Unveiling Tanzania's Ambitious Sh3 Trillion Energy Development Plan

DAR ES SALAAM. The government has made a commitment to persistently invest in the execution of energy projects in the fiscal year 2023/24.

The objective of the plan is to enhance electricity generation, decrease reliance on solid biomass for cooking, foster a gas-driven economy, and augment Tanzania's petroleum reserves.

During his address to Parliament, Energy Minister January Makamba highlighted that the proposed budget of TSh 3.049 trillion for his ministry in the fiscal year 2023/24 aligns with President Samia Suluhu Hassan's vision of expanding electricity access, promoting environmental preservation through the adoption of clean energy, safeguarding Tanzanians from unpredictable global oil prices, and ensuring that Tanzanians reap the advantages of the country's abundant natural gas resources.

In addition to finalizing the construction of the 2,115MW Julius Nyerere Hydropower Project, the government will persist in the preparations for the implementation of the $42 billion liquefied natural gas (LNG) plant and accomplishing the objective of electrifying all villages.

According to Mr. Makamba, the government intends to undertake a minimum of ten electricity generation projects and initiate preparations for the execution of several additional projects in the upcoming fiscal year. These efforts are aligned with the broader objective of achieving a minimum power generation capacity of 5,000MW by 2025.

At present, the interconnected power plants within the national grid possess a capacity of 1,872.04MW, showcasing a commendable growth of 10.5% compared to the reported capacity of 1,694.55MW at the conclusion of the 2021/2022 fiscal year.

The minister expressed a strong sense of assurance that the successful execution of a minimum of ten ongoing projects, with a projected expenditure of over Sh1.985 trillion funded by taxpayers, will propel the nation towards achieving the targeted production levels outlined in accordance with the CCM Manifesto for the 2020 elections.

Remarkably, out of the total sought amount of Sh3.049 trillion, an astounding Sh2.96 trillion, equivalent to 97.1% of the ministry's overall budget for the fiscal year 2023/2024, will be allocated specifically to development projects.

The majority of the development funds will be allocated to the Julius Nyerere Hydropower Project, with a substantial amount of Sh1.5 trillion designated for the completion of the remaining phases of its implementation.

During the parliamentary session, Mr. Makamba disclosed that the government-funded project, amounting to TSh6.55 trillion, has currently achieved a progress rate of 86.89%.

"The dam will reach the level of power generation within a week because, as of May 23, 2023, the water depth of the dam has reached 160.51 meters above sea level. To initiate electricity generation, the water level needs to reach a minimum of 163 meters above sea level," he explained.

The government has allocated Sh40 billion for the expansion of the Kinyerezi 1 Power Plant, which will generate 185MW, and Sh6.27 billion for the Ruhudji Hydroelectric Power Station, which will have a capacity of 358MW.

Additionally, over Sh5.25 billion has been set aside for the Rumakali Hydroelectric Power Station, which will generate 222MW, Sh500 million for the Kikonge hydropower project, which will produce 321MW, and Sh15.52 billion for the Malagarasi hydropower project, expected to generate 44.8MW.

For the Kakoko project, which aims to generate 87.8MW, the government has allocated Sh39.15 billion, and Sh27.63 billion for the solar power project in Shinyanga.

Moreover, the government has dedicated Sh345 billion to the major Mawe project, with a capacity of 150MW, and Sh6.5 billion for the ongoing maintenance of the Hale hydropower plant.

The minister emphasized the significance of implementing these projects due to the surging power demand in Tanzania. Mr. Makamba stated, "The demand for electricity has rapidly increased in the past year, breaking the record for peak demand eight times, an unprecedented occurrence in the country's history."

He further noted that the current electricity production in the country does not align with the rapid growth of economic and social activities, resulting in a significant infrastructure gap in electricity transmission and distribution.

Despite substantial progress in rural electrification, the minister revealed that approximately 36,101 hamlets out of a total of 64,760 hamlets are still awaiting connection to the electricity grid.

"The demand for electricity in the country continues to grow. During the period of 2022/23, the average electricity demand was 1,363.94 MW, representing a 6.9 percent increase compared to the average of 1,276.43 MW in 2021/22," he explained.

He added, "During this period, the peak electricity demand reached 1,431.59 MW (as of May 15, 2023, at 2:00 AM), showing a 6.8 percent increase compared to the 1,340.68 MW reached in 2021/22 (as of May 26, 2022, at 2:00 AM)."

According to Mr. Makamba, this surge in demand is attributed to the growth of large customers, particularly industries and businesses, which have increased by 5.6 percent, as well as the expansion of economic and social activities.

Recognizing the global focus on clean energy transition in the face of climate change, the minister highlighted the importance of utilizing energy sources with minimal or no carbon impact. He emphasized the need to strengthen the use of water sources, renewable energy, and natural gas, which has been identified as a transitional energy source that can be utilized until 2050.

In recent developments, the long-awaited liquefied natural gas (LNG) project in Tanzania reached its conclusion earlier this month after years of intense negotiations. Mr. Makamba revealed that a special legislation is currently being drafted and will soon be submitted to the parliament for thorough discussion and approval.

In light of the magnitude and uniqueness of the project, and to ensure effective coordination, monitoring, and facilitation for timely benefits, the government has established a Special Project Office under the Ministry of Energy.

Earlier this month, Equinor and Shell Tanzania reached an agreement with the Tanzanian government for the development of the LNG plant. The project is estimated to cost $42 billion (equivalent to Sh98.7 trillion).