Tanzania’s power crisis to continue through 2009

Saturday December 27 2008
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A power station in Dar es Salaam. Photo/FILE

The energy sector in Tanzania will continue to perform poorly in the coming year, as there are no short-term plans to correct the situation, 10 months after President Jakaya Kikwete reshuffled the Cabinet over emergency power procurement irregularities.

Tanzania’s installed power generation capacity is 897 MW, but it only generates less than 600 MW.

The government has in 2008 concentrated on long term plans to arrest the problematic energy sector that has been hurting the manufacturing industry and making locally produced goods expensive and uncompetitive.

Among the projects the government is banking on for massive increases in power production in the long term are Mchuchuma and Liganga in southern Tanzania, where there are deposits of coal and iron ore.

Mchuchuma’s Coal will be turned into thermal power and the Liganga iron ore will be turned into steel. The two projects are considered critical for the country’s future economic development.

The Regional Spatial Development Initiative (RSDI) programme has already floated a tender for a transaction advisor who will be responsible for advising the government on the best approach to acquire a private investor for the projects.


This marks the beginning of initial stages of the implementation of the project under the Mtwara Development Corridor (MtDC).

NDC holds a prospecting licence for coal in Mchuchuma and iron ore in Liganga operated within RSDI, which is being implemented by the South African Department of Trade and Industry and other development partners.

Another power project slated for the coming year is the construction of a 358 MW hydropower dam on Ruhudji River.

The project will be financed by a loan from the International Development Association of the World Bank Group and is estimated to cost $800 million.

The Ministry of Energy and Minerals has already floated tenders seeking consulting services to support the Tanzania Electricity Supply Company (Tanesco) in the preparation, in negotiation and finalisation of the project’s financing.

The project will be undertaken in a Public Private Partnership (PPP) approach.

In the wake of the recent massive failures in power purchase agreements, which have also caused several political leaders to resign, the consultant will also ensure that in the agreements, the interests of the government and Tanesco are protected.

Ruhudji is one of several hydropower projects that are earmarked by the Tanzanian government in its power master plan. Others to follow are the Mchuchuma Coal fired plant with 200MW and the Rumakali Hydropower Development that will have a 222MW.

Around 90 per cent of Tanzania’s energy needs are met by biomass, particularly woodfuel. Petroleum and electricity account for 8 per cent of energy consumption, and coal and other sources for less than one per cent.

The Tanzanian government has attempted to diversify the country’s sources of energy with limited success. Electricity supply has been erratic because of the national grid’s heavy reliance on hydroelectric power, which in turn depends on rainfall.

Over the past few years, poor rainfall contributed to several electricity shortages due to the inability of the country’s Ubungo electricity plant to supply energy throughout the country.

A new contract scandal involving a South African and a Canadian firm over a multimillion hydropower station has emerged prompting the president’s office to block the Canadian firm from entering into the project over procurement irregularities.

Another project, a 900MW power station at Stieglers Gorge in Rufiji River, is on the drawing board. But this $2 billion hydropower project, which was awarded to a South African firm with Indian connections — Infrastructural Development Finance (Pty) Ltd — has been suspended by the government over procurement irregularities.

Perhaps the coming year will see uranium exploration companies step up their efforts in determining availability of the energy source material that would make the country awash with the world class energy production mineral.

Politicians have already started to press the government to amend the Atomic energy Act number 7 of 2003 to place it under ministry of energy and minerals, so that explorations and making it as a source of energy can be done.

Despite of the fact that Tanzania is endowed with such minerals which estimations shows that it could account for more than 30 per cent of the total mineral deposits in Africa, still the government appears not to know what to do with it.

Tanzania’s sole producer and supplier of electricity, Tanesco continues to face a severe budgetary shortfall, due largely to a multi-million dollar bill for past electricity consumption owed to the company by the Tanzanian government.

In the long term plans, experts have been urging authorities to pursue East African interconnection studies to select the most appropriate interconnection points and to negotiate interconnection agreements for power exchanges with neighbouring countries of, among other, Kenya and Uganda.

Possibilities of developing an interconnected East African grid system and plan for integrated regional system operation should be pursued in line with recommendations from the studies.

As part of the East Africa interconnection studies it is recommended to update the Stiegler’s Gorge Feasibility Study for the possible development of a regional East African interconnected grid and integrated generation development.