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.