May 03, 2010 (The Citizen/All Africa Global Media via COMTEX) -- Electricity producer Songas has advised the State-owned Tanzania Electric Supply Company (Tanesco) to confine itself to the distribution and transmission of power if it is really intent on turning around its fortunes.Songas managing director Christopher Ford said in an exclusive interview with The Citizen in Songosongo Village, Kilwa District, on Friday that the generation of electricity should be left to private firms.

Mr Ford said liquidity problems Tanesco was currently facing would persist if the utility continued to be involved in electricity production, saying the endeavour required massive investment.

"Whatever the company is doing should be focused on ensuring that it operates efficiently... projects which require heavy investments are not ideal for Tanesco at this time when it's facing financial problems," he said.

Mr Ford advised the Tanesco management to concentrate on streamlining its revenue collection systems so ensure that earnings were commensurate with the electricity sold to users.

He also urged the company to reassess and change its tariff structure and make "rich" electricity users to pay more for the power they consume.

Since Tanesco is a service-oriented institution, domestic users should get power at relatively low prices, while commercial customers should be made to pay more because they use electricity to generate profits, Mr Ford said.

He said the government should support Tanesco by helping the company to acquire capital needed for investments.

"I'm not suggesting that the government provides cash for Tanesco...it can act as a guarantor when Tanesco seeks loans from financial institutions."

Mr Ford said he was against the idea that Tanesco should purchase Songas to save the company from having to use a big chunk of its income to pay for the power it purchases from the private firm.

Available statistics indicate that Tanesco uses up to 70 per cent of its monthly revenue to buy electricity from Songas, which has been contracted to supply 120MW to the national grid.

Mr Ford said Tanesco would not be able to run power production projects, which required heavy investment, adding that Songas itself was not making much money despite being a private company, adding that more needed to be done to develop the energy sector.

"The future of Tanzania is in the energy sector, and the government should be careful on how Tanesco is empowered to take part in the process to ensure the sector is well managed."

Songas intends to expand its facilities on Songosongo islet in Kilwa and double gas production.

Mr Ford told a group of journalists who toured the facility on Friday that plans were afoot to raise production to 90 million cubic feet of gas daily from the current level of 45 million cubic feet.

"This amount will facilitate production of 450MW of electricity, which might go a long way in alleviating power shortages in the country," he said.

The Songas boss said there were no plans to export gas to Mombasa in Kenya because "gas requirements in Tanzania are huge and of paramount importance."

He said the expansion project would cost between $80 million (Sh104 billion) and $90 million (Sh117 billion) to be sourced from financial institutions.

He welcomed Tanesco to partner Songas if the company felt it was in a position to take part in the two-year project.

Mr Dave Butcher, the Pan African Energy site operations manager at the Songosongo plant, said gas was being produced from five wells, adding that production could be substantially increased.

"Our current level of production depends on the needs. We have enough gas to double our production," he said, and added that the company would soon start drawing gas from a sixth well.

Pan African Energy has been contracted by Songas to manage the production and processing of gas at the Songosongo facility.

The plant operations manager, Mr Elias Mnunduma, said gas deposits at Songosongo could last 20 to 25 years under current production levels.

Songas last month announced plans to increase power production by about 20MW at its Ubungo gas-fired plant in a Sh20 billion project.

The company has also entered into talks with other stakeholders on plans to double its power output in two years.

Mr Ford said this was among Songas' medium-term plans to boost power production in the country.

Songas currently produces 180MW, which is about a third of Tanzania's electricity needs.