Tanesco to convert 2.4trn/- debt into equity

01Aug 2023
The Guardian Reporter
Business
The Guardian
Tanesco to convert 2.4trn/- debt into equity

The Tanzania Electricity Supply Company (Tanesco) is expected to convert 2.4trn/- debt owed by the government into shareholders fund (equity), which will push the state- owned power utility company’s  capital to 6.3trn/-.

The company’s Chief Finance Officer (CFO) Renata Ndege said recently in Dar es Salaam that talks with the government, which is the lender, is ongoing. The current shareholders’ fund is 3.9trn/-.

Currently, the company fixed assets has improved to 18.1trn/- by the end of 2022/2023 financial year ended in June 2023, from 15.3trn/- recorded in 2021/2022 financial year, making it the largest firm in Tanzania and one of the largest in East and Central Africa.

Upon the conclusion of the talk with the government to convert the debt into equity, Tanesco will also increase its total assets to 20trn/-.

According to the CFO, the company net profit has also increased to 109.4bn/- compared with 77bn/- respectively, due to the improved cash flows. Loan receivables amounting to 7trn/-.

Despite of improved cash flow, the CFO said company is still operating in deficit due to lower revenue than expenditures, as it amounted to 125bn/-, which is an improvement from previously 200bn/-.

However, the deficit is expected to be reduced after the start of Julius Nyerere Hydroelectric Power project (JNHPP), installation of smart meters, adoption of technology, involvement of private sector, the use of fibre and provision of digital services.

The company cash flow is expected to increase to 2.58trn/- during the next financial year from currently 2trn/-.

She said production costs increased to 1.6trn/- from 1.5trn/- due to increase of production on extension of gas fired electricity plants.

The company’s electricity sale has grown to 1.8trn/- during the financial year 2022/2023, compared with 1.6trn/- during the year 2021/2022.

According to the managing director Maharage Chande, the company is continuing to enhance compliancy, monitor risks and improve governance to ensure more organizational efficiency.

He said Tanesco has also undergone organizational reform by introducing various units following the restructuring of the management to ensure good governance, as well as forming the resources mobilization unit.

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