Tanzania gas producer Orca Exploration posted net income for the first quarter of US$2.8 million, from a loss of US$5.6 million in the same quarter of 2016. The first quarter loss in 2016 was driven by a US$8 million provision on Tanesco receivables.
Revenues fell in the first quarter by 2%, to US$15.5 million, while gas delivers fell by 6%, to an average of 1.23 mcm per day.
Volumes were down, Orca said, as a result of reduced nominations from state-owned power producer Tanesco. Offsetting the decline, though, prices increased by 2% to an average of US$4.68 per 1,000 cubic feet (US$132.5 per 1,000 cubic metres).
The price the company received from industrial consumers was US$7.75 per 1,000 cubic feet (US$219.5 per 1,000 cubic metres), which is a decrease from its 2016 level. However, power supplies are priced at only US$3.57 per 1,000 cubic feet (US$101.1 per 1,000 cubic metres).
Capital spending in the quarter was US$7.5 million, down from US$14 million year on year. Of this, capital expenditure, US$7.4 million was a transfer of workover costs from 2015, which was moved from accounts receivable to plant and equipment. This sum is expected to be recovered under Orca’s production-sharing agreement (PSA).
Orca has long struggled to secure payments from Tanzania’s power generator for its gas supplies, which has led to increasingly testy exchanges. As of the end of the quarter, Tanesco owed Orca US$76.2 million, which was a reduction of US$80.1 million over the three-month period. Receivables at the end of March were only US$1.8 million, down from US$5.7 million at the end of December. Since the end of the quarter, Tanesco has paid a further US$6.5 million.
The head of Tanesco was fired at the beginning of this year following a bid to increase power prices. The company buys power from independent producers at a price higher than it sells onto consumers, according to recent reports from the Controller and Auditor General.