By 2040 Tanzania will need 46.2 billion US dollars to invest in electricity

By 2040 Tanzania will need 46.2 billion US dollars to invest in electricity

2017-02-07

Date: February 6

By 2040 Tanzania will need 46.2 billion US dollars to invest in electricity

On February 6, Tanzania said it would need $ 46.2 billion in investment over the next 20 years to transform its aging energy infrastructure and meet surging electricity demand.

Investors often complain that the lack of reliable electricity is an obstacle to doing business in Tanzania.

On Monday, the overall plan for the power system announced by the Department of Energy pointed out that 70% of the capital expenditure would be financed by debt and the rest by the government's own resources.

"The financing requirements for the implementation of the Power System Master Plan (PSMP 2016-2040) are approximately US $ 46.2 billion," the plan said. "Costs include investments in power generation, transmission line and plants, which generate nearly 80% of the total investment cost. "

Over the next 10 years, Tanzania aims to eliminate long-term energy shortages and promote industrial growth by using its rich natural gas and coal reserves to increase power generation capacity from about 1,500 megawatts to 10,000 megawatts.

Tanzania said in January that it was seeking a $ 200 million loan from the World Bank for its heavily indebted national electricity supplier, Tanzania Power Supply Company (TANESCO). This is after the president does not allow companies to raise electricity prices to cover costs.

President Mogul Ripley wants cheap electricity to fuel industrialization, but the World Bank may insist that loss-making Tanzania power companies raise electricity prices to cover power generation costs and the company needs it badly.

In 2016 Tanzania's power supply company's debt amounted to $ 363 million, higher than the end of 2015 $ 250 million.

Tanzania's energy regulators approved a 8.53% tariff hike on December 31st, which is less than half the company's required recovery.

But the next day, Magu Foley fired the head of the Tanzania power supply company and blocked prices, saying rising electricity prices would hinder plans to boost industrial output.

Decades of mismanagement and political intervention meant Tanzania's power supply companies were selling electricity at below-cost prices. In addition, the company is also working to deal with transmission leakage and power theft.

The overall planning of the power system states that Tanzanian population is estimated at 50 million, of which about 40% are currently available. The government hopes to increase the electrification rate to 90% by 2035.