Tuesday, September 15, 2015
Local manufacturers who pay the lowest power tariffs in East African Community (EAC) region will further improve their competitiveness if they adopt efficient energy technology.
"Although we enjoy lower power tariffs in the East African region, we still pay very high compared to industries in SADC region who are our competitors," said Confederation of Tanzania Industries (CTI) Director of Policy and Advocacy, Hussein Kamote.
Mr Kamote who was making a presentation on Energy Efficiency Programme to CTI stakeholders last week, said because local manufacturers face competition from Southern Africa Development Community (SADC), there is need for energy tariffs to drop further.
"Our production costs are higher because of factors such as delays in clearing goods from Dar es Salaam port which takes up to 10 days compared to Beira and Mombasa which on average do it in 7 days, Kamote argued.
According to Tanzania Industrial Development Organization (TIRDO), the energy bill accounts for between 15 and 40 per cent among local manufacturers hence representing the largest share of production costs.
"In 1970s, Denmark used to have the same problem of poor energy use which forced us to adopt measures to address the problem as global oil prices were high," said Jesper Friis who is Regional Manager with Confederation of Danish Industries. Mr Friis whose institution is working CTI backed by Danish International Development Agency to address the problem of energy inefficiency among local manufacturers pointed out that many companies spend more on energy because of poor technologies used.
He pointed out that it is in the interest of Denmark to assist the country's local industry become more competitive because future bilateral trade between the two countries will be more vibrant.
"We want to see much more efficient use of energy among Tanzanian industries like what is happening to Kenyan manufacturers," Friis noted.
Among measures which Friis advocated to address the problem of efficient energy use, includes use of modern compressors, boilers and motors which constitute the bulk of intensive energy consuming gadgets at factories.
Among the many Kenyan companies which are assisting industries to address excessive use of energy through use of modern technologies include Lean Energy Group. Founded in 2007 by Dinesh Tembhekar, Lean Energy Group has assisted many Kenyan manufacturers reduce their energy bill thanks to funding from Sustainable Use of Natural Resources and Energy Finance (SUNREF).
Mr Tembhekar said his group of companies has assisted Flamingo Tiles to reduce costs by 35 per cent by replacing energy intensive boilers which used oil as a source of energy. "Most of you here can also reduce your energy bill by simply changing broilers or compressors which consume a lot of energy and factories," said Tembhekar whose company has been commissioned to undertaking auditing of 45 industries in the country to establish the extend of energy wastage.
Flamingo Tiles's boilers use of oil has been replaced with sugar molasses briquettes. "These briquettes are environmentally friendly and emit less carbon dioxide hence preventing climate change," he noted.
Experts argue that the briquettes also avert one ton of carbon dioxide emissions but also saves the Biomass briquetting in the process of converting low bulk density biomass into high density and energy concentrated fuel briquettes.
Briquettes have high specific density (1200 Kg/m3) and bulk density (800 Kg/m3) compared to 60 to 180 Kg/m3 of loose biomass. CTI Chairman, Dr Simon Nyantahe urged manufacturers to cooperate with energy auditors who will be visiting the 45 factories to audit their energy use.
"At this point, I would like to request all members of CTI to participate in this energy audit programme, where you will be required to pay only 15 per cent as administrative costs,' Dr Nyantahe noted. "These are simply energy auditors so let's cooperate and give them correct information," the CTI Chairman underscored saying reduced energy costs will reduce prices of manufactured goods and make them competitive in the market.
SUNREF East Africa Coordinator, Jeff Murage said under the programme, after a successful experience in Kenya where some industries have reduced energy costs by almost 50 percent, Tanzania and Uganda are being included in a pilot phase.
"Under this programme, we provide both financing and technical support to industries through CTI," Mr Murage noted. Murage said locally, the programme works in partnership with Bank of Africa where industries can get loans to replace their aged energy guzzling equipment such as boilers, compressors and motors which contribute towards a bloated energy bill. "We provide funding of up to 4.5 million US dollars through Bank of Africa but you should present bankable projects," he urged. Murage pointed out that for equipment loans of as low as 300,000 US dollars, approval can be done within hours while bigger sums involved more scrutiny. The DANIDA funded energy audit survey among CTI members will end next year when the Lean Energy Group will present a report which will be used to decide intervention.