THE Tanzania Electric Supply Company (Tanesco) yesterday signed a 300bn/- loan agreement with a syndicate of pension funds and banks led by Stanbic Tanzania Limited.
"The loan is a landmark achievement towards implementation of the firm's five-year financial recovery plan," said Dr Idris Rashidi, Tanesco Managing Director.
"The money is to be spent on settlement of debts and procurement of equipment and supplies to boost the firm's performance," he told journalists shortly after the signing ceremony in Dar es Salaam.
Dr Rashidi said the firm owes suppliers and providers of power such as the Independent Power Tanzania Limited (IPTL) about 150bn/-.
Stanbic Managing Director Bashir Awale described the transaction as the largest ever in East and Central Africa by local banks.
"It is indeed a landmark transaction where we have been able to find a local solution to a local development problem," Mr Awale said.
Stanbic is the lead bank in the syndication that also involved the National Microfinance Bank (NMB), CRDB Bank, Exim Bank and Tanzania Investment Bank (TIB).
Other participants in the agreement are the Parastatal Pension Fund (PPF), National Social Security Fund (NSSF), Government Employees Provident Fund (GEPF) and PSPF.
Mr Awale said the loan would be repaid by installments in six years with an 18-month grace period at interest pegged on 182-day treasury bills (TBs) rates.
He said among the advantages of syndicated loans was sharing of the risk among lenders. "A transaction involving 300bn/- is definitely a heavy burden on a single bank," he said.
He said the lenders offered between 70bn/- and 5bn/-where bankers are to provide over 200bn/- and the pension funds would give the balance. NMB has committed 70bn/-, CRDB Bank 65bn/- and Stanbic Bank 40bn/-.
Dr Rashidi stressed that Tanesco was committed to improved performance after yesterday's huge financial jab, saying other measures being undertaken by the power utility company were to enhance efficiency and instituting cost cutting measures.
He said apart from the financial recovery plan, Tanesco has also drawn up a 1.5trillion/- five-year capital investment programme that was still under negotiation.
Dr Rashidi said the 1.5trillion/- capital investment programme expected to secure funding from the World Bank, the United States Millennium Challenge Account, the government and other development partners.
SOURCE: DAILY NEWS
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