Power Grid


TANZANIA : Challenges Facing Energy Sector

Juma Mandali
1 year, 11 months

Hydropower development in Tanzania largely until recently except for very few issued PPPs agreements signed was the government led.

The Electricity Act of 2008 and the subsequent feed-in tariff policy, since endorsed stimulated private sector investment in electricity generation in the country.

To provide the intelligent layperson with a concise yet comprehensive overview of the Act 2008 it provides rules for the power generation, storage, and distribution of electricity in Tanzania and assigns duties to the Minister responsible for electricity matters and the Energy and Water Utilities Regulatory Authority with dos and don’ts.

To enhance efficiency, Tanzania has been endeavouring to reform the electricity sector, primarily during the third phase of government, under now the late Benjamin Mkapa although an overhaul realisation into three classifications i.e., power generation, transmission and distribution has not been achieved due to what I can term as a textbook model of reforms which imaginably has been moving unhurriedly and faces myriad resistances since energy is also a security matter to a nation to those who understand complexities involved into such sector. Hence, what are the main challenges for Tanzania’s energy sector that each policymaker needs to be grappling with even as Julius Nyerere Hydropower Project (JNHPP) is near completion?

There could be many challenges but in the context of how this sector is important to the growth of the economy, only a few will be highlighted here to help draw attention to where perhaps should focus when it is about the energy sector to make decisions better for the development of the nation.

Unjustifiable energy use in cooking and transport is the number one challenge in my view that if no action is taken can have a wide bearing on the environment and climate-related effects. Biomass fuels in whatsoever form and liquid petroleum gas are the main cooking fuels in urban areas in Tanzania, with LPG slowly replacing biomass in rural and suburban areas. It is regrettable most Tanzanians don’t appreciate that the import of LPG for cooking and petroleum products for transport is precipitously draining Tanzania’s foreign currency reserves earned from exports of gold, precious metals such as Tanzanite etc.

Thus, moving to clean energy sources, especially electricity, for cooking and transporting clean cooking energy to help reduce let’s say use of charcoal, whose effect led to deforestation is a huge challenge for Tanzania and enabling this fuel switching, in my view should be an important policy goal of the Government of Tanzania.

According to the latest Tanzania power system master plan, Tanzania’s electricity demand will expand at an annual rate of 13.82% during 2022–2030, rising from 10,176 GWh in 2022 to 28,664 GWh in 2030.

This growth signals that hydropower will continues to play a predominant role in Tanzania’s electricity system. As President Dr Samia Suluhu Hassan graces JNHPP water filling for the generation of 2,115MW of electricity upon completion last week on 22nd December 2022, Tanzania’s total power installed capacity by 2021 was 1,605.86 MW.

Tanzania’s electricity generation agreeing to the ministry of energy and minerals comes mostly from natural gas (48%), trailed by hydropower (31%), petrol (18%), solar (1%), and biofuels (1%) supplemented by power imports power from Uganda (10 MW), Zambia (5 MW), and Kenya (1 MW). Analysis of the Ministry of Energy and Minerals sources reveals that the average electricity consumption per capita in Tanzania is 108kWh per year, compared to Sub-Saharan Africa’s average consumption of 550kWh per year, and 2,500kWh average world consumption per year.

Provided the demand for electricity in Tanzania is projected to be growing at 10-15% per year, with currently only 24% of the total population having access to electricity deliberate decisions need to be taken that include Government plans to increase Tanzania’s generation capacity to 10,000 MW in 2025 combined.

To achieve this goal, the Government of Tanzania has embarked on reforming the electricity supply industry mainly by attracting private capital to the industry to invest in other energy sources. Whilst the initiative to attract private capital is gaining momentum under the government led by Dr Samia, the hydropower sector needs to be equipped for challenges ahead that in my view might range from technical, financial, and social to environmental.

For instance, there is excess electricity during the rainy season and insufficient electricity generation during the dry season, which in the past has resulted in significant electricity power rationing.

Polishing Tanzanian’s electricity generation curve by consuming or selling surplus electricity during the rainy season and increasing generation during the dry season to reduce fuel imports for generators and meet Tanzania’s rising electricity demand is a major policy challenge facing hydropower development especially as the nation aligns itself for industrialisation.

Implies that to meet Tanzania’s mounting electricity demand, mainly as a call to industrialise and value addition processing mount, accelerated development of its hydropower and power mix sources from potential unexplored sources is fundamental.

From an investment and business point of view, it is generally acknowledged that there has been underinvestment not only in a generation but maintenance of infrastructure that occasionally when executed triggers among other things power rationing due to major maintenance.

In addition, another challenge is on what can be viewed as administrative and bureaucratic vested interests and inadequacies, less-than-attractive electricity prices that are not deemed to be adequate to support system cost and capital expansion in my view are a major cause of the timely underinvestment.

Insufficient investment in infrastructure particularly transmission lines is critical for hydropower development, thus extra main policy goal for Tanzania should be to attract investment by initiating efficiency and economic principles into the sector and if necessary while trying to avoid politicisation of the energy sector. Worldwide in recent years, there has been an increase in extremely unstable weather patterns and events, like flooding, high sediment load caused by farming along water sources, landslide-induced destruction of water sources through animal husbandry and farming through unplanned irrigation schemes etc.

Such impromptu human activities in my view will severely reduce the base flow available to hydropower projects in the long run. The effect in addition to inadequate maintenance will thus upsurge capital and operational costs, and loss of revenue from plant stoppages. There is yet another area that could be a subject of a hot debate, but the fact is that Tanzania’s electricity sector in my opinion experiences some governance encounters.

Tanzania’s Tanesco, the national electric utility and the sole buyer of electricity, can be frequently a victim of political interference. Electricity prices and power purchase agreements if honesty and patriotism aren’t well-thoughtout can many times be driven by factors other than scientific or business economic principles.

Things like complaints about administrative delays in tax refunds and issuance of permits and PPAs approvals, poor economic governance, and inadequately experienced and skilled human resources can be a source of governance failures in the sector and coupled with poor governance and lack of transparency seen in the private sector together could lead to deterioration in the sector governance.

Tanzania has all to benefit if it exports its surplus electricity to other SADC region members but this can only happen if there could be robust long-term plans to develop all potential energy sources comprising geothermal sources.

If achieved Tanzania could increase its gross domestic product immensely above the baseline scenario and relieve itself from depending on donor hand-outs and going for development loans that sometimes can have unfavourable terms.


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