Tanzania: Industries on Energy Audit to Save Costs

Posted on : Tuesday , 30th June 2015

Industries have embarked on energy audit to minimise electricity costs that account for between 15 and 40 per cent of total production overheads.

The audit is a pre-requisite for industries to implement energy efficiency, but financing the exercise remains a big challenge. The Confederation of Tanzania Industry (CTI) backed the initiative through French aid agency--Sunref.

CTI's Director of Policy and Advocacy, Mr Hussein Kamote, said yesterday that six companies have signed contract with three energy audit firms to conduct the services.

"This is a pilot programme that will involve in total 45 industries. Twelve have already lined up for the audit and others will come aboard in due course (among them Alaf, Simba Cement, and Nyanza Bottling)," Mr Kamote told reporters.

The factories dodged to conduct the audit due to high costs as it goes between 20m/- and 200m/- depending with the size of the industries, the bigger the more expensive.

But Mr Kamote said CTI has entered into an agreement with Sunref to enable industries which have carried energy audits and wish to invest in energy efficient programme to get a soft loan from Bank of Africa.

The soft loan, according to CTI, attracts less than five per cent interest rate and payback period is some 10 years. The programme will cover the audit costs but industries are requested to contribute 15 per cent of energy lost audit to facilitate the Confederation administration overheads.

"Industries have many benefits once carried the audit and implement energy efficiency programme...actually they can save up to 30 per cent of the power costs," Mr Kamote said.

In reducing energy costs industries enhance their competitiveness in the markets which at the end of the day triggers growth of the companies and the economy at large.

Overtime, industries machines or appliance, heating system, wiring, and indoor and outdoor lighting are need to be replaced as they are outdated or rundown thus increase energy use.

But due to high costs of conducting energy audit and replacing them, companies continue using them at expenses of extra production costs thus edging them out of competition. "...

The competiveness of industries in Tanzania is largely determined by the cost of electricity...," Mr Kamote said, "industries have the responsibility to implement such programmes to cut down unnecessary consumption."

CTI said the Tanesco and Rural Electricity Agency are taking various steps to reduce power tariffs including bring in renewable energy and natural gas, but the industries have a role to play also.

"The implementation of energy efficiency will reduce pressure for Tanesco and other related institutions to generate, transmit and distribute more energy and thus improve their efficiency in the operations," Mr Kamote said.

The 600,000 US dollars (about 1.2bn/-) pilot energy efficiency programme, which was signed yesterday, expected to last for three years and will involved 45 industries.

Sunref targets the long-term and concessional financing with a view of realising renewable Energy and energy efficiency in the participating countries - including Tanzania, Kenya and Uganda.