In 2002, the Government of Tanzania entered into a two-year contract with NETGroup Solutions (Pty) Ltd. of South Africa for the management of the Tanzania Electric Supply Company Limited (TANESCO), the country's national utility company. The contract focused on improving the financial and operational efficiency of TANESCO and preparing the utility for subsequent privatization at end of contract term. A very successful with first phase of the contract focused on billing and collection ended in May 2004 and was subsequently renewed by the government for another of two and a half years. In total, the contract spanned 56 months from May 2002 to December 2006, including an initial phase of 27 months. Total contract payments for the two phases were estimated between US$ 18 and 19 million.
Following the expiration of second phase in December 2006, the Government decided not to renew the management contract but to continue with full public ownership of TANESCO. Although privatization was not achieved, the contract was successful in improving TANESCO's financial and administrative commercial technical performance. This categorization relates to the first phase contract
BUSINESS | CONSTRUCTION OBLIGATIONS | PRIVATE FUNDING | SERVICE DELIVERY | SOURCE OF REVENUE |
BUSINESS - Existing: The project involves management of an existing utility (TANESCO) by the project company (NETGroup Solutions). The contract therefore implies taking over the utility's customer base, previous undertakings, employees, and particularly in this case, TANESCO debt burden and fragile financial standing.
CONSTRUCTION OBLIGATIONS - N/A
PRIVATE FUNDING - N/A
SERVICE DELIVERY - User: The project company assumes collection and billing obligations, interfacing directly with customers.
SOURCE OF REVENUE - Fee: The project's revenue stream originates from a performance based fee from TANESCO.