Tanzania set to open up electricity distribution

He said the government, through the National Energy Compact, has agreed to pilot the model with one or two transmission projects that will be formally announced later this year.

“We have agreed with the International Finance Corporation (IFC) that in September they will come to Tanzania, where we will begin preparing tender documents that will open these projects to qualified investors,” Mr Mramba said.

While the government has in recent years opened up generation to Independent Power Producers (IPPs), the transmission and distribution value chains have remained under the control of the state-run Tanzania Electricity Company Limited (Tanesco).

The new policy shift is intended to address infrastructure gaps, keep pace with growing power demand and facilitate industrialization, Mr Mramba said.

He added that the move comes at a time when Tanzania is implementing an ambitious plan to connect 8.3 million new customers by 2030, in line with the country’s broader electrification strategy.

Mr Mramba said the recent interest shown by the private sector at the Africa Energy Forum was a positive sign that Tanzania’s energy sector reforms were gaining international traction.

“There is great enthusiasm from investors to come to Tanzania and invest in power infrastructure. As the economy grows, we need to expand the scale and scope of our investments to ensure energy remains the backbone of our economic growth.”

Tanzania is currently enjoying a power surplus following the completion of the 2,115MW Julius Nyerere Hydropower Project, but officials say the government is now focused on scaling up future capacity in both generation and transmission to stay ahead of anticipated demand.

However, Mr Mramba said Tanzania is seeking a total of $12.9 billion to fast-track access to affordable and sustainable energy for 42 million people by 2030 as the country is implementing different initiatives under the ambitious continental Mission 300 initiative.

The funding will be used to support a wide range of energy projects over the next five years aimed at achieving universal access.

Mr Mramba, who made a presentation about the Tanzania’s energy compact under the Mission 300, said the financing requirements include $8.85 billion in public investment and $4.04 billion from private capital mobilisation.

The funds are earmarked for generation, transmission, distribution, rehabilitation, last-mile connections, off-grid electrification, clean cooking and capacity building, he said.

According to him, Tanzania demand growth for electricity is projected at between 10 percent and 18 percent per annum in the near future.

In the span of one year, the capacity of Tanzania’s electricity generation connected to the national grid increased to 4,031.71 megawatts (MW) as of April 2025, representing an 86.6 percent rise compared to 2,138 MW recorded in March 2024, according to the Ministry of Energy budget.

Of the total, 2,716.27 MW (67.4 percent) is generated from hydropower, 1,198.82 MW (29.7 percent) from natural gas, 101.12 MW (2.5 percent) from oil, 5 MW (0.1 percent) from solar and 10.5 MW (0.3 percent) from biomass.

Affordability aspect

The country director for the Department for Business and Trade at the British High Commission in Tanzania, Mr Andrew Mahiga, urged the Tanzanian government to create clear, investor-friendly policies to attract more private sector participation.

He emphasised that clear frameworks—defining public-private partnerships, independent power producer roles and cost-reflective tariffs—would give investors the confidence they need.

“Tanzania’s power tariffs are among the lowest in the region due to subsidies. This makes the government cautious about inviting private companies. But with the right structures, private participation can actually improve affordability and reliability,” Mr Mahiga said.

With advancements in solar, wind and battery technologies and innovative models such as net metering—where surplus electricity generated by consumers is fed back into the grid—he said the future of energy in Tanzania is evolving.

“The technology has become more affordable and efficient. What seemed unfeasible 20 years ago is now a viable business opportunity,” Mr Mahiga said.