that such an interconnection would prove beneficial to both countries. Table 1: TALNGUAFYI&: ELECTRIC POWER 3DLES, 1958-65 (in miiLlioiis of kwh) UNDERTAKIENG 19',8 _1959 _ &i6 96] __;;62 XD 16hL9j ~~~ 1961 1962 j~~~~~~~~~~~~~~~~~~_i6 ,6h 1965 Dar Es Salaan 11.62 14.44 16.13 18.5( 2168 22.43 27-114 33.81 (Sisal 29.97 30.56 31.36 32.47' 36,75 -37.69 40.04 37.71 Tanga (Che- 5.22 5.31 5.95 5.28 4,.82 5.39 6.26 7.47 (Sisal 0.28 0.27 0.26 0.117 0.27) 8 8 8.39 Morogor° Othe r 0.23 0.25 0.25 0.39 0.39) 0.8 2.82 0.52 Moslhi 1.34 1.41 1Q93 1.97 2,,08 2.81) 6.18 6.9 Arusha 1.33 1.30 1.37 1658 1,.75 2.03) Dodoma 0.17 0.16 0.21 0.20 0.24 0.21 0.23 0.38 Tabora 0.45 0.28 0.14 0.211 0.,22 0.19 0.13 0.26 Kigoma 0.11 0.15 0.15 0.1', 0.17 0.19 0.24 0.26 Mwanza 0.62 o.52 0.54 o.65, 0,76 0.97 1.04 1.18 Bukoba - - 0.0 °2 0.12 0.17 0.14 0.13 Mbeya 0.07 0.06 0.09 0.1() 0.09 0.09 0.11 0.12 Iringa 0.37 0.39 0.43 0.414 0.47 0.79 1.09 1.27 Lindi 0.05 0.04 0.07 0.09 0.07 0.10 o.o6 0.07 Mtwara 0.10 0.07 0.11 0.27 0.15 0.10 0.08 o.o8 TOTAL 51.93 55.21 59.09 62.)19 69.93 74.0( 85.56 98.59 Percentage increase over previous year. 6.14 7.1 5.7 11.9 5.8 15.6 15.2 Table 2: TANGANYIKk: INDUSTRIAL ENERGY SALES, 15958-65 (in millions of kwh) UNDERTAKING 1958 1959 1960 1961 196$2 1963 1964 192 Dar Es Salaam 31.22 35.3,7 4o,, 4 L 45.66 53.23 58.20 67.18 79.27 Tanga 43.60 )45.37 L6.,73 46.8-3 53.01 58.00 58.74 56.33 Morogoro 1.47 1.55 1,,70 1.75 2.01 2.25 4.36 10Q97 Moshi 5.21 5.6o 6.57 7 .0)4 7.51 7.13) 6.) Arusha 3.67 3.86 b4.29 4.78 5.36 6.04) 1) Dodoma 0.8 1.15 1.29 1.38 1.53 1.61 1.69 1.593 Tabora 1.)42 1.41 1,36 1. 55 1.78 1.82 1.75 1.92 Kigona 030 0.3)4 0,37 0.39 0.46 0.53 0.62 0.67 Mwanza 2.98 3.12 3,.Jt3 4.00 L.17 4.47 4.68 4h.85 Bukoba - - 0,08 o.41, 0.74 0.81 0.95 1.07 Mbeya 1.09 1.28 1.39 1.46 1.45 1.56 1.66 1.87 Iringa 1.27 2.09; 2,,33 2.35 2.36 2.60 3Q00 3.38 Lindi 052 0.5 3 0,59 0.63 o.60 o.60 0.59 0.60 Mtwara 0.)45 0. 42 o.48 0.6c o.64 0.59 0.58 0.65 TOTAL 94.19 102.09 110,63 :kL.9 5 134.85 146.54 161.10 180.05 Percentage increase over previous year. 8.4 8,4 7.5 13.4 8.7 9.9 11.8 Table 3: INSTAILF,D PLANT AND iLAX2fl4,IM DEMAIU4DS. CCTOBER 1966 October 1966 1965 Type of nsNaxr-iii Load Branch of Prime ± aL-Ud tCapcicly Demand Factors Undertaking Mover Gross KW Firm i(J in kw. % Dar Es Salaam) Diese:l 16 700) 44 70 I - 5300 Tanga ) Hydro 38,500) ' Moshi ) Hvdro 1i 160) Arusha) Diesel 4.300) 2,660 3,b8O 53e 9 Mwanz Diesel 2,060 1n . 1 ;580 -n6=7 Iringa Hydro 1.220 330 730 58M8 Thabra Diesel 9n0 660 592 1V2 Dodoma Diesel 1,210 870 700 45,9 H4%r1rn 1 s r) ) Mbeya Diesel 320) 420 L50l TRlikcB'hn Tii-qPlI Rnn (Diel n02 Mtwara Diesel 5240 340 340 31.7 Kigom.a Diesel 850 550 .22l5 224,0 Lindi Ditcsel 480 280 202 43.1 Nachingw.ea Diesel 250 100 o 80 Musoma Diesel 365 200 61 Singlda D iesel 270 150 n 68 iMpwapwa Diesel 100 75 58 Tluy~ru Diesel. 1 8 1,~ . LL 1 7 iClJJ. A:) a .a. As th.e altitu,de ^.f4 Blr,anclheOS va,rieS lf1rom1 sea lk eve- to 6) 4 feet, the plant capacities given above are the site ratings, '>AJ-LiCII 4n. m,any cases are less than the nampl' rtns b -. Arnual load factors are not available for the f`ve smallest Branches. Table 4: TANGANYIKA ELECTRIC SUPPLY CCIMPANY LIMITED: BALANCE SHEET AS AT DECEMBE1R 31, ]i965 Authorised Ca pLtal 5_5C, 500,00. Issued Caoital 5,367,535. Fixed Assets Capital Reserve 157,011. At Net Book Amount at 31.12,1947 L 418,218. Reveniie Reserves Additions since at cost_ 11,320,564. Revenue Reserves____ Development b200,000. L11,738,782. General 320,000. Revenue Account 7h,615. Less: DIeprecistion Account at 31st December 118,628. 594,,615. Accumulated to date 3,3511,67. 594,615, Loan Capital 3,473,285. 3,47:3,285. D. 7 Sterling 8,6'' Deb. Stock (Secured) - 3,000,000. 265,07. 8,265,497. Current Liabilities Motor Vehicles, Furniture &: Lquip. 348J,0$54 5 reditors ;h417, 196. Less: Depreciation 175 426. East African & UK Tax 45,001. 172,628. 1268 462,197. 1720628 462,197. Current Assets Stores (I,ess 1l,C000 reserve) 501:,630. Sundry DE!btors 218,94oC. Investments at cost 9,gO0. Cash 392,763. 1,12:3,233. 1,123,233. ~9,561,3[,8. b9,561, 358. NOTE: Outstanding Capital Commitm?nts not prov'.ded in the balance sheet amount to L6215,000 of which b214,200 is recoverable from consumers, Table 1 TANGANYIKA ELECTRIC SUPPLY COMPANY LIMITEI): REVENUE ACCOUNT FOR YEAR ENI)ING DECEMBER 31, 1965 b _L Administration & General Expenses 3C),532 Operating Surplus &c Sundry Receipts 1,048,728 DepjreCILation CL Tools, etc., lC,2lLI Income from :nvestments a.nd Deposits 17,181 Depreciation of Fixed Assets: Land, Buildings & Machinery, etc. 4o6,895 Motor Vehicles, Furniture &. Equipment 34,253 4,41,148 44l,h 18 Remuneration of Auditors 3,l427' Directors Fees 3, h2 6 Stamp 'Duty on increase in Authorised Capital 7,500 Loss on sale of investments 2,813 Interest on Debenture Stock (Grosss) 34o,00() Preliminary & Development expenditure written off 111 Net Revenuie for tha year carried dlown 226,7138 LI- , of E11065, 909 Provision for U.K. Income Tax 4,739' Net Revenue for the year brought domn 226,738 Dividends on Stock, Gross 196,600 B3alance brou,-t forward from last year 249,216 DeveloprrTent Reserve 200,000 Ba'lance carried forward 7_ 61615 b _I7 9 ; 14795l4 Table 6: TANGANYIKA FULCTRIC SUJPPLY CO1'ANY LIMITED MARKET STuRVEY FSTIMATES, 1965-75 a/ MAYINTM D].EMIANDS (in KW) 1965 UNDE'RTAKINlT 3BPANCII (Acti]al ) 1966 1967 1968 1969 1970 1971 1972 :1973 1974 1975 Dar !Es Salaam 24,500 28,500 33,600 39,200 46,1o0 53,500 6:,500 70,500 79,800 89,200 Mlorogoro 6,b80 7, 080 7,7'49 8,L4iO 9,220 9,880 10,530 :11,2140 1] ,950 12,690 Tanga 18,1(o 19,600 20,900 22,200 23,500 214,900 26,1400 _;N)90 29,600 319400 System Total 37,600 46,600 52,500 59,].00 66,1400 74;,900 83,900 9'3,600 1014,100 115,300 126,300 Moash 1,640 2,830 3,090 3, 380 3,700 4,100 4,510 14,98(3 5,W00 6,040 6,650 .Arush¢,a 2,080 3,010 3,5100 14,070 14,770 5,3'50 6.,110 6,910 _ 7,80^50 8,670 9,720 System Total 4,040 5,260 5,5940 o 6,720 7,630 8,510 9,570 10,700 :]1,970 13,250 14,750 Dodoma %60 560 610 670 730 790) 860 920 1,000 1,080 1,160 Tabo-ra 590 740 810 880 960 1,0o40 1.,130 '1,210 1,3'10 1,o10 1,510 ]Kigorna 220 220 230 250 2-70 -2)90 310 35( 3830 420 460 Mwanza 1,360 1,950 2,140 2,380 2,b60 2,980 3,320 3,690 14,130 4,610 5,130 Buko'ba 372 1420 L.6o 500 5)50 600 660 720- 7130 870 910 Mbeya 550 550 580 610 65o0 7100 750 800 810 9 10 980 Iringa 710 670 700 730 7'60 820 880 940 1, 000 1, 070 1,150 Lindi 200 230 230 2140 2L4o 250 260 270 280 290 300 Mtwara 300 380 1.10 1450 1490 5)iO 590 650 720 790 870 46,502 57,580 64,610 75,520 81,3140 91,L420 102.,230 113,850 1,?6,5:20 14,000 153,520 a/ ]3y Messrs. Merz and McLellan Table 7: TANZANIA LARGE INDUSTRIAL POWER COINSTMIERS EXPECTED TO BE CONNECTE]D IN NEXT FIVE YEARS Additions to estimated Ultimate Maximnum Demand in KW Estimated kwh LOCATION NATURE OF INDUSTRY _ ____ 19677 196 9 = 1970 1971 Consuotion Dar Es Salaam Friendship Textile Mill 4,500 - - - 30,000,000 Steel Rolling Mill 6,000 - - - - 78,000,000 Nitrogen Plant 6,0000 - - - 28,00(,000 B. R. Group Textile Mill 1,250 - 2,700 - 3,500 21,000,000 Cement Works (Expansion) - 1,500 - - - 6,OO(,0OO Tasini Textiles - 1,000 - - - 11,000,000 Hilton HoteFl 750 - - - - 3,500,000 University College 500 - - - - 3,000,000 New Parliament Building - 500 - - - 1,500,000 Jubilee Trust Building - 500 - - - 1,500,000 Bank of Tanzania - o00 - - - 960,000 Police Heacdouarters 300 - - - - 500,000 Hotel Afric 300 - - - - 500,000 N. D. C. Headquarter - 300 - - - 1,000,000 Tanesco Head Office 250 - - - - 1,750,000 E. A. R. & H. (Ubungo) 200 - - - - 500,000 New Government Offices 200 - - - - 750,000 Belbase BuiLlding 200 - - - - 500,000 National Library 150 - - - - 900,00C0 Mwanza Sodefra Textile Mill 1,500 3,400 - - - 17,000,OOCI Edible Oil Factory 750 - - - - 268,o000 Brewery - 500 - - - 1,200,00C Mtwara Cashew Nut Factories 250 500 - - - 12,000, OC' Kwaragara/Handenii Sisal 200 40 40 40 40 500,00O Ngambo Sisal - - - 200 100 1, 000,OOC BumbuLi Hospital - - - 100 - 240,00C0 Tanga B:Lanket Factory 100 - - - - lo0,OO0 Amiani Tea Research Station 50 - - - - 75,OO0 Moshi Hospital - 300 200 - - 1,OOID,0OO Same Magnesite Mine - - 2,000 - - 5,000,0oo Moshi Tanning Factory. Hide and Skins - Torch batteries and cells. 500 - - - - 701),OOC) Himo S-isal - 500 - - - Not kniown. Arusha Fertiliser Plant - - 300 - - " Arusha Tanning Factory - - 250 - - Moshi Bag Factory - 500 250 - - 1,500,00C) Arusha Biscuit Factory 200 - - - - 500,OOC) Arusha Textile Factory (Kiltex) 1,100 650 - 2,250 - 35,0010,000 Arusha Soap Factory - 200 - - - 300,000 Arusha - - p 1n R -nnonr' Table 1: CAPITAL PROGRAMI AND SOURCES OF FINANCE OF TANGANYIKAI ELECTRIC SUPPLY COMPANY LIMITED (in E thousands) 1967 19c68 1969 1970 GENERATION (i) Included in the Plan 1,58:1 462 347 265 (ii) Kidatu Hydro Station (not in the P:Lan) - 700 3,420 4,020 Balance of E5,290,OO incurred including transmission in 19'11 and 1972 to complete the project TRANSMISSION & DISTRIBUTION (iii) Included in the Plan 988 286 96 191 (iv) Minor extensions to Power Stations and Mains (not included in the Planl) 473 532 615 690 BUILDINGS (v) New Headquarters in Dar es Salaam (not in the Plan.) 1715 10 - - TOTAL 3,217 1.,990 _4,4'78 5,166 E14,851 Foreign exclhange element in above total 2,039 927 2,200 3,900 I;9,066 SOURCES OF FINANCE Internally generated cash 81:1 467 829 743 Government loan 685 251 - - Commercial credits 731 Canadian loan 32!4 36 Loan for Office Building 133 17 TOTAL IFUNDS AVAILABLE 2,684 771 829 743 f5,02'1 Additional Finance Required 533 1,219 3,619 4,423 E9,824 (Foreign and Local) -- - NOTE: The Plan referred to above is the GTovernment; s Five-Year I)evelopment Plan 1966 through 1970. Table9: TANGANYIKA ELECTRIC STUPPLY COMPANY LIMITED PRINCIPAL PROJECTS INCLUDED IN THE 1967-70 PROGRAM OF CAPITAL 'DEVELOPMENT Expenditure Estimated Estimated Date in Program Total of PROJECT Period Cost Completion L Nyumba ya. Murigu H[ydro Project 468,000 710, 000 1.968 Ubungo 3C) MW Diesel 'Station 1,623,000 1,673,000 1970 Kidatu Hydro Pro ject 8,140,000 13,430,000 1972 r5 Additional Diesels of L.5 MW eELch at MWaLnza and 2 at Arusha 494,000 494,000 1.968 66 kv1 line NYM to Moshi ) 1967 66 kv line Moshi/Arusha ) 923,000 923,000 1967 1.32 kj line Chalinze/Morogoro ) 1967 33 kv Feeders 150,000 150,9000 1 969 Ubungo Sub-Station Extensions 148,000 148,000 1969 Moshi./Kikuletwa 66/33 Ikv Sub-Station 82,000. 82,000 1969 Headquarters Office Dar es SaLlaai 185,000 185,000 1968 Hale & Ilala Sub-Station extensions 158,000 158,000 1970 Additional Diesels Coastal Area 70,000 900, 000 1971 Computer Installationr 100,000 100, 000 1968 12,541,000 18,953, 000 Minor Extension t;o Power Stations & Mains 2,310,000 TOT10TAI DIJRING PLAN PERXIOD 140,51,000 d k BukoboJ - Co/ g > s ~~~~~~~~~~~TAN2ZAN IA > Cl > + t 1 .// ;ahusomo > \ k TANGANYIKA ELECTRIC: SUI'PLY CO. LTD. t e R t! ' 9- @4 - 0 oo 8 rp ~~~LICENSED SUPPLY AIREAS 1~~~~~~~~~~~~~~~~~~A _,,-~.o m-\D 5il 4 / | *ShioYonJ t_,- ' 0 3Eu rwo ,% WN W. ./ E I ¢ ... ,, y . f / .,~~~~~~~~O-d- N R . / ! oK=5ulu 't,J , \vzf5 /8 0 <8 OLoholo .bU z~~~~~~~~A'- \ j T-___ a~~~- ~ ~ \_ - * ;5Mtero E iKOil;iz d-- roiQoirrengerr+R-Es-DAR-ESALAAMA -iK \ X ~~~~~~--\ >, ~~~ '' . t ~~~~l g p-' a t C' C O N G O is > L X --<> " / t z Kidiltu ! -- - t * E.i-aing thrm sain OQMe ' ANogo * bs L- -g hldr. tts _j \tks F.li-aing bull. supply * ;uuuO [ g'r _f_J , PrA!ce tl --l st'ton- 4t 1s .4Z~ ~'' ProJ-^ted 13vKVi o:gn _N hnge = = ProJ: sted t(:lsV j j ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~ tM. > > @ @@ L l sa. il g3 3 K,,'\-(O uo;r 0//5 FEbR'J;RY l'09Nt... U