What’s blocking Tanzania’s path to energy sufficiency?

Thursday August 11 2022
Tanesco pic
By Charles Makakala

Electricity is the lifeblood of modern economies. With electricity, economies grow; without it, they stagnate. Prosperous nations view the availability of affordable and reliable electricity as a top priority.

South Korea, a country small enough for one to drive from any one point to another within four hours, commands twice the amount of electricity generated by 48 sub-Saharan African nations combined. South Korea is a country that understands what the essence of electricity is, Tanzania doesn’t.

In ten years, the total installed capacity hasn’t increased. Only one third of households have access to electricity, and per capita consumption puts Tanzania among the bottom ten nations in the world.

Also Read: How gas saved Tanesco Sh37 trillion in 16 years

Unlike South Korea, Tanzania is well endowed resource-wise. Hydropower potential is close to 38GW. Southern shores are bulging with natural gas. At least 1.2 billion tonnes of coal remain underground. Not to speak of biomass, geothermal, uranium, wind and solar. That’s the holy grail of energy mix, which can be achieved with domestic resources only.

Alas, if wishes were horses...

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With the 2.15GW Julius Nyerere Hydropower Project (JNHPP) curiously delayed until 2024, Tanzanians have to wait longer for a reprieve. That aside, there appears to be a lot of movements in the power generation side – Ruhudji and Rumakali hydropower projects, Makambako and Kititimo wind projects, and the Kishapu solar project. These projects will inject an additional 1GW or so in the next few years. In Tanzania, though, it is important not to confuse movements with progress.

That said, the government deserves a pat on the back for current efforts. To stay ahead of the demand curve, one should consistently develop new sources of energy. Nonetheless, without understanding what it is that stopped Tanzania from harnessing its resources in the past, it is difficult to appreciate what needs to be done going forward.

Tanesco’s Power System Master Plan sets out a power generation mix vision consisting of hydro (28 percent), natural gas (33), coal (26), wind (4), solar (4), and geothermal (5) by 2044. The current developments appear to ignore the two biggest resources, i.e., natural gas and coal, which are very reliable for base load capacity. Instead, they favour temperamental hydro, wind, and solar solutions. The implications should concern us all.

To start with, there has been no bigger blessing to Tanzania’s energy sector in the past 30 years than the introduction of gas-fired power plants, bringing increased reliability and affordability. In fact, all that have gone wrong went wrong by someone ignoring natural gas.

Also Read:Tanzania needs Sh4.42 trillion to end electricity woes

The power crises of mid-1990s introduced Songas and IPTL to the Tanzanian market. Songas was conceived to run on gas, utilising about half of the gas from Songo Songo. The use of gas, from Songas to Kinyerezi I and II, according to a recent Wentworth Resources report, has saved Tanesco $16 billion between 2004 and 2020. IPTL was conceived as an emergency power solution running on diesel, later to be converted to gas. That never happened, and Tanesco paid millions of dollars extra every month as a result.

Given that there is some unutilised gas capacity at Ubungo (from Songo Songo), more at Kinyerezi (from Mnazi Bay), and much more where the two pipes come from, it goes without saying that gas should take centre stage in Tanzania’s energy strategy.

Read:Tanesco loses nigh Sh16 billion per month

When it comes to coal, though, the story might be a bit more complex. Currently, Africa is under a lot of pressure to move away from coal. China is not financing coal-based projects outside of China. Europeans are piling on that pressure too. So, when I wrote an article last year making a case for coal, some people felt the idea was very unsophisticated.

Luckily, the war in Ukraine has lifted that sanctimonious veil. Today, as the French, the British, the Germans, and others are procuring coal as winter approaches, it is quite clear that when push comes to the shove, national interests will trump global climate considerations. My position is any logic that requires Africans to sacrifice growth for climate is suspect at best.

In Tanzania, coal is key to unlocking the southern regions’ potential, especially through investments in railway, iron mining, and power transmission networks. This is part of the Mtwara Corridor project which will catapult Tanzania’s GDP forward. It is also an effective transition solution from wood and charcoal. So, why not coal?

A 2016 World Bank report highlighted three things that have prevented Tanzania from harnessing its energy resources in the past – one, lack of coherent planning; two, poor allocation of public and private generation projects; and three, lack of sustained commitment to private sector investment and competitive bidding practices. As a result, there have been a number of independent private projects (IPPs) which have been quite exorbitant, pressing Tanesco to pay six to eight times of the best case scenario.

As much as Tanzania needs billions of dollars of new power projects, this painful history should not lead to knee-jerk reactions. Given Tanesco’s financial and operational limitations, the solution cannot be more public power projects such as JNHPP, Kinyerezi II, and Makambako. The solution is in smart deployments of IPPs. That is what will lead to reasonable capacity charges, competitive unit charges, and sustainable growth.

To achieve that effective planning and transparent procurement processes is key. Barring that, there should be no illusion: there will be no light at the end of the tunnel.