Power Africa in Tanzania

 

Tanzania Energy Sector Overview

Tanzania has a variety of energy resources, which include natural gas, biomass, hydropower, geothermal, coal, solar and wind. Although the Government of Tanzania (GOT) is aggressively pursuing the expansion of generation capacity and grid extension, much of this energy potential remains untapped. The continued development of Tanzania’s energy sector is critical to the country’s ability to grow economically, attract foreign direct investment (FDI), and spark industrialization. Tanzania has 1,358 megawatts (MW) of installed grid generation capacity to serve its population of over 51 million, and an additional 76 MW in isolated mini-grids. Electricity production meets less than 15 percent of the demand per annum. Less than 30 percent of the population is connected to the grid. Tanzania’s vibrant mini-grid and off-grid sub-sectors have been identified as being the most cost-effective strategy to serving about half of the rural population.

The GOT’s sector reform plan aims to increase generation capacity up to 10,000 MW by 2025, unbundle the public utility’s (TANESCO’s) operations by 2021, and supply base-load demand through a growing share of natural-gas fired generation. A gas pipeline from southern Tanzania to Dar es Salaam was commissioned in September 2015, and it now supplies 150 MW of generation at the Kinyerezi site.

The GOT is committed to improving TANESCO’s viability in the short-term by balancing its books and meeting its current liabilities with improved cash flow. In the long-term, the GOT has committed to gradually unbundling TANESCO beginning in 2017 by separating generation from transmission and distribution. The GOT has publicly committed to plans to move away from unsolicited independent power providers (IPPs) and towards a competitive procurement framework to bring much needed generation online. Projects under 10 MW will continue under the purview of the Rural Electrification Agency (REA).

Power Africa Support

Power Africa is supporting the Tanzanian energy sector through transaction assistance for priority generation projects, technical advice to release the constraints to private sector investment, and capacity building for key institutions through embedded advisors with TANESCO, REA, and the Energy & Water Utilities Regulatory Authority (EWURA).

 

Highlighted Transactions

Name

Megawatts (MW)

Type of
Transaction

Value
(USD Million)

Timeline

Power Africa Support

GOT Actions

Kinyerezi

150 MW

Gas Generation

$183

 

  • Construction 2014
  • Operational October 2015
  • TA to price natural gas delivered to the plant

 

  • Possible sovereign guarantee from Ministry of Finance
  • Prioritized TANESCO payments

NextGen/ Kigoma

5 MW

Solar

$7.6

  • Financial Close 2016
  • Operational late 2017
  • Facilitate financing
  • Assisted TANESCO and EWURA to develop second generation SPPA
  • OPIC investment
  • TANESCO, REA, to support actions that allow EWURA to resolve SPPA issue.

 

About Power Africa

Power Africa is a multi-partner initiative which launched in 2013. Power Africa’s goals are to increase electricity access in sub-Saharan Africa by adding more than 30,000 megawatts of cleaner, more efficient electricity generation capacity and 60 million new home and business connections.

Power Africa works with African governments and private sector partners to remove barriers that impede sustainable energy development in sub-Saharan Africa and to unlock the substantial wind, solar, hydropower, natural gas, biomass, and geothermal resources on the continent.

Mobilizing Partnerships & Investments

Power Africa draws on the combined expertise and abilities of 12 U.S. Government agencies, the World Bank Group, the African Development Bank, the Government of Sweden, the Government of Norway, the Government of Canada, the UK Department for International Development, the Government of Japan, the International Renewable Energy Agency, African governments, and private sector partners. Power Africa’s “Toolbox” approach offers a range of resources to advance key projects on the electricity grid and, through the Beyond the Grid sub-initiative, in places where the national grid doesn’t reach.

 

Last updated: February 09, 2017

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