Investment appraisal process of rural electrification projects: case study of TANESCO.

The practice of engineering in electrifying the rural areas in Tanzania involves many choices among alternative designs, procedure plans and methods. This study dealt with principles and techniques that are useful in securing rational answers in the field of rural electrification. The central problem was to investigate how Tanzania Electric Supply Company Ltd. [TANESCO] appraises its rural electrification projects, and whether the procedure used tally with theoretical framework available in literature. It has investigated whether the cash flows, the main input of analysis were prepared taking into consideration principles given in literature. The foundation for uncertainty and risk assessment techniques have been discussed to form the basis for critical analysis of appraisal of rural electrification projects methods used in TANESCO. The study established that the procedure currently used by TANESCO omit some important study stages and normally, which could cost the company when it finds that the project under study is not viable. It has been also revealed that the cash flows were not established in some projects, which lead the author to assume that decisions made on these projects were subjective, rather than technical. In the course of preparing the cash flows, the study revealed that principles governing its preparation as stated in literature are normally not followed.