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HISTORICAL BACKGROUND

Tanzania Electric Supply Company Limited (TANESCO) is a parastatal organization under the Ministry of Energy and Minerals. The Company generates, transmits, distributes and sells electricity to Tanzania Mainland and sells bulk power to the Zanzibar Electricity Corporation (ZECO) which in turn sells it to the public in islands_ Unguja and Pemba. TANESCO owns most of the electricity generating, transmitting and distributing facilities in Tanzania Mainland, which has an estimated population of 40.2 million people by July 2008 (World Fact Book).

The German colonialists established the first public electricity supply in Tanzania (which was then called Tanganyika) in 1908 at Dar es Salaam. It served the railway workshops and a part of the town where the colonialists were mostly staying. When the Tanganyika territory was mandated to Great Britain in 1920, a Government Electricity Department was formed to take over and operate the public supplies left by the Germans.

In 1931, the Government handed over the undertaking at Dar es Salaam and those elsewhere upcountry (Dodoma, Tabora and Kigoma) to private enterprises. One of these companies was the Tanganyika Electric supply Company Ltd. (TANESCO) which was established on 26th November 1931 and the other company was the Dar es Salaam and District Electric Supply Company Ltd (DARESCO).

TANESCO commenced operations in 1933 by operating a diesel power station at Kange in the outskirt of Tanga; by 1936 the company had constructed a dam 90m long across the Pangani River and had commissioned two generators totaling 5MW.  Concurrently with this, over 400km of supply lines were erected.  In 1947, 1952 and 1959 three more sets were installed, bringing the total capacity up to 17.5Mw, its present value.

By 1945 the major part of the assets of the company was invested in supplies to sisal industries in the area.  This “one-crop load” aspect of the supply entailed obvious risks and, in 1945, the company sought permission to export power to the port of Mombasa in Kenya, partly to diversify its customers.

By an agreement dated February 12, 1948, among the Tanganyika Government, the Kenya Government and TANESCO, TANESCO was authorized to export surplus power from the Pangani Falls power station to Mombasa, subject to certain conditions designed to safeguard supplies to consumers in the company’s Tanganyika concession.  The supply was provided by a transmission line some 135 km long erected on concrete poles. This contract was terminated in 1965.

DARESCO’s early years of operation were occupied in constructing a new power station at Kurasini in Dar es Salaam, upcountry i.e.1936 (Mwanza), 1937 (Moshi), 1944 (Arusha) and in the 1950’s new branches were established at Tabora, Dodoma, Mbeya, Iringa, Lindi, Mtwara and Morogoro.

After Tanganyika goes its independence on December 9, 1961, the government showed its interest to purchase shares from two private companies.

Between 1964 and 1975 the government purchases all the shares from the two companies.

Development and construction since independence
Immediately after Independence, TANESCO started planning new power projects in order to meet the increasing industrial, commercial and rural township power supply demands.  Studies to develop the country’s hydroelectric resource were commended in order to reduce the cost of generation using imported diesel oil.

Hale hydropower plant
In 1962, construction of the 21-MW Hale hydropower station on the Pangani River, upstream from Pangani Falls, was started, with an associated transmission line from hale to Dar es Salaam.  This power station was commissioned and formally opened by President Nyerere in 1964.  At the same time, supplies were extended to virtually all of the sisal estates in the Pangani area by the addition of branches at Kilosa, Kimamba and Lushoto.

Other small generation and transmission projects
In 1967, augmentation of the existing generation and distribution systems in several towns was commenced.  Construction of the Ubungo diesel power station in Dar es Salaam, to replace the old Kurasini plant, was completed in 1969.  In the same year, the 8MW Nyumba ya Mungu hydropower station on the headwaters of the Pangani River, and its associated transmission in 1969, while at Mwanza and Arusha extensions to the existing stations of 9MW and 6MW respectively were completed to Tanga by a 65km wood pole transmission line, and a transmission line to connect Morogoro to the line from Hale at Chalinze was also built.  The Moshi system was extended to Machame.  Various local extensions to the Dar es Salaam, Tanga and Morogoro systems were made to feed new industrial complexes and factories.

Electrification to rural areas and small townships
In 1965 the Tanzania Government declared a policy regarding electricity supplies to areas where economical operations were doubtful.  Under this policy, it was agreed that if TANESCO was required to provide power supply to townships which for some time might be uneconomic, then the company would be subsidized by either the Government, the local authority of prospective large consumers in the areas.  Following this policy decision, feasibility studies were conducted on several townships and subsequently the Government electricity installations at Nachingwea and Mpwapwa were taken over by TANESCO. New branches at Singida and Shinyanga were established and, in 1966, new power at Musoma and Tukuyu were commissioned.  In 1969 supplies to Mafia Island, Himo and Marangu were established.

Extension of the Moshi system to Machame District was completed in 1974 with the electrification of Chamwino, Ndurugumi, Kigwe, Kiabakari and Butiama Ujamaa villages. In 1970’s Handeni, Tarime/Utegi, Kahama, Nzega, Njombe, Babati, Kondoa, Sumbawanga, Tunduma, Same and Bagamoyo townships were electrified.

TANESCO and DARESCO decide to merge into a single organization to produce TANESCO, which exists today. It was in 1968 that the name Tanzania Electric Supply Company Limited was adapted. The Government is currently the sole shareholder in TANESCO.

Great Ruaha power project
In 1968 proposals to build the first large hydroelectric power station in Tanzania were accepted by the Tanzania Government and agreement to finance the project was reached among the Government, the World Bank and the Swedish International Development Authority. This development was at Kidatu on the Great Ruaha River, which was the implementation of the three phases Great Ruaha Power Project (GRPP).

Construction of the first phase started in 1969.  This involved a 40m high, rock-fill dam; and underground power station large enough to accommodated four 50MW machines; about 350km of high – voltage transmission line from Kidatu to Dar es Salaam; and the installation of two generating units to supply 100MW to the grid system.  Phase 1 of this project was commissioned in mid 1975 and inaugurated by President J.K Nyerere in the same year.

Phase 11 development of the Great Ruaha Power Project started in 1977 and involved the construction of a 45 m concrete dam at Mtera, 170km upstream from Kidatu, installation of the two remaining 50MW generating units at Kidatu power station; and the relocation of the Iringa/Dodoma road to pass over the Mtera dam.  These works were completed in early 1981.

Kidatu/Dar es salaam, Hale/Moshi and Kidatu - Iringa Mufindi transmission lines
Associated with the Kidatu development was the construction of 350 km of high voltage transmission line from Kidatu to Dar es Salaam to connect the power station to the coastal grid.  The line was financed by the Canadian and Tanzania Governments and was commissioned in 1975.

In order to connect the northern towns of Arusha and Moshi to the coastal grid system, a transmission line from Hale power station to the Kiyungi substation at Moshi was commissioned in 1975.  This was also financed by the Canadian and Tanzania Governments.

In 1979 work commenced on second major transmission line from the Kidatu power station.  This line, to be commissioned in 1983, runs westward to Iringa & then to the Mufindi pulp and paper mill.  It was planned to extend the line from Mufindi to Mbeya by 1984.

In 1976, through the Canadian International Development Agency, TANESCO Commissioned Acres International Limited of Canada as consulting engineers to develop a master plan for development of the electricity supply system for the next 30 years or so.  The plan will be periodically reviewed to ensure that it remains compatible with actual system growth, with revised load forecasts and with changing economic circumstances.

The installed capacity of the hydroelectric power station at Kidatu was doubled in 1980 and its capability was augmented by the construction of the storage dam and reservoir at Mtera, opened by President J.K Nyerere in February 1981.

In addition to building large hydropower stations to serve the transmission grid system, TANESCO has to continue upgrading its diesel powered units at isolated centers.  In 1983 new diesel power stations at Mbeya, Dodoma and Tabora were commissioned.  Six diesel sets were delivered in 1981 for installation at other existing stations, either to augment the installed capacity or to replace worn out units.

In 1992, the government of Tanzania established the Parastatal Sector Reform Commission (PSRC) whose main responsibilities were to ensure smooth privatisation of the public corporations with the aim of enhancing their efficiency. Since then the government has removed TANESCO’s monopoly as the sole power generating and distributing company.

TANESCO established a business planning process in 1996 and the first corporate business plan was out in 1997. The main objective of the Corporate Plan was to collectively assess and manage risks in aspiring to achieve organisational long-term goals. It helps management to assess the company’s capacity to survive shocks, to adapt to sudden change, and to capture new opportunities.

Manpower development and administration
Between 1964 and 1979 the number of employees rose from 1,406 to 4,481.  During the same period the percentage of Tanzania citizens rose from 87 to 99.5 while the percentage of Tanzanians in senior positions went from 19 to 99.2.  TANESCO is now fully Tanzanian.

Since then the government owned 100 percent of the shares.
As in June 17, 2010, TANESCO had 5645 employees, 4516 men and 1129. Casual labors are 294

By 1999 the government decided to unbundled and privatize TANESCO to promote efficiency, private sector participation and introduction of competition in electricity market. In 2005 the Board of Directors approved a ‘Ring fenced’ organizational structure which has Managing Director at the top, assisted by four General Managers.

In 2002 Net Group Solutions of South African, a private consultancy, was given a management services contract to run Tanesco, and in September 2004, under pressure from the World Bank, the contract was extended for a further two years, despite criticism of the high salaries paid to Net Group managers.

In 2006 the Tanzanian government decided not to renew the contract because of poor performance: “Tanzania was dissatisfied with the quality of management provided by Net Group Solutions and added that the government was obliged to listen to the views of the public following complaints about the quality of service being offered by Tanesco.”