Tanzania set to become major energy exporter

Major global players in the energy sector were in Dar es Salaam last week for a two-day Powering Africa summit to discuss opportunities for private investments in the country’s rapid growing energy infrastructure.

About 200 major investors and key local and international stakeholders in the energy sector from public and private sectors were at the summit under the auspices of Power Africa initiative to examine the future transformation of the country’s energy landscape.

The Minister for Energy and Minerals, Prof. Sospeter Muhongo, provided insights into the huge investment opportunities in the energy sector buoyed by huge findings of natural gas in the southern regions of Lindi and Mtwara and other largely untapped diverse energy resources including biomass, hydro, coal, geothermal, solar and wind and uranium.

Tanzania ambitious strategy to transform its energy landscape is projected to move the country from a power starving nation to a biggest exporter of liquefied natural gas to East African region by end of the year and beyond in the future.

With abundant mineral, agricultural and energy resources, improved road infrastructure, and on-going efforts to develop ports and rail infrastructure, Tanzania is becoming a hub for investments in the East African region.

The potential for investment and trade are buoyed with the country’s growing population and an expanding middle class representing rising consumption and by extension market to drive up development and growth.

However, despite plentiful natural gas, coal, hydropower, solar and biomass resource potential, it has one of the world’s lowest levels of electricity consumption per capita of about 150 KWh.

Prof. Muhongo said Tanzania had only 10 per cent of the population connected with electricity at independence until 2005. From 2005 to the present the number had risen to 24 per cent due to massive investments in the energy sector totaling about 4trn/-.

According to government plans, 30 per cent of the population will be connected with electricity by the end of the year. He said there would be no going back as the government was committed to transform the sector as it is key to drive the economy and ensure sustainable development.

“There is no way we are going to fail. We are so determined,” he told the delegates at the summit.

Explaining further about the huge investment opportunities in the energy sector, Prof. Muhongo said Tanzania was currently generating about 1200 megawatts of electricity where about 42 per cent of the installed capacity is from expensive thermal power, 40 per cent from natural gas and 18 per cent from hydro power stations.

Plans are underway for the country to generate about 3000 megawatts of electricity by the end of the year or early next year where a bulk of it, about 80 per cent will come from natural gas.

Hydro sources will provide 15 per cent and only 5 per cent will come from oil. “If you look at a country to invest, Tanzania is a solid candidate,” he told the delegates of the summit.

He said the ambitious projections were realistic and the government was determined to achieve them. “We have projects taking up there and we have a strategy,” he said.

Another important issue was on restructuring plans for the Tanzania Electric Supply Company, the state owned firm which manage generation, transmission and distribution of electricity.

Prof. Muhongo said major reforms to TANESCO had already begun to align it with the major changes unfolding in the energy subsector.

The reform process had began with decentralization of operations with a view to reduce excessive bureaucracy at the power utility firm, he said.

The process to incorporate subsidiary companies were under way. At least one subsidiary company to deal with geothermal power generation was in final stages of incorporation, he said.

The Minister also hinted there will be another subsidiary company for transmission of power dealing with procurement or production of concrete poles instead of the current ones which are not durable.

He, however, did note go into details when asked later so as not to pre-empty the whole process but his ministry would give the vision of restructuring TANESCO in June this year.

Prof. Muhongo cautioned the delegates that their inputs to the reform process were invited but the process would be guided by the government. “We are doing the reforms.

We are the champions and owners of the process. We welcome your inputs but keep in mind it is championed by the government and we’re capable of doing that,” he said.
Source: Daily News, reported by Henry Lyimo from Dar es Salaam, Tanzania
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