TANESCO still owes PAET despite paying upfront

Despite TANESCO debt to PAET, the state power utility payment to natural gas supplier has improved over the past year. The TANESCO for the past six years failed to pay its dues to Orca through PanAfrican Energy Tanzania (PAET) that accumulated to the current amount.

PAET said unreliable payment history of TANESCO over the past six years has resulted in 74.4 million US dollars’ worth of previously raised invoices to presently remain unpaid. “These invoices are reported in Orca’s audited financial statements as doubtful debt,” the statement to 'Daily News' over the weekend said.

Furthermore, PAET said, an additional 42.9 million US dollars of invoices previously issued to TANESCO have not been recorded in the accounts due to International Financial Reporting Standards (IFRS) revenue recognition rules, but remain collectable under the Portfolio Gas Supply Agreement between PAET and TANESCO.

However, TANESCO’s acting Manager Public Relations, Leila Muhaji, was not reached for comment yesterday regarding the state power utility debt stance with PAET. PAET statement to 'Daily News' was making a clarification over the recent financial statement that shows TANESCO has paid some deliveries more than invoices.

“TANESCO payments to PAET have improved over the past year,” PAET agreed. PAET said the receipts from TANESCO are applied first against invoices for current gas deliveries.

“[Thus] certain portions of receipts are recorded as deferred revenue in case payments from TANESCO again become insufficient to cover current deliveries,” PAET said in the statement. Therefore any excess over these two amounts would be used to settle invoices in arrears.

The natural gas supply firm said until the end of last December there was no reduction in the arrears owing and consequently there is no advance payment made by TANESCO to PAET.

“The amount shown as deferred revenue is a reserve against the risk that TANESCO payments do not cover current deliveries in the future,” the statement read.

In summary, the amount owed by TANESCO to Orca is reported in the financial statements as nil US dollars “but this does not mean that the amounts are not legally owed by TANESCO to PAET per PGSA”. PAET remains in discussion with TANESCO and the government on resolution of the overdue obligations.

The reconciliation between the amounts recorded for financial statement purposes under IFRS and the total amount owed by TANESCO to PAET are shown in the financial statement. Under IFRS, only amounts that meet certain revenue recognition criteria may be reported in financial statements.

Source: Daily News

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