History in the making

History was made in Tanzania this month when a syndicate of the country's own local commercial banks and pension funds raised $240 million to fund the recovery of the Tanzania Electric Supply Company (Tanesco) in a deal that illustrates the increasing depth of the country's capital markets.



It is the single largest corporate finance deal ever in East Africa and it signals that Tanzania is more able to rely on its own finance institutions and less dependent on foreign financiers such as the World Bank.

With this deal, Tanzania becomes the first country in East Africa to use resources held by its pension funds to finance infrastructure. The deal is part of a growing trend where companies in East Africa are preferring to finance expansion and recovery through locally sourced, shilling-denominated long-term debt.

Tanesco managing director Dr Idris Rashidi, the immediate former governor of the Bank of Tanzania, described the deal as a landmark transaction that will pave the way for the return of the utility to its past financial strength.

Part of the money will be used to strengthen the company's transmission and distribution network in order to reduce power losses, to connect new customers and to train staff to improve customer service delivery.

Under the recovery plan, Tanesco will embark on an ambitious capital expenditure programme to sustain an average load growth of 15 per cent per annum over the next five years. Also targeted in the plan are new infrastructure, new customers and upgrading of old infrastructure.

Increased electricity capacity is vital for Tanzania’s economic development. Tanzania has an electricity per capita consumption of about 64kWh/y (compared with over 10,000kWh/y for developed and 900kWh/y for emerging countries like India and China). In Tanzania, electricity is expensive and unreliable – these are major obstacles to global competitiveness.

The School of St Jude is educating the kids who will become the next generation of engineers, accountants, lawyers, bankers, entrepreneurs, teachers, and policy makers. Improved infrastructure, and better education will help Tanzania climb out of the poverty trap.

No water, no power

Last year the Tanzanian electricity supply was wrecked due to the drought that knocked out the hydro generating plants. Today we hear that Australian electricity is threatened by our current drought. The National Electricity Marketing Management Corporation forecasts that the water crisis could cause power shortages next year unless action is taken. Water is needed for the Snowy hydro power, and also for cooling towers of coal powered generators.

Premier Iemma has responded immediately by allocating water reserves in the Hunter Valley for use by the big power stations in their cooling towers.

Bayswater Power Station, Hunter Valley, NSW

Also in the news today is the Australian government plan to spend $23 million telling us about its ‘leadership role’ and ‘balanced voice’ on global warming. No wonder voters are cynical about politicians! After years as a climate skeptic, Prime Minister Howard now wants us to see him as having shown leadership in this area. Leaders are supposed to drive the machine and steer it, not just apply the hand brake. Still, it's an election year, so what can we expect?

I wonder how far $23 million would go in Tanzania if it was invested in projects to produce electricity from renewable resources? Water used to be a renewable resource, but with global warming, that isn’t necessarily so any more. As most of their electricity is hydro, they have an urgent problem.

Climate skeptics are a dying breed. The evidence for global warming has become widely accepted on the basis of scientific concensus. Here’s an excellent resource, accessible and authoritive, for key information about global warming. The helpful guys at RealClimate say,

We've often been asked to provide a one stop link for resources that people can use to get up to speed on the issue of climate change, and so here is a first cut.

They point towards info at different levels – beginners to advanced – and have a handy set of links to answers for specific contrarian myths.

Our fearless leader

Like extreme poverty, climate change is one of the big issues that we need to know about if we are to live our lives responsibly and leave the world a little better for having been here.

So, keep learning, keep giving!

What? Power blackouts again?

A report in the Arusha Times on 24 February shows the large impact that service failures can have poor countries like Tanzania.

Regular readers would know that the School of St Jude struggled to operate last year as the drought caused electricity rationing for 12+ hours a day. Since the rains at the end of the year the hydro-electric generation plants have come back on line and power has been restored.

Nevertheless, parts of the Central Business Area of Arusha have been in total darkness for the last two weeks. They have had no power because of a blown out transformer. Apparently TANESCO could not replace the transformer as it had none in store. ABB Tanelec has refused to sell it one because TANESCO could not also pay up-front and, although TANESCO is owned by the Tanzanian government, it is not credit worthy.

The power blackout is affecting businesses and essential services like schools and hospitals, and even the local radio station, Radio 5, has been off the air since 10 February. Just when meat vendors at the Central Market Place suffered a devastating blow due to an outbreak of Rift Valley Fever, those selling fish and chicken were restricted by the lack of power.

To Arusha residents and businesses the transformer failure is part of ongoing power problems. The town, despite the end of power rationing last December, still experiences daily power cuts.
In very poor countries, even important institutions like electricity companies struggle to provide basic services. Small things that go wrong can have major impacts that hold the country back, mired in the cycle of perpetuating poverty.

The School of St Jude bought two large new generators in 2006 to supplement the older ones it already had. It looks like these generators will be essential to the operation of the school for years to come.

Rain!

After a devastating drought in 2005-2006 that brought the country to its knees, late rains have filled the dams enough to give hope that electricity supplies will soon return to normal. It will take more rain to restore the confidence of farmers and give the country the farming production it needs for economic growth.

The drought and power cuts led the government to revise its 2006 gross domestic product growth forecast to 5.9% from an earlier 7.3%.

With the return of more certain electricity supplies, the School of St Jude won’t need to rely so heavily on its diesel generators, and will get some relief from the $8,000 per month fuel bills.

Here's Gemma with two of her constant companions – Amiri, the head groundsman in charge of all the building stores and Amani, our fulltime electrician, who has the tough job of keeping the school ‘switched on’ in a country with an atrocious power supply.

How many schools have a full-time electrician to keep things working? I guess that this is just one of the many wonderful differences about the School of St Jude.

I keep thinking about solar power. How effective is it in the Arusha district? Are there local suppliers? Can sponsorship help to provide solar power at both campuses? I need to find out more.