Syndicate content

Add new comment

Submitted by Nick Lea on
I recently visited a large manufacturing company in Dar. It has a 10 MW machine which stretches sheet iron. When the power shuts down at the wrong time, the iron roll breaks and in bad cases it whiplashes into the compression rollers. The manager showed us 3 damaged rollers each costing $500,000 to replace. Electricity is such a problem that the firm is planning to build its own power station once the gas line is built to Dar. I do think it is important to listen to businesses. Of course, they may use the opportunity just to lobby for reduced costs or higher sales, but they may also be correctly identifying real symptoms. The main problem with business surveys is that firms often don’t diagnose the problem correctly. It may well be true that electricity supply and quality are a problem in Tanzania but this may be caused not by a lack of investment or technical skills in the power sector but by the political economy of electricity supply. The next question to ask is “what are the incentives in the power sector?”, “who set those incentives?” and “what would it take to change them?”. If a single company is planning to invest in a dedicated power station that points to the possibility of a private-sector run industrial power grid: yet my guess is that this would be impossible under the current regulatory regime.