World Bank approves Sh770 billion electricity financing to Tanzania

Summary

  • The new International Development Association (IDA) credit to the Tanzania Rural Electrification Expansion Programme (TREEP) will facilitate an additional one million last-mile grid connections

Dar es Salaam. Tanzania’s electrification efforts has received a boost after the World Bank approved additional financing of $335 million (about Sh770 billion) that will support scaling up of grid extension and grid densification in rural areas.

In the past decade, Tanzania has been ranked as one of sub-Saharan countries with the fastest electricity access expansion rates, according to the Breton Wood institution.

The new International Development Association (IDA) credit to the Tanzania Rural Electrification Expansion Programme (TREEP) will facilitate an additional one million last-mile grid connections, including 8,500 education facilities and 2,500 healthcare facilities, as well as provide renewable energy options and clean cooking solutions to rural households.

“Scaling up access to modern forms of energy is an important component of the Government of Tanzania’s long-term economic growth plan,” said the acting World Bank country director for Tanzania, Malawi, Zambia, and Zimbabwe, Ms Preeti Arora.

“We are pleased that our support to this objective over the past five years helped to provide electricity access to over four and a half million people including 5,900 education facilities, 1,664 healthcare facilities, and 14,316 business enterprises,” she added.

The initial IDA financing of $209 million for TREEP was approved in 2016 and the programme became effective in 2017.

Implemented as a Programme for Results (PforR) by the Rural Energy Agency (REA) and the Ministry of Energy, TREEP has supported the government’s National Rural Electrification Programme (NREP) by innovatively linking the disbursement of funds directly to the delivery of defined results and achievement of objectives, which include expanding rural access to electricity, increasing the supply of renewable electricity in rural areas, and strengthening the capacity of sector institutions to deliver on the NREP.

Despite Tanzania’s impressive progress in increasing electricity access from seven percent in 2011 to 38 percent in 2020, a large gap remains between electricity access rates in urban areas (73.2 percent) and rural areas (24.5 percent), according to the World Bank.

The NREP’s new Rural Energy Master Plan 2022-30 provides a roadmap to reach 100 percent energy access by 2030.

“The historical emphasis on backbone grid extensions resulted in the national grid reaching 78 percent of villages, but remained out of connection distance for most households,” said Ms Jenny Hasselsten, World Bank Senior Energy Economist and Task Team Leader for TREEP.

“With this additional financing, TREEP is expected to electrify 15 percent of the current off-grid population which will increase the access rate in Tanzania from 38 percent to 45 percent.”

The additional financing to TREEP is co-financed by a grant from the Energy Sector Management Assistance Programme (ESMAP) in the amount of $6 million.

In addition to expanding grid connections, TREEP will support implementation of the National Renewable Energy Strategy and the piloting of a Solar Home System (SHSs) and clean cooking results-based financing programs for rural households.

TREEP will also support capacity strengthening through annual sector capacity building plans and the design and implementation of a sector-wide monitoring and evaluation framework to facilitate project tracking by the Ministry of Energy, as well as collaboration between various government agencies and stakeholders.

“The cooking subsector in Tanzania extensively utilizes biomass, despite recent progress in the use of modern fuels, with firewood and charcoal as the primary cooking fuels for most households. This is exacting a high toll on the country in terms of premature deaths or lost productivity due to adverse health impacts from exposure, as well as deforestation and associated effects,” said Mr Mbuso Gwafila, the World Bank senior energy specialist.