energy - natcomreport

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UNESCO NATIONAL COMMISSION OF THE UNITED REPUBLIC OF TANZANIA

Overview ofthe sector

Tanzania is endowedwith diverse energy resourcesincluding biomass, naturalgas, hydro, coal, geothermal,solar and wind, uranium,much of which is untapped.Wood-fuel accounts for up to90% of total national energyconsumption, with about 2%from electricity and 8% frompetroleum products.

Whereas Tanzania hasplentiful natural gas, coal,hydropower, solar and bio-mass resource potential, ithas one of the world’s lowestlevels of electricity consump-tion per capita (150 KWh).Considerable scope exists foraccelerating electrificationto meet the growing demandespecially in the rural areasthrough off-grid solutions.Investment opportunitiesexist for developing hydro-power dams, solar photo-voltaic systems, biomassbased co-generation in sugar,wood, and tea factories toprovide electricity.

Tanzania’s power sector isdominated by a single verti-cally integrated national utility,Tanzania Electricity SupplyCompany Ltd (TANESCO),which has nearly 800,000

customers. Total installedgeneration capacity is 1219MW, from which hydropowercomprises 561 MW and ther-mal 658 MW. National elec-tricity connectivity is about14% with a rural coverageof less than 3%. The contri-bution of non-hydro renew-able energy for power gener-ation is less than 5%.

Tanzania has not yet foundoil and is, therefore, completelydependent on imported petro-leum products. Tanzania hasexcellent unexploited butpotential sedimentary basins.

PerformanceIn 2009, the energy and

gas sector grew by 8.4% com-pared to 5.4% in 2008. Theincrease was due to additionalgas power produced. Thetotal contribution of this sub-sector to the GDP remainedat the 2008 rate of 1.7%.

Power generated by thenational grid and other sourceswas 3,290.3 GWh comparedto 2,917.3 GWh in 2008.

A total of 59,547 new cus-tomers were connected toelectricity by TANESCO in2009, compared to 56,383 in2008, which was an increaseof 5.8%.

However, Tanzania expe-rienced severe power rationingin October and November2009 as the result of low waterlevels at its main hydropowerdams and a damaged tur-bine at the Songas plant,together which caused a 150MW shortage.

Potential• Hydro: 4.7 GW (only 12%developed);• Coal: 1.2 billion tones ofwhich 304 million tonnes areproven;• Natural Gas: > 45 billioncubic meters;• Others: Solar, Biomass,Wind, Geothermal;• Petroleum/Oil: Prospectingactivities on-going.

RegulatorThe Energy and Water

Utilities Regulatory Authority(EWURA) is an autonomousmulti-sectoral regulatoryauthority established in 2001by the Energy and WaterUtilities Regulatory AuthorityAct, Cap 414 of the laws ofTanzania. It is responsiblefor technical and economicregulation of the electricity,petroleum, natural gas andwater sectors.

The functions of EWURAinclude among others, licens-

Energy:Natural gasto improve

power supply

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ing, tariff review, monitoringperformance and standardswith regards to quality, safety,health and environment.EWURA is also responsiblefor promoting effective com-petition and economic effi-ciency, protecting the interestsof consumers and promotingthe availability of regulatedservices to all consumersincluding low income, ruraland disadvantaged consumersin the regulated sectors.

Energy consumptionEnergy consumption in

Tanzania exhibits a patternobserved in most developingcountries whereby biomassenergy dominates. Consump-tion pattern is as follows:• Biomass based fuels (main-ly woodfuel and charcoal)accounts for about 90% ofthe total national energyconsumption;• Commercial energy accountsfor 10% (2% from electricityand 8% from petroleum).

ElectricityThe electric power indus-

try advances a nation’s pro-ductivity, promotes businessdevelopment and expansion,and provides employmentopportunities. As mentionedearlier about 14% of the pop-ulation has access to elec-tricity. With strong growthin commercial, industrial,agriculture and residentialsectors, it is projected that thedemand will triple by 2020.

Tanzania has an installedcapacity of about 1219 MW,of which hydropower com-prise 561 MW and thermal658 MW. More investmentsare therefore required in thepower sector in order meetthe projected growth demand.The Government has enactedthe New Electricity Act, 2008which encourage private

sector’s participation ingeneration and distributionof electricity hence curtailTANESCO monopoly andincrease competition.

Of all the electricity pro-duced in the country in 2009,a total of 2,242 GWh wereproduced by hydro powerand 1,592.5 GWh by naturalgas and diesel.

Petroleum downstreamPetroleum downstream

was liberalised in, 2000 toallow oil marketing companiesoperating in the country toimport and supply petroleumproducts as well as set pricesin accordance with the marketforces. The petroleum down-stream sub-sector is still under-going reforms, the Govern-ment’s role remains that ofputting in place appropriatepolicies and institutionaland legal framework, attractprivate sector investments,taxation and monitoring ofpetroleum distribution oper-ations and supplies. In 2008

the country is estimated tohave used about 1.7 milliontonnes of petroleum products.

Production of gas is nowtaking place at the SongoSongo and Mnazi Bay wheregas is used in electricity gen-eration and for thermal appli-cation in more than 35 Dares Salaam based Industries.Natural gas production isexpected to go up by 60% fromthe current level (90 millioncubic feet a day) by 2012.

The petroleum down-stream sub-sector is governedby the Petroleum Act. 2008,The Act provide guidance onpetroleum industry develop-ment in Tanzania and reflectthe principles embedded inthe National Energy Policy,2003.

Petroleum upstreamExploration and produc-

tion of petroleum is governedby the Petroleum (Explora-tion and Production) Act of1980. Petroleum exploration

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activities started in the coun-try since early 1950s whenBP drilled a number of wellsalong the coast and in theisland of Zanzibar and Mafia.

Although no liquid hydro-carbons have been discovered,three gas fields have so farbeen discovered which areSongo Songo, Mnazi Bay andMkuranga gas fields.

Tanzania Petroleum Devel-opment Corporation (TPDC)is responsible on behalf ofthe Government to overseethe development of petroleumexploration and productionactivities in the country.Currently there are 14 explo-ration companies operatingin the country.

Renewable energyRenewable energy resources

are expected to play a signif-icant role in the supply ofmodern energy services inthe country in future. This islargely due to their availabil-ity, suitability in addressingglobal concerns on environ-ment and the need to makeenergy services available torural and peri-urban areaswhere most of these resourcesexist. At present, the followingrenewable energy technol-ogies are being developed,promoted and disseminated.• Small scale hydropower;• Modern biomass technology(co-generation, improvedstoves, improved charcoalproduction, thermal-chemicalgasification, briquettes, liquidbiofuel production, etc.);• Solar energy;

• Wind for mechanical andelectrical power;• Development of liquid bio-fuels to supplement use ofpetroleum fuels;• In addition, considering thefact that a unit energy savedis much cheaper and moreenvironmental benign thangenerating each the same;energy efficiency and conser-vation is also being promotedby Ministry in collaborationwith other stakeholders.

Rural energy accessThe Ministry of Energy

and Minerals (MEM) estab-lished Rural Energy Agency(REA) and Rural Energy Fund(REF) to mobilize coordinateand facilitate both private andpublic initiatives towardsrural energy development.

The major function of REAis promoting new investmentin modern energy for ruralareas throughout Tanzania.REA work with key service-sector institutions and min-istries responsible for ruralservices (including water,health, communications,education, and local govern-ment) to promote investmentin modern energy that willincrease the access of ruralpeople to improved energyservices.

The MEM encouragesother institutions, such asNGOs, businesses, entrepre-neurs, municipalities andCommunity Based Organi-sations (CBOs), to actively helprural communities throughplanning, financing andexecuting rural energy pro-grammes. The rural energyprojects developed with thefacilitation of the Rural EnergyAgency will ultimately beowned and implementedby the private sector, NGOsand CBOs.

REA through its RuralEnergy Fund is intended toprovide capital subsidies tobuy down the cost of energyservices and thereby reducethe risks to project developersenvisioned to include com-munities, companies, localgovernments and others thatare ready and capable ofinvesting in the provisionof modern energy services inrural areas.

Challenges of theenergy sector

In order to achieve theoverall objectives of economicgrowth and poverty reduction,there is a need for substantialimprovements within theenergy sector, both on thedemand and supply side.The main challenges of theenergy sector are:• On-going exploration activi-ties with lot of uncertainties;• Increased electricity demandthus requiring massive invest-ments in generation, trans-mission and distribution;• Unstable and escalatingpetroleum prices;• Over dependency on woodfuel for cooking;• Cross border and regionalinterconnection for fosteringpower reliability;


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• Accessibility of rural pop-ulation to modern energyservices;• Making renewable energytechnologies compete withfossil fuel based ones;• Energy pricing versus afford-ability;• Energy Conservation andefficiency and quality stan-dardisation of equipmentand gadgets.

Energy policyThe National Energy Policy

(NEP) which drives devel-opment of energy sector waslaunched in 2003. The policyfrom 2003 takes into accountthe structural changes thathad occurred in terms ofchanges in the economy andpolitical transformations atnational and internationallevels. The NEP spells clearlythe Vision and Mission of theenergy sector.

VisionThe Vision of the energy

sector is to effectively contributeto the growth of the nationaleconomy and thereby improvethe standard of living for theentire nation in a sustain-able and environmentallysound manner.

MissionTo Mission for the energy

sector is to create conditionsfor provision of safe, reliable,efficient, cost-effective andenvironmentally appropriateenergy services to all sectorson a sustainable basis.

The perspectiveThe energy policy takes

into accounts the need forimproving access for thegreater proportion of thepopulation to more efficient,environmental friendly mod-ern energy services. This isenvisaged to be achievedthrough substantial shareof renewable energies. TheEnergy Policy also recognises

the importance of privatesector participation in devel-opment of the energy sector.In order to achieve this thesector is undergoing restruc-turing in order to attractmore private investment,enhance efficiency in theprovision of energy services,expand access to electricityand promote regional tradingthrough interconnections.

Rising demand from bothlocal and export power marketsis necessitating urgent addi-tions to Tanzania’s installedelectricity capacity. The coun-try is looking to the rehabil-itation of the power industryand the exploration of bothgas and coal for power gener-ation to reduce the supply-demand gap. ■

Energy Services Limited(ELECTRICAL/MECHANICAL ENGINEERS AND CONTRACTORS)

We are specialized in:• Industrial, Commercial and Domestic Installations.• Power Engineering, Test and Commissioning.• Power line construction and cabling from 400Volts up to 132,000 Volts.• Installation and Commissioning Diesel Generators,Transformers, Switchgear and Motors.• Repair and Servicing Industrial plants, Engines,Generators, Motors Transformers, Switchgear andPower lines.

Plot No. 2380/206 Gerezani / Keko MwangaP.O. Box 23145, Dar es Salaam, Tanzania

Tel: 2866070, Fax: 2865978E-mail: [email protected]


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