by Ben Taylor

Further delays to LNG plant
Negotiations for the development of Tanzania’s proposed liquefied natural gas (LNG) export plant have been delayed by proposed government changes to a financial agreement reached last year, according to sources both in government and in the companies involved.

The long-delayed project, with an expected budget of USD $42 billion, is a major part of the infrastructure required to capitalise on the full potential of Tanzania offshore natural gas resources.

The government and investors announced in May 2023 that they had completed negotiations on the project. The government said at the time that cabinet would review the agreements the following month, but they have not yet been approved.

As of May 2024, it was reported that the Attorney General, Eliezer Feleshi, had raised queries. These required re-opening discussions with the investors, Equinor and Shell as joint operators and Exxon Mobil, Pavilion Energy, Medco Energi and Tanzania’s national oil company TPDC as partners.

Sources told The Citizen newspaper that the government was still weighing various contract terms. This reportedly includes a proposal from the companies involved that proceeds from the project be banked by foreign financial institutions, as well as withholding tax exemptions and using foreign insurance companies.

Head of communications for Equinor Tanzania, Genevieve Kasanga, said that Equinor and Shell, on behalf of the Tanzania LNG partners, initialled fully termed agreements with the Tanzanian government in May 2023. “Since then, the progress has indeed been slower than we expected,” she said.

Government spokesperson, Mobhare Matinyi said Tanzania was still interested in working with the group of investors, but said that the government was proposing changes to the initialled agreement that would “ensure that truly both sides benefit fairly in the whole deal.”

“We hope that our experts and officials will conclude the amendments sooner than later to allow this important project to go ahead,” he added.

A source from one of the investors said that the proposal “completely blew the project economics out of the water”.

The US Ambassador to Tanzania, Mr Michael Battle, told The Citizen that he had met with the investors, and “they said they would meet again to negotiate the issues that were raised to satisfy both the Tanzanian side and the investors.”

It is now more than two years since President Samia Suluhu Hassan witnessed the signing of the preliminary agreement for the project HGA in June 2022. This was signed between the government on one side and Shell and Equinor companies which are the main partners in the implementation of the project.

Tanzania currently boasts 57.54 trillion cubic feet of natural gas reserves located both onshore and beneath the Indian Ocean.

Gas conversion plant in the pipeline?
A Canadian firm, Rocky Mountain GTL, reportedly has plans to build a $420 million plant in Tanzania that will produce diesel and jet fuel from natural gas.

“Once the project is up and running, Rocky Mountain GTL’s technology will supply Tanzania with diesel and jet fuel and will also be able to produce naphtha,” said a representative of the firm.

Naphtha is the main ingredient used to lighten heavy oil in pipelines, and the plant would also produce by-products such as hydrogen fuel.

According to initial plans, the plant could be completed within two years and will at first produce 2,500 barrels of fuel per day.

“Through this project, Tanzania will be the first country in Africa to sell jet fuel and diesel to neighbouring countries. This is a significant step that will also lower the prices of these two important sources of energy,” said the spokesman.

Tanzania faces court case over natural gas dispute
A Canada-listed gas development company from the British Virgin Islands, Orca Energy Group Inc, has filed a USD $1.2 billion (TSh 3.2 trillion) claim against the United Republic of Tanzania and the Tanzania Petroleum Development Corporation (TPDC).

This action, initiated by Orca’s wholly-owned subsidiaries PanAfrican Energy Tanzania (PAET) and Pan African Energy Corporation Mauritius (PAEM), highlights growing tensions over alleged breaches of contractual and investment treaty obligations.

The dispute arises from TPDC’s rejection of PAET’s proposed commercial terms for Additional Gas (AG) and a new gas sales agreement. PAET contends that these actions breach their contractual rights and expectations and is seeking compensation exceeding $1.2 billion (TSh
3.2 trillion).

The central issue revolves around the Songo Songo Development License, granted to TPDC in 2001 for the development of the Songo Songo Field.
The agreement, which includes the Production Sharing Agreement (PSA) and the Gas Agreement (GA), was set to deliver Protected Gas (PG) until the end of July 2024, primarily for power generation at the Ubungo complex near Dar es Salaam.

The Notice of Dispute calls for negotiations with the Tanzanian government and TPDC, with arbitration proceedings expected if a resolution is not reached within the specified timeframes.

Speaking to The Citizen newspaper in early August, Solicitor General Boni Luhede stated that the parties now have six months to resolve the dispute amicably. “If not settled,” he explained, “arbitration proceedings will be instituted.”

Separately, in July, Tanzania reached a settlement agreement with Indiana Resources Limited, resolving a lengthy dispute over the expropriation of the Ntaka Hills Nickel Project. The government agreed to pay a total of USD $90 million to Indiana Resources and its associated entities, marking the end of nearly seven years of arbitration at the International Centre for Settlement of Investment Disputes (ICSID), a World Bank division.

And in October 2023, Tanzania settled with Canadian mining company Winshear Gold Corp, paying $30 million (TSh 75 billion) following a dispute over the expropriation of its SMP Gold Project in southwest Tanzania, originally seeking more than three times this amount in compensation.

Tanzania aims to become Africa’s leading graphite producer
Tanzania is working to become Africa’s largest graphite producer, according to the Minister for Minerals, Antony Mavunde. Currently, Tanzania contributes only 0.6% of Africa’s graphite production, well behind Madagascar (13%) and Mozambique (10%).

However, Mr Mavunde, said that if the ten companies that currently hold graphite mining licenses start production, Tanzania will surpass the two and become Africa’s leading producer.

Graphite is used to make pencils, lubricants, crucibles, foundry facings, polishes, brushes for electric motors, and the cores of nuclear reactors. It has high thermal and electrical conductivity that makes it a key part of steelmaking, where it is used as electrodes in electric arc furnaces.

by Ben Taylor

Significant breakthrough in helium explorations
Helium One Global, the firm licensed for helium exploration in south­west Tanzania has discovered 4.7% helium concentrations at Rukwa Rift Basin. The company described the high concentrations as a big milestone towards achieving commerciality at the earliest opportunity.

“When performing the Basement Drilling Stem Testing (DST), high concentrations of helium began to flow to the surface,” read the statement from the company. The statement went on to add that the quantity of helium increases with depth.

Helium One Global’s Chief Executive Officer (CEO), Lorna Blaisse said that she was delighted with the findings. She added that she appreciated all collaborators including the Ministry of Minerals and the Mining Commission of Tanzania among others involved in bringing the project to the point of success.

Commenting on the findings, Assistant Commission in the Ministry of Minerals, Mr Francis Mihayo said the positive results from the exploration strengthen hope for helium extraction in Tanzania. He said the discovery of helium stands as the basis for further exploration, which will lead into a feasibility study and finally exploitation.

University of Dar es Salaam’s Head of School of Mines and Geosciences, Dr Elisante Mshiu, also the President of the Tanzania Geological Society (TGS), noted that concentration of 4.7% helium signals existence of huge volumes of the gas. “Concentration of 4.7 per cent is massive”, he said. He said further exploration will be undertaken at the area to estimate the actual volume of helium available, and expressed his optimism that Tanzania can become the global leading supplier of helium upon effective exploitation of the deposits.

Today, helium is produced primarily in just four countries including in the USA, Qatar, Algeria and Russia. It has multiple essential uses including in manufacturing of medical equipment.

Helium One Global holds prospecting licences totalling more than 2,965 square km across three distinct project areas which are Rukwa, Balangida, and Eyasi located within rift basins in the north and south­west of Tanzania.

The Company’s flagship Rukwa Project is located within the Rukwa Rift Basin covering 1,900 square km in the south-west.

First turbine at Nyerere Hydropower Plant (Stiegler’s Gorge) switched on
In February, Tanzania switched on the first turbine of a new hydroelectric plant at Steigler’s Gorge on the Rufiji river. This was announced by Doto Biteko, energy minister and deputy prime minister, while visiting the 2,115 megawatt (MW) Julius Nyerere Hydropower Plant (JNHPP). He said that the first turbine was now contributing up to 235 MW of power to the grid.

The project has been highly controversial. Before construction began in 2019, conservationists warned that building the dam could affect wildlife and their habitats as well as agricultural productivity. The site is located within the Selous Game Reserve, one of the largest protected areas in Africa, harbouring one of the most significant concentrations of animals including elephant, black rhino and cheetah and a large variety of habitats, according to United Nations agency UNESCO.

On the positive side, the plant is expected to provide a major boost to the country’s electricity generation capacity. Many areas have recently been suffering from extended power shortages, and load shedding has been estimated as costing between 5-7% of Tanzania’s GDP. Further, it will achieve this at a much lower cost than existing sources: an estimated 4.5 cents per kilowatt-hour.

Nevertheless, in addition to critics of the project’s impact on the environment and livelihoods, analysts have suggested that had the same level of investment gone into alternatives such as geothermal, solar and wind, the country could have generated double the output of JNHPP. It is impossible to make these calculations with any certainty, however, as little reliable information has been made public about the construction cost. The official price tag is USD $2.9 billion, but experts claim this is unrealistic. Competing estimates range from $3.9 billion to $9.8 billion.

LNG project delayed further
Negotiations for the development of Tanzania’s $42 billion liquefied natural gas export plant have been delayed by proposed government changes to a financial agreement reached last year, according to a government spokesperson and sources within the companies involved in the project.

The government and investors announced in May 2023 that they had completed negotiations on the project to unlock Tanzania’s vast offshore gas resources. The government said at the time that the cabinet would review the agreements the following month.

Energy Minister Doto Biteko told parliament in April 2024 that the attorney general and other government institutions had provided feedback on the deals and negotiations were expected to conclude during the 2024/25 fiscal year.

A source from one of the investors told Reuters news agency that the delay related to changes that Biteko proposed to the host government agreement after he became energy minister last August. Biteko also serves as deputy prime minister.

The source, who asked not to be identified, said Biteko and his team came back to investors with a “rather interesting amendment to the HGA which completely blew the project economics out of the water”. The source did not provide details but said that progressing on the project would be “definitely not quick” and that the minister’s talk of completing negotiations in the coming fiscal year was “optimistic”.

Meanwhile, “a source privy to the matter” told The Citizen newspaper that the government had concerns about several aspects of the proposed agreement. The source said the government was weighing a proposal by the companies that proceeds from the planned $42 billion project be banked in foreign financial institutions, as well as a proposal that the companies should be compensated by the government in case that natural gas prices drop in the international market in the future.

Contacted for comment by The Citizen, Biteko said that the government and companies were “still negotiating to find common ground.”

In March, the United States government warned Tanzania of a likely exodus of investors if delays continue. US Deputy Assistant Secretary of State, Joy Basu, told The EastAfrican newspaper that companies such as Exxon Mobil that have been pushing the deal with Tanzanian authorities had reached a point where they were now “willing to walk away.”

“There is LNG in lots of places around the world now, and for Tanzania the window for this particular investment is closing fast. Such windows do not remain open forever,” said Ms Basu whose portfolio in the Joe Biden administration includes overseeing economic and regional affairs in Sub-Saharan Africa.

Exxon Mobil, based in Houston, Texas, is one of several multinational firms that have stakes in the LNG project. Britain’s Shell and Norway’s Equinor, have been earmarked as joint main operators of the project, with Exxon Mobil, Pavilion Energy (Singapore), Medco Energi (Indonesia) and the state-owned Tanzania Petroleum Development Corporation (TPDC) as partners.

Barrick settles legal claims relating to North Mara gold mine
Barrick TZ Limited and North Mara Gold Mine Limited, local subsidiaries of Barrick Gold, announced in March that they have reached a settlement of the claims by Tanzanian residents against them in their UK legal action. They said that the settlement was reached “with no admission of liability on their part,” but provided no further details about the settlement’s content.

Fourteen Tanzanian citizens made claims against Barrick TZ and North Mara Gold Mine Limited for alleged human rights incidents between 2014 and September 2019. The Tanzanians alleged that the companies were legally responsible for deaths and injuries caused by the Tanzania police during security operations on or around the mine. The mine had a memorandum of understanding with the police for security under which it paid, housed and equipped the police.

Barrick TZ Limited and North Mara Gold Mine Limited denied the allegations.

The company’s decision to settle comes over four years after the proceedings were brought forward in the UK.

RAID, a UK-based NGO that exposes corporate wrongdoing, environmental harm, and human rights abuse, has repeatedly raised concerns about human rights violations at the North Mara mine.

In November 2022 it published findings showing the reported death toll at the North Mara mine had risen to at least 77, along with 304 wounded, by police responsible for mine security, most of which occurred after Barrick acquired the mine in 2006. This would rank the North Mara mine as one of the deadliest industrial mines in Africa in terms of security-related violence.

RAID Executive Director Anneke Van Woudenberg said after the settlement was announced that she “welcomes any settlement that brings relief to the claimants after so many years.”

Two further legal actions alleging killings and injuries by security forces at Barrick’s North Mara mine remain ongoing – one in the Canadian courts against Barrick Gold and one in the UK against London Bullion Market Association (LBMA). The latter case alleges that the LBMA is liable in respect of the deaths of two artisanal miners at the mine in July and December 2019 because it certifies gold from the mine as responsibly sourced and free from serious human rights abuses. The LBMA says the claim has no merit.

Zanzibar launches first oil and gas licensing round
The President of Zanzibar, Dr Hussein Ali Mwinyi, on March 20 commissioned the first round auction of oil and gas blocks to investors.

Dr Mwinyi said the government had reviewed the legal and contractual frameworks around oil and natural gas before launching the round, to attract investors into the hydrocarbon industry.

“We made the review to create a friendly investment environment in the oil and gas sector here in Zanzibar because companies need to invest in a safe place where they can be profitable,” he said.

The government of Zanzibar has embarked on the “blue economy” policy, which includes oil and gas among the main priority areas.

“The government believes that the blue economy has many opportunities to promote economic development plans that aim at reducing poverty and creating employment opportunities,” said President Mwinyi.

He said that the exploration activities for oil and gas in Zanzibar started in the 1950s with the British Petroleum (BP) Company, in collaboration with Shell, conducting detailed investigations and drilling two wells on both sides of Unguja and Pemba, which were completed in 1963. After the union of Tanganyika and Zanzibar in 1964, oil and gas exploration activities were under the government of the United Republic of Tanzania.

The Minister for Blue Economy and Fisheries in Zanzibar, Mr Shaaban Ali Othman, said the launch covered eight blocks out of the 12 existing blocks. “We are waiting for applications from investors for the eight blocks that are up for grabs in the next 10 years,” he said, welcoming investors.

He said both the laws governing the sector and the production sharing agreement (PSA) model were reviewed to facilitate investment.

The chief executive officer of the Zanzibar Petroleum Development Corporation (ZPDC), Mr Mikidadi Alli Rashid, said the investors will sign the PSA model with the minister and ZPDC to officially start oil and gas exploration and drilling.

He also urged residents to be patient, as oil and gas exploration and potential development take time. (The Citizen)

by Ben Taylor
Criminal syndicate at Barrick?
Acacia Mining, a subsidiary of Barrick Gold that operated the company’s gold mines in Tanzania up to 2019, lost as much as $31 million each year to a criminal syndicate operating at the North Mara gold mine, according to an internal report. The report was prepared in 2017 by a consulting firm, Europe Conflict and Security Consulting Ltd for a security contractor at Acacia Mining, and was recently cited in a court case underway at the High Court in London.

The report found that North Mara gold mine was “fully infiltrated” by at least one criminal syndicate that stole millions of dollars in fuel, equipment and high-grade gold-bearing rock, with the collusion of police, the report found. It warned further that there was widespread corruption, fraud and misappropriation in the mine’s contracts and land compensation payments.

The report estimated that criminal activities at North Mara “may easily exceed US$20 million annually” and could be as much as US$31 million. It pointed to the involvement of both Acacia staff and the criminal syndicate in all criminal activities surveyed, adding that “this indicates a significant level of collusion/infiltration.”

The syndicate at North Mara had “strong intelligence, operational and organisational capabilities,” the report said, including the ability to manipulate security-camera coverage, move large stolen items without detection, rapidly adjust exit routes when detected, and co-opt the police and security guards. As many as 30 per cent of the mine’s staff could be involved in the activities, with “local government and political patronage” protecting the criminals, according to the report.

Barrick has long faced scrutiny for police-related violence and deaths at North Mara. Dozens of local villagers have reportedly been injured or killed by police, who receive regular support from the company for providing security outside the mine. The company has blamed the violence on “intruders” who illegally enter the mine in search of gold-bearing rock.

These allegations are the subject of the court case currently underway in London, where Tanzanian villagers are claiming that Barrick co-operated with local police who caused deaths and injuries in the local community – an allegation that the company denies.

The internal report estimated that the losses from trespassers were only about US$200,000 a year, while the mine was losing much larger sums from organised criminal groups operating in much more sophisticated ways.

A spokesperson for Barrick did not respond to questions from reporters from The Globe and Mail newspaper (of Canada, where Barrick is based) about the report on criminal activities at North Mara. However, in the court case Barrick lawyers acknowledged that the company was aware of allegations that the mine was infiltrated by criminal syndicates in collusion with the police.

The mining company “took what steps it could, including rotation of police officers assigned to the mine site, to prevent collusion,” Barrick said in its statement of defence.
Lawyers for the Tanzanian claimants said Barrick must disclose more information on the North Mara criminal activities. They argue that the police violence is sometimes a result of police collusion with one or more criminal syndicates at North Mara. To help the syndicates, police have controlled access by the trespassers and used force against villagers who were suspected of competing with the syndicates for gold-bearing rock, the lawyers said.

A British-based rights group, Rights and Accountability in Development (RAID), said the alleged police involvement in organized criminal syndicates at North Mara was troubling, since the police are still involved in day-to-day security at the mine today. “It raises serious questions as to why Barrick continues to have such a close relationship with the police,” said Anneke Van Woudenberg, executive director of RAID. (The Globe and Mail)

Helium drilling enters crucial stage
The search for helium gas has stepped up with the commencement of new drilling in Rukwa region, according to the Minister for Minerals, Anthony Mavunde. The new drilling holds the potential of making Tanzania the world’s leading source of helium and securing the future of the vital gas used in medical diagnostics, among other critical applications.

Justyn Wood, the CEO of Noble Helium, the company responsible for the exploration, expressed his appreciation for the collaborative efforts that have brought them to this juncture in a statement.

“This operation is a testament to the dedication and collaborative efforts of Noble Helium’s team, the Marriott Group, SLB Services, local suppliers and workers, and the Tanzanian government. It is an absolute milestone moment in the company’s history.”

The milestone marks a crucial juncture as Tanzania gears up to commence actual helium production in 2025, provided all goes according to plan. The numbers are staggering, with Tanzania’s primary helium project in Rukwa estimated to contain as much as 138 billion cubic feet (bcf) of recoverable helium, making it the largest known primary helium deposit in the world.

This surpasses the 54 billion cubic feet of helium discovered at Lake Rukwa in 2016, which was already celebrated as a discovery of global significance.

The global helium market has long been dominated by the US, and more recently by Russia. However, with the significant reserves in Tanzania, experts in the mining sector believe the nation is poised to become the world’s largest helium supplier.

A senior economist specialising in mineral resources, Dr John Kitomari, said, “The successful extraction and export of helium could significantly boost Tanzania’s economy and contribute to the country’s long-term financial stability.”

“The world watches with bated breath, eager to see if this crucial stage of exploration will usher in a new era for Tanzania as a major helium producer, fundamentally transforming the dynamics of the global helium market,” he said.
Besides providing a vital ingredient for party balloons and other inflatables, helium is an important gas in modern medical technology such as MRI scanners and has uses in scientific research and space exploration.

Oil exploration underway in Northern Tanzania
Tanzania has completed the acquisition of 2D seismic data in the Eyasi Wembere basin, a key step in the country’s quest to discover oil and natural gas in the region. The project, which cost TSh8 billion, was conducted in areas within the eastern branch of the great rift valley, spanning six districts across five regions, namely Singida, Arusha, Tabora, Shinyanga, and Simiyu

The basin is believed to have the potential to contain significant oil and gas resources, based on its geological similarities to other oil-producing basins in the region, such as the Albertine and Turkana basins in Uganda and Kenya, respectively.

Mr Sindi Maduhu, a Geophysicist from the Tanzania Petroleum Development Corporation (TPDC) and the Project Manager, explained that the 2D seismic data acquisition will help the country identify areas with potential for oil and natural gas presence.

by Ben Taylor

Equinor, Shell and Exxon agree major LNG project with Tanzanian authorities
The Government of Tanzania has agreed a deal with three companies – Equinor, Shell and Exxon Mobil – for the development of a liquefied natural gas (LNG) export terminal. The agreement is a milestone for the long-delayed project to unlock Tanzania’s vast but remote offshore gas resources, which the companies involved have said is expected to cost tens of billions of dollars. Experts put the likely cost at around US $42billon (£34bn).

The deal includes the main elements of a host government agreement to provide a regulatory framework and a production-sharing agreement and is subject to legal reviews and quality assurance before an expected signing in the coming weeks, Norway’s Equinor said.

“It paves the way for the series of milestones that need to follow to realise this fantastic LNG opportunity for the country and the world,” Equinor’s Tanzania country manager Unni Fjaer said in a statement.

“We are happy it is a big step towards the implementation of the project, although we have a lot to do,” said Tanzania’s chief negotiator Charles Sangweni. “If everything goes well as planned, I am confident that the final investment decision will be reached in 2025,” he told Reuters.

Equinor and Shell are joint operators of the development while Exxon, Pavilion Energy, Medco Energi and Tanzania’s national oil company TPDC are partners. Shell operates Tanzania’s Block 1 and Block 4, which hold 16 trillion cubic feet in estimated recoverable gas. Norwegian oil and gas producer Equinor operates Block 2, in which ExxonMobil holds a stake and which is estimated to hold more than 20 trillion cubic feet of gas.

Project-specific law in preparation
A few days after the deal was signed, Energy Minister, January Makamba, told Parliament that the government is preparing a project-specific law on the proposed Liquefied Natural Gas (LNG). A project-specific law gives investors preferential legal protections, boosting their confidence to invest.

“Madam Speaker, this law will be brought to the parliament for the first reading anytime from now,” Mr Makamba said, who called the finalisation of talks with the energy companies on the project “a historic milestone.”

Mr Makamba said that on top of the special project law, the government also plans to establish a special office for the highly anticipated project that authorities expect to unlock Tanzania’s vast offshore gas resources.

Dastan Kweka, a prominent analyst and commentator on oil and gas issues, said that the development was expected considering Tanzania’s recent relations with investors. “During the previous administration, Tanzania enacted several laws described as unfriendly to investors. There are also risks emanating from the change of administrations because every administration comes with its philosophy and priorities,” Mr Kweka noted.

In 2017, Tanzania passed laws allowing it to force mining and energy companies to renegotiate their contracts, which observers predicted would complicate its gas exploration plans.

“Project-specific laws help investors avoid these risks,” added Mr Kweka. “It gives them more certainty and protection. They most likely demanded the legislation as part of the conditions to invest in the project.”
Whether or not Tanzania will benefit from it will depend on how authorities handle it, he said, urging caution while developing the legislation.

“It is a law that if we had options as a nation, we would not accept,” he explained. “But because we have no option, whether Tanzania benefits or not will depend on how our government negotiates the terms with the investors.”

However, an expert working with one of the companies involved told The Chanzo online newspaper that there is no cause for concern.

“No one would invest US$43 billion without protective measures that the Parliament supports,” said the expert, who preferred to remain anonymous. “Project law is a mechanism that protects the investment.”

IMF: the project’s potential is transformative
Earlier in the year, the International Monetary Fund (IMF) published a paper on the macroeconomic implications of the project, concluding that “the project has the potential to transform the Tanzanian economy,” but that this will require “proper institutional and policy frameworks for the effective management of gas revenues”.

“In addition to the direct impacts of the LNG investment and gas production on economic activity,” said the paper, “the revenue generated from LNG exports could enable the Tanzanian government to invest on highly needed human capital and infrastructure, thereby raising the potential of the economy and lifting millions of Tanzanians out of poverty.”

“International experience shows that a balanced saving and investment approach that scales up public investment gradually, taking into account absorptive capacity, efficiency of public investment, volatility of revenues, and exhaustibility of gas reserves would serve Tanzania better than either saving or aggressively scaling up public investments.”

“While preparations towards project implementation progress, the Tanzanian authorities should start developing a policy framework for effective management of gas revenues. The first step would be having a comprehensive understanding of the macroeconomic implications of the project. … Meanwhile, improving the efficiency and effectiveness of public investments can help Tanzania prepare for a productive utilisation of upcoming gas revenues.”

LNG and the climate crisis
Despite being a fossil fuel, LNG is frequently cited as being compatible with the Paris Agreement. This is because some adoption of LNG (the ideal percentage is not agreed) would allegedly facilitate the Paris Agreement goal to limit global warming to 1.5°C above preindustrial levels. LNG would help countries reduce their emissions, as LNG emits less carbon than coal and oil, and could help bridge the period while advances and investments are made in the world of renewable energy. As a result, it is sometimes called a “transition fuel” or “bridge fuel.”

Further, Tanzania’s moral right to profit economically from her fossil fuel reserves is strong. The country’s contributions to global carbon dioxide emissions have always been tiny, and the argument is compelling that those who caused the problem should bear the cost of solving it. Furthermore, the benefits of LNG extraction for countries at lower levels of development, such as Tanzania, could include – as the IMF indicates – massive poverty reduction.

Nevertheless, LNG remains controversial, for various reasons. First, LNG emits large quantities of methane, a potent greenhouse gas, making it less preferrable from an emissions reduction perspective than originally thought. Second, LNG investment diverts finance not only from dirtier fossil fuels, but also from renewable energy. And third, new investments in LNG risk the entrenchment of further fossil fuel-based infrastructure, with stranded assets that will be rendered obsolete as decarbonisation proceeds worldwide, particularly as LNG facilities are extremely difficult to repurpose for cleaner fuels like hydrogen.

Alejandra Padín-Dujon, an analyst at Colombia University in New York, said the project was an “ecologically and politically risky bet”, given declining demand for LNG in Europe and global decarbonisation efforts.
“In a world that is rapidly moving toward decarbonisation,” she wrote on a blog for the London School of Economics (LSE), “investing in LNG may never pay off: by the time new facilities are up and running, global markets may not only have turned away from LNG (limiting demand and leading to stranded assets), but may actively penalise countries that rely on it.” (Reuters, The Chanzo, The Citizen, IMF, LSE)

Solar-power plants under construction on mainland and Zanzibar
Mainland Tanzania and Zanzibar have each initiated groundbreaking solar-power plants. The projects respectively represent the first grid-linked solar power generation project on the mainland and a major step towards reducing dependence on under-sea power cables for Zanzibar.

On the mainland, Tanzania has awarded China’s Sinohydro Corporation as the construction contractor for the country’s first-ever solar photovoltaic power station to feed into the national electricity grid.

The Tanzania Electricity Supply Company (TANESCO) signed the contract for the plant’s first phase of 50 MW capacity, in the presence of the Minister of Energy, January Makamba.

The project is part of a TSh 275 billion (£89m) 150 MW solar power initiative in Kishapu district, Shinyanga region. The power station will connect to the national grid through a 220 kV transmission line from Singida to Shinyanga.

TANESCO picked JV Artelia from France and Energiovida from Tanzania as consulting contractors. The estimated cost for the first phase is TSh 109 billion, the works are expected to start in mid-2023 and be completed within 12 months.

Mr. Makamba acknowledged at the signing ceremony that this marks the first introduction of solar electricity into the national grid of Tanzania. He commended the French Development Agency (AFD), which has provided a loan for the project’s implementation.

Tanzania is developing a new Renewable Energy Policy to further enhance investments in renewable energy, which will capitalise on the substantial financial resources, capital markets, and advancements in new technologies dedicated to renewable energy globally, Makamba said. He also announced ongoing efforts to identify areas with renewable energy resources and prioritise native investments in wind and solar projects. The Tanzanian government, Mr. Makamba said, will provide support in this regard and establish guidelines for project implementation.

Meanwhile, the government of semi-autonomous Zanzibar has signed an agreement with Mauritius-based Generation Capital Ltd and Tanzania’s Taifa Energy to build its first large-scale solar power plant, as it seeks to become energy independent. The plant will cost $140 million (£113m).

The Power Purchase Agreement (PPA) between the state-owned Zanzibar Electricity Corporation (Zeco) and the two companies to develop the 180MW plant will be implemented in phases, according to Zanzibar’s Ministry of Energy and Minerals.

“The project will be built in phases and will commence with the expedited construction of a 30 MW solar PV power plant at Bambi, Central District in South Unguja Region, that will be completed in 2024,” Joseph Kilangi, the Permanent Secretary at the Ministry of Energy and Minerals, said in a statement.

Zanzibar currently gets electricity through a 100 MW under-sea cable from mainland Tanzania, but now wants to generate its own energy as it pursues the development of its tourism sector. The province is betting on clean energy to help achieve that ambition.

In March this year, the government of Zanzibar committed to supply approximately 200 acres of land for the Zanzibar Clean and Renewable Energy Park Project, for instance. The project, to be developed by Astra Energy Inc, will generate 50MW of clean and renewable energy, largely driven by solar.

by Ben Taylor
Controversial oil pipeline gets government approval
The government of Tanzania gave formal approval in February for the construction of the USD $3.5bn East African Crude Oil Pipeline (EACOP), despite human rights and environmental concerns around the project. This followed official approval for the project from the Ugandan government in January.

The 900-mile pipeline will transport crude from oilfields in Lake Albert in north-western Uganda to the port of Tanga on the Indian Ocean, passing not far from Singida and Kondoa [see TA 128]. The pipe will be 600mm diameter steel with heating to improve the fluidity of the oil, and will require a 30m wide corridor over the entire route (Eacop.com). The $10 billion oilfield and pipeline project is being jointly developed by France’s TotalEnergies, the China National Offshore Oil Corporation (CNOOC) and the state oil companies of Uganda and Tanzania. The first oil is expected to flow in 2025.

“This construction approval marks another step forward to EACOP as it allows commencement of the main construction activities in Tanzania, upon completion of the ongoing land access process,” said EACOP Tanzania general manager Wendy Brown.

The project has been hailed by some as an economic boon for both countries, though it has run into strong opposition from human rights and environmental campaigners, who say it threatens the region’s fragile ecosystem and the livelihoods of tens of thousands of people.

Tanzania’s Energy Minister, January Makamba, dismissed the environmental and rights concerns as “propaganda”, and said that all environmental, safety and human rights standards have been complied with. “We are proud of the pipeline because it will increase Tanzania’s influence in the world,” he added.

The oil originates in two oilfields on Lake Albert. Drilling began in January at the Kingfisher field on the south-eastern edge of the lake, operated by CNOOC, while the second field on the lake’s northern shore is being developed by TotalEnergies. This second field, known as Tilenga, extends into Uganda’s largest national park, Murchison Falls. At least 100 oil wells are reported to have been drilled inside the reserve.

There are an estimated 6.5 billion barrels of crude oil under the lake, of which a little over 20% is thought to be recoverable. The reserves are expected to last up to 30 years, with production peaking at 230,000 barrels a day. This would be sufficient to make Uganda the fourth-largest hydrocarbon producer in sub-Saharan Africa.

The pipeline has been controversial for the potential damage it could do to the environment and to people’s lives and livelihoods along the route. Fishers on Lake Albert are already seeing pollution on the lake, and one-third of EACOP will pass through the Lake Victoria watershed, on which an estimated 40 million people depend for their livelihood. “A leak along the pipeline could be a cataclysm,” said Hilda Flavia Nakabuye, a Ugandan activist, and “once consumed, the oil extracted will emit nearly 34m tonnes of CO2 a year, six times the emissions of Uganda”.

TotalEnergies is being sued in France by a group of NGOs for allegedly failing to comply with the country’s 2017 duty-of-care law. The NGOs are asking the Paris court to suspend TotalEnergies’ Ugandan projects, claiming the company is in breach of their legal obligation to identify and prevent human rights and environmental abuses resulting from its own activities or those of its subcontractors.

Civil society organisations in Uganda have also fought against the project, but have met with stiff resistance from the authorities. According to reports, the army now has a regular presence across the oil-producing region, journalists have been persecuted and human rights activists hindered in their work. Dickens Kamugisha of the Africa Institute for Energy Governance, a small NGO, explained that “the government passed a law in 2016 designed to hinder the activity of NGOs. The aim is to muzzle civil society”. Another activist, Maxwell Atuhura, is among those to have been arrested over EACOP. “The more I informed people, the more I was being watched,” he said. “It started with tailing, then negative blurb about me on the local radio, and finally an arrest in May 2021. I spent two nights in jail. The police confiscated all my equipment and threatened me, telling me that I was risking my life to continue my work.” (The Nation, The Guardian)

President Samia calls for attention on Africa in the energy transition
President Samia Suluhu Hassan has called for western governments and companies to focus on the needs of African countries when acting to address climate change and steering the global energy transition. She made the call in Davos, Switzerland, in January, on the sidelines of the annual World Economic Forum (WEF).

President Samia said it was high time developed countries in Europe and America put focus on producing energy from Africa, and that resources in Africa could help smooth the energy transition. “Africa could be another source of energy,” she said. “When it comes to green energy, we have almost everything ranging from nickel, cobalt and copper.”

She also reached out to private sector in developed countries to provide funding for Africa to enable the continent to produce more energy from natural gas. “It is true that we need energy transition but this should take some time, we also need funding to embark on energy transition,” Dr Samia appealed. She noted that there is high demand for energy in the African continent amid the fourth industrial revolution which is taking place across the globe.

Further, the President urged African countries to put more efforts in strengthening regional power pools such as East African and Southern Africa power pools, saying not enough has been done. “If we create these power pools there will be no problems of shortage of energy because whoever who will be having a crisis will be served by the regional power pools,” she remarked.

She reminded leaders during the discussion that the energy transition is a global problem which requires global solutions. “There is a need for a multilateral approach in addressing the challenge,” she said, and expressed her concerns that many developed countries are formulating energy strategy unilaterally rather than engaging developing countries.

Speaking late in 2022 at the United Nations Climate Change Conference (COP27) in Egypt, President Samia said Tanzania is taking a number of initiatives aimed at mitigating the impacts of climate change for sustainable development.

She said the government has adopted a national climate change response strategy and contribution with a target of reducing greenhouse gas emissions between 30 to 35 per cent by the year 2030. This includes continuing to construct and expand rapid transport networks. She explained that these are expected to reduce more than 900 million tonnes of carbon emissions each year. (Daily News)

Agreement reached for new hydropower project in Kagera

The government of Tanzania, the African Development Bank (AfDB), and the French Development Agency (AFD) have signed agreements for two development project loans worth a total of $300 million to finance the construction of the 88MW Kakono Hydropower Plant in Kagera region. The project also received a grant of 36 million Euros from the European Union (EU).

The project, to be implemented by the Electric Supply Company (TANESCO), will reportedly reduce greenhouse gas emissions by an estimated 216,065 metric tons per year and comply with highest international environmental and social standards. The government expects that the project will serve four million people and increase the service coverage rate by around 7% of the population.

Alongside the construction of the new hydropower plant, associated infrastructure will be built, including upgrading the existing Kyaka substation and a new 39-kilometre 220-kilovolt transmission line and capacity building support for TANESCO.

The French Ambassador to Tanzania Nabil Hajlaoui said: “We have heard President Samia Suluhu’s message. She aims to generate 5GW of electricity by 2025. France is ready to be part of this journey by investing in power generation and transmission projects to meet the rapidly growing electricity demand while reducing the carbon intensity of its energy mix.”

The concrete dam will be 51m in height above the river bed, creating a reservoir which will extend about 28km upstream of the dam, with a width of around 1.5km at the widest point. (AfDB)

Deals agreed with three Australian mining firms

President Samia Suluhu Hassan in April witnessed the signing of deals worth US$600 million with three different Australian companies as Tanzania seeks to gain more from its vast wealth of minerals.

During a function at the State House in Dodoma, the President witnessed her administration closing deals with Evolution Energy Minerals Limited, EcoGraf Limited and Peak Rare Earth Limited.

With EcoGraf Limited, Tanzania agreed to the development and operation of the Epanko Graphite Project in Morogoro. An initial investment worth US$127.7 million will be made. With Peak Rare Earths Limited, the government agreed to the development of the Ngualla Rare Earth Project with an initial investment of US$439 million. With Evolution Energy Minerals Limited, the Samia Administration agreed to the development of the Chilalo Graphite Project in Lindi with an initial investment worth US$100 million.

by Ben Taylor
Progress in LNG plant negotiations
Negotiations between Tanzania’s Ministry of Energy and Equinor and two multinational oil companies – Shell and Equinor – on the proposed liquid natural gas (LNG) processing plant in Lindi region are said to have made good progress. However, the target date set by President Samia Suluhu Hassan for conclusion of the negotiations – December 2022 – was missed. The Minister for Energy, January Makamba, explained that the delay in concluding talks was solely due to the Christmas holidays.

Talks between the government’s negotiation team and Shell and Equinor and their partners were revived in 2021 after having been stalled for some time. The two sides are said to have agreed on key issues, and have signed an initial Host Government Agreement (HGA).

In June 2022, President Hassan witnessed the signing of the initial HGA, and directed the team to complete discussions on the remaining areas before the end of December. “We would have finished drafting the agreement,” said Mr Makamba, “but our partners are now taking leave during Christmas.” He added that the drafting will resume in the new year. Mr Makamba said the negotiations have been complex and have taken considerable time. “I was in Arusha for four days, and we were meeting from 7:00 in the morning to close to midnight,” he explained.

The investing companies are optimistic about the project’s execution after the discussions conclude. “From Equinor’s side, we are encouraged by the progress we have seen in the talks between the LNG investors and the government. While we are still working on finalising the agreement to progress our LNG project in Tanzania, we have now agreed on the key items and have entered the drafting stage,” reads a statement.

To date, the government in partnership with oil and gas companies have discovered a total of 57.54 trillion cubic feet (TCF) of natural gas in various blocks. This includes 10.41 TCF from onshore wells and 47.13 TCF discovered offshore. Natural gas is currently used mainly for electricity generation, industrial and domestic activities as well as powering vehicles. Around 60% of the electricity consumed in Tanzania is generated using natural gas, with the rest coming from other sources such as hydropower plants, oil, solar and biomass.

The planned LNG plant in Lindi will facilitate the export of the natural gas to the world market. The agreements to be signed after the current negotiations include the final Host Government Agreement, which spells out terms of the project, the project law and the benefit-sharing agreement. A final investment decision could be reached in 2025, potentially allowing exports to start before 2030.

Earlier, a new report by Stanbic Bank Tanzania has suggested that the Liquefied Natural Gas (LNG) project can potentially raise Tanzania’s Gross Domestic Product (GDP) by over USD $7bn (TSh 16 trillion) per annum and earn the government $2bn in revenue. “It is believed that, upon completion, Tanzania LNG will be the largest energy project in Africa’s history in terms of capital investment. It would increase Tanzania’s GDP by $7 billion per annum,” Stanbic Bank Tanzania said in a statement yesterday. Tanzania’s GDP in 2020 was estimated at USD $62 billion, according to the World Bank.

The magnitude of the economic impact is correlated with the expected future price of LNG. The Bank accounted for this by modelling different future price scenarios, ranging from $5.50 MMBTU to $12.00 MMBTU. “It represents a transformational economic impact; between 270,000 and 600,000 direct and indirect employment opportunities during the lifespan of the project; between $2 billion to $6 billion in fiscal contributions to the government of Tanzania per year; and between $3 billion to $8 billion per annum in balance of payments contributions,” the statement reads.

In his remarks at the report launch, Mr Makamba said the report insights were critical in providing an overall understanding of the macroeconomic impact of the project. He also affirmed the government’s commitment to finalizing the project and tapping into the wider opportunities provided by alternative energy sources. “We will be unapologetic in the extraction and consumption of gas energy that exists in our country,” said Mr Makamba. “In Africa, if we are to extract all gas resources, we will contribute just 3 to 3.5 percent of global greenhouse gas emissions. Tanzania is building a robust gas economy, and not just limited to liquefied.”

The Minister said the envisaged LNG project with its huge financial and economic impact to the nation would bring about changes on the way public and private institutions would operate. “It can’t be business as usual. It is huge investment, something never done before. Public and private institutions will be required to be able to execute their jobs on top global levels,” he said. (The Citizen, Daily News)

Gold miners launch legal action against Barrick Gold
A group of Tanzanian villagers is suing Canadian mining giant Barrick Gold over alleged police killings, torture and other abuses at North Mara gold mine in Tanzania. Further, the families of two miners allegedly killed at the mine in 2019 have launched a legal claim against the London Bullion Market Authority (LBMA) for certifying its gold as free from major human rights abuses.

The first claim, filed in the Superior Court of Justice in Ontario, Canada, accuses mining of being complicit in extrajudicial killings by police guarding its North Mara facility.

The miner has faced similar charges various times in recent years. In 2013, twelve villagers living in the neighbourhood of North Mara sued the company, then known as African Barrick Gold (ABG), in a UK court for the death of their six relatives, whom they said were shot by police in 2011. In 2015, the company agreed to an out of court settlement to compensate the villagers for undisclosed amounts of money.

This time, the plaintiffs include relatives of five men killed by police assigned to the mine, according to the filing. Nine of the plaintiffs say they were themselves beaten or shot by the police. The claim states that residents routinely enter “waste rock areas” at North Mara to retrieve rocks with trace amounts of gold, which they process and sell.

It also claims that Barrick “has had effective and practical control” over police stationed at the mine and that the company’s security agreements with the police effectively make them the mine’s “private and heavily armed security force.”

In the second case, the law firm Leigh Day has filed a legal claim at the High Court in London alleging that the LBMA has been wrongly certifying that gold originating from North Mara gold mine was free from major human rights abuses. According to a statement, the two men died while working at the mine. “The claimants assert that despite a publicly recognised pattern of systemic human rights abuses associated with the mine over many years, the LBMA has continued to certify gold from the mine under its LBMA Responsible Gold Standard,” the law firm claimed.

According to Leigh Day, the first miner died in July, 2019 after being shot by security staff at the facility while the second miner died in December of the same year after being shot by Tanzanian police. The claim, filed in the Superior Court of Justice in Ontario, Canada on Wednesday, accuses the world’s second-biggest gold miner of being complicit in extrajudicial killings by police guarding its North Mara facility, located about 30km (18 miles) from the border with Kenya.

Barrick Gold Corporation has refuted the allegations, saying Barrick had frequently made it clear that North Mara’s security personnel are unarmed and that the mine does not supervise, direct, control or instruct any mission, assignment or function of the Tanzanian police force, which is a state institution.

Barrick president and chief executive Mark Bristow said the group was proud of its human rights record around the world and of North Mara’s strong working relationship with the communities around the mine. He said many of the mine’s employees have been drawn from the surrounding villages and in line with Barrick’s other operations, North Mara prioritises local employment and procurement.

“While the vast majority of local residents are law-abiding, there are rogue bands, armed and well-organised, who from time to time invade North Mara to steal gold-bearing rock, presenting a serious risk to the safety of mine personnel and community members in the process,” said Mr Bristow.

“As recently as last month, North Mara was attacked by an armed force of almost 100 men. Despite the police’s attempts to repel them, 71 managed to scale the site’s nine-metre-high perimeter wall and engaged with the mine’s unarmed security personnel. The policemen eventually removed them, but one of the intruders died as a result of his injuries. “Two of the policemen were also injured. Barrick made a public announcement about the incident at the time. This was far from being a one-off occurrence and North Mara lives with the constant threat of such invasions.”

A spokesperson for the company also told Reuters news agency that the Canadian legal action “is riddled with inaccuracies,” and that it “attempts to advance claims against Barrick Gold Corporation in Ontario based on alleged actions of the Tanzanian police, even though Barrick exercises no control or direction of any nature over the Tanzanian police.” “We intend to vigorously defend against these allegations in the appropriate forum,” she said.

Tanzania’s deputy minister of Minerals, Dr Stephen Kiruswa, said the accusations were stirred up by “groups which want to get money from global NGOs,” playing down the seriousness of the legal action. “We have met residents near the mine and they are happy with the support of the miner to community life,” he said, adding that there were no any human rights abuses. (The Citizen, Al Jazeera, Reuters)

Tanzania, Uganda hit back at EU on oil pipeline plan
The governments of Tanzania and Uganda have responded in robust terms to criticism of the East Africa Crude Oil Pipeline (EACOP) project from the European Union Parliament.

In September, the EU Parliament adopted a resolution raising concerns of human rights violations, major environmental and climate risks posed by the execution of the EACOP project. According to the resolution, more than 100,000 persons are being forcibly evicted to make space for the pipeline, and they are being deprived of the use of their land and thus also their livelihood before receiving compensation.

The resolution calls “for the EU and the international community to exert maximum pressure on Ugandan and Tanzanian authorities, as well as the project promoters and stakeholders, to protect the environment and to put an end to the extractive activities in protected and sensitive ecosystems.” It further calls for efforts to use “the best available means to preserve the culture, health, and future of the communities affected and to explore alternatives in line with international climate and biodiversity commitments.”

Responding to the resolution, January Makamba, Tanzania’s Energy Minister said that the overall pipeline route has been designed to minimise environmental and social impacts. “Some physical displacement (loss of shelter) and economic impact (full or partial loss of farmland) is unavoidable,” he admitted, but added that “land acquisition is compliant with both the Laws of Tanzania and the Performance Standards of the International Finance Corporation (World Bank).” “We offer a choice between replacement housing (generally of higher standard than the existing dwelling) and cash compensation. Around 85% of the affected people have elected for replacement housing, and construction of these replacement houses is ongoing.”

Mr Makamba insisted that “no land will be accessed by the project until compensation has been paid and notice to vacate has been given. In fact, those affected will also be entitled to transitional food support and have access to livelihood restoration programmes. The land acquisition process is expected to be completed in mid-2023.”

Finally, he noted that “the pipeline will be monitored by a state of the art fibre-optic cable to detect both temperature changes and vibrations and it will be executed in an exemplary manner in terms of transparency, shared prosperity and sustainable development including the environment and respect for human rights.”

Responses in Uganda were less diplomatically expressed. The Deputy Speaker of the Ugandan Parliament, Thomas Tayebwa, described the resolutions as “deliberate misinformation.” “These are projects which were approved by the Parliament of a sovereign country,” he said, “and anything to do with challenging their approval is an affront to the independence of this House and we cannot take it lightly.”

“The EU bile against the project”, he went on, “betrays neo-colonial attitudes and imperialism of the EU Parliament”.
He further derided the EU Parliament for closing an eye to the EU’s own emissions. According to Mr Tayebwa, EACOP will only represent 0.5%, yet the EU with just 10% of the world population is responsible for 20% of emissions, and member countries are exploring plans to deepen fossil-fuel extraction.

by Dr Hildebrand Shayo

JNHPP Hydropower moves forward but major challenges for Tanzania’s energy sector remain
Large-scale hydropower development in Tanzania has, until recently, largely been government led. The Electricity Act of 2008 and the subsequent feed-in tariff policy has since endorsed stimulated private sector investment in electricity generation in the country.

The Act provides rules for power generation, storage, and distribution of electricity in Tanzania. A section devoted to rural electrification assigns duties to the Minister responsible for electricity matters and the Energy and Water Utilities Regulatory Authority (EWURA).

To enhance efficiency, Tanzania has been endeavouring to reform the electricity sector. This process began during the third phase of government under President Benjamin Mkapa. Nevertheless, the overall restructuring of the sector into three largely separate sub-sectors – a power generation, transmission and distribution – has not yet been achieved. This is largely due to the slow pace of reforms and the myriad forms of resistance faced. For one, energy is also a national security matter.

Let us ask what the main challenges are for Tanzania’s energy sector that each policymaker needs to be grappling with, even as the Julius Nyerere Hydropower Plant (JNHPP) is near completion [previously known as Stiegler’s Gorge – see https://www.tzaffairs.org/?s=stiegler&submit=Search]. 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.

Energy use in cooking and transport is the number one challenge in my view. If no action is taken, this can have a wide bearing on the environment and climate-related effects. Biomass fuels in the form of firewood and charcoal and liquid petroleum gas (LPG) are the main cooking fuels in urban Tanzania, with LPG slowly replacing biomass in rural and suburban areas.

It is regrettable most Tanzanians don’t appreciate that importing LPG for cooking and petroleum products for transport is precipitously draining Tanzania’s foreign currency reserves. Thus, moving to clean energy sources, especially electricity, for cooking and transporting clean cooking energy should be an important policy goal of the Government of Tanzania. To reduce the use of charcoal, which has contributed hugely to deforestation would be a big benefit to the country.

According to the latest Tanzania power system master plan, Tanzania’s electricity demand will expand at an annual rate of 13.8% during 2022–2030, rising from 10,176 GWh in 2022 to 28,664 GWh in 2030. This growth indicates that hydropower will continue to play a dominant role in Tanzania’s electricity system.

As President Samia Suluhu Hassan graced JNHPP water filling for the generation of 2,115MW of electricity upon completion on 22nd December 2022, Tanzania’s total power installed capacity by 2021 was 1,606MW. Tanzania’s electricity generation, according to the Ministry of Energy and Minerals, currently 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).

Ministry of Energy and Minerals data 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, urgent action needs to be taken that include Government plans to increase Tanzania’s generation capacity to 10,000 MW by 2025. 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, the hydropower sector needs to be equipped for the technical, financial, social and environmental challenges that lie ahead.

For instance, there is currently excess electricity during the rainy season and insufficient electricity generation during the dry season. In the past this has resulted in significant electricity power rationing. Smoothing Tanzanian’s electricity generation curve by consuming or selling surplus electricity during the rainy season and increasing generation during the dry season, in order 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.

This implies that to meet Tanzania’s mounting electricity demand, as calls to industrialise and increase 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 (to power generators) electricity prices that are not deemed to be adequate to support system cost and capital expansion are a major cause of underinvestment. Insufficient investment in transmission lines is a critical obstacle for hydropower development; thus a further policy goal for Tanzania should be to attract investment by initiating efficiency and economic principles into the sector 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. Further, 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. This has the potential to severely reduce the base flow available to hydropower projects in the long run. The effect in addition to inadequate maintenance will thus be to increase both capital and operational costs, and loss of revenue from plant stoppages. Hence, increasing the resilience of hydropower plants is another policy goal for Tanzania to achieve its full potential in the energy sector’s goal.

Further, Tanzania’s electricity sector in my opinion experiences some governance problems. Tanesco, the national electricity utility and the sole buyer of electricity, can be frequently a victim of political interference. Electricity prices and power purchase agreements can often be driven by factors other than scientific or business economic principles.

Tanzania has much to benefit if it can export surplus electricity to other SADC region members. This can only happen if there are robust long-term plans to develop all potential energy sources. If achieved, Tanzania could increase its gross domestic product immensely and relieve itself from depending on donor handouts and going for development loans that sometimes can have unfavourable terms.

by Ben Taylor
Significant deal signed on LNG processing facility
Tanzania has signed a framework agreement with the Norwegian firm Equinor and UK-based Shell that brings the parties closer to starting construction on a $30bn project to process and export liquefied natural gas (LNG). The deal announced in June foresees a final investment decision by 2025, and a start of operations by 2029-2030 at a liquefied natural gas plant to be built in Tanzania’s southern coastal town of Lindi.

“We have never reached this stage of natural gas development in the history of our country,” said Energy Minister January Makamba during the signing ceremony. “This project will significantly change our economy,” he added.

President Samia Suluhu Hassan, also present at the ceremony, welcomed the preliminary agreement. “We have reached a good stage of discussions about the LNG project, but much work is still waiting for us to talk and make it competitive,” she said.

Plans for the LNG plant had stalled for several years under President John Magufuli, and President Hassan re-launched efforts after taking office in 2021.

“We had many stops but through [the] resolve of the government, we kept engaging, discussions and we believe Tanzanian gas presents a huge opportunity,” said Equinor country manager for Tanzania, Unni Fjaer.

Both Equinor and Shell have existing interests in natural gas in Tanzania. Along with US firm ExxonMobil, Equinor is exploiting an offshore block where it says it has found 20 trillion cubic feet of natural gas. Shell, together with Ophir Energy and Pavilion Energy, says it has discovered 16 trillion cubic feet of gas in two other offshore blocks in the same area.

Low-carbon energy potential, and projects
While Tanzania continues to seek to exploit her natural gas resources, the country is also powering ahead on low-carbon energy projects.

President Samia Suluhu Hassan stated while on a visit to the US in April that the country has a goal of producing 6,000MW from renewable energy by 2025. She said the electricity will be produced through a combination of hydropower, solar and wind projects.

The President was speaking at a discussion themed “A New Day for US-Tanzania Relations,” hosted by President and Chief Executive Officer of the Wilson Centre (and former US Ambassador to Tanzania), Mark Green.

Chief among Tanzania’s portfolio of renewable energy projects is the controversial 2,100MW Julius Nyerere Hydropower Project (JNHPP) at Stiegler’s Gorge, where construction is well under way (see previous issues of TA). Two smaller hydropower projects – the Ruhudji and Rumakali projects, both in Njombe region – are also lined up to begin producing 358MW and 222MW respectively. In combination, these three projects will nearly triple the country’s electricity supplies from the 2021 level of just over 1,605 MW.

Tanzania is also pressing ahead with both wind and solar power projects. In July, Energy Minister, January Makamba visited the site of a proposed 150MW solar farm in Kishapu District, Shinyanga Region. He explained how the project, financed by the French development agency AFD, will eventually feed power into the national grid, providing energy particularly to Simiyu and Mwanza regions, as well as to communities surrounding the plant.

Tanzania is recognised as having an abundance of the solar radiation necessary for generating large-scale power year round. It is estimated that 83% of the country’s land area has a high level of annual average radiation, and 14% has very high levels. This means the solar resource for power generation is viable in most, if not all, the country.

The President told the audience in the US that Tanzania has a target to produce between 600MW and 700MW of electricity from solar.

Similarly, the country has high potential for wind-power projects, with several parts of the country having strong and predictable wind patterns. Projects already underway include a 100MW plant near the town of Singida and a 300MW project near Makambako.

Geothermal energy potential is also being developed, with an initial focus on providing direct heat for agricultural and industrial purposes including greenhouse heating, grain drying, etc.

Currently, with per capita annual energy consumption of just 103KWh, Tanzania ranks in the bottom ten nations in the world, below even the norm across sub-Saharan Africa. In the past ten years, while the population has increased by 32% and electricity demand by an estimated 400%, total installed power generation capacity has increased much more slowly, from 1,521MW to 1,700MW: a pace equivalent to roughly one percent per year.

Fuel subsidies introduced to cushion citizens from price increases
In May, the government announced moves to protect consumers in Tanzania from the rapid global rise in fuel prices by introducing a TSh 100bn (USD $43m) monthly subsidy. The subsidy took effect on June 1st and resulted in a reduction in prices at the pump of around TSh 300 per litre.
Petrol, diesel and kerosene prices had risen to record highs of above TSh 3,000 per litre earlier in May after global oil prices shot up following Russia’s invasion of Ukraine.

Nevertheless, as global prices remain high, pump prices in Tanzania have continued to rise despite the government subsidy. In early August, the Energy and Water Utilities Regulatory Authority (EWURA) announced new price caps for fuel that saw prices for petrol and diesel rise to levels never recorded before in the local market. A litre of petrol in Dar es Salaam will cost TSh 3,410, while in Mtwara the same will cost TSh 3,762.
“Fuel is a strategic and very important product,” said the executive director of the Tanzania Association of Oil Marketing Companies (Taomac), Raphael Mgaya. “If the government continues with its efforts to ensure the commodity is available at affordable prices by the end user, then it will help strengthen the economy and reduce the risk of inflation,” he added.