EWURA: Tanzania’s power sector faces challenges, growth opportunities

TANZANIA: THE Energy and Water Utilities Regulatory Authority (EWURA) latest report has revealed critical points in the Tanzania’s electricity sector, detailing a future marked by both opportunities and obstacles.

A 68-page report which was signed by Ewura’s Board Chairman Prof Mark Mwandosya shows statuses of ongoing nation’s ambitious projects including the Julius Nyerere Hydropower Project (JNHPP) and substantial infrastructure developments as key factors shaping the sector’s evolution.

“The Authority commends the Government’s commitments to invest in power generation infrastructure, such as the 2,115MW Julius Nyerere Hydropower Project and rural electrification programmes,” wrote Prof Mwandosya.

Equally, the Authority acknowledges the private sector’s contributions to government efforts to expand both electricity generation capacity and access to electricity.

It further indicates official government figures that overall electricity accessibility increased from 67.5 percent in 2016/17 to 78.4 percent in 2019/20.

In rural areas, accessibility has increased from 49.3 percent to 69.8 percent respectively.

On the other hand, overall connectivity has increased from 32.8 percent in 2016/17 to 37.7 percent in 2019/20, whereas in rural areas the connectivity has increased from 16.9 percent to 24.5 percent in 2019/20.

In probe, ‘Daily News’ could not independently obtain published data on electricity accessibility and connectivity as of Financial Year 2022/23.

According to the report, one of the most notable aspects of Tanzania’s energy future is the substantial shift in the generation mix.

Ewura says, the commissioning of major hydropower projects, including the Julius Nyerere Hydropower Project (2,115MW), the Rusumo Hydropower Project (26.67MW), and the Kinyerezi I Extension (185MW), is set to dramatically increase the installed capacity of the national grid.

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In a related development, Energy Minister and Deputy Prime Minister Dr Doto Biteko told reporters that Tanzania expects to have a total of 4,013.72 megawatts of installed capacity at the end of 2024, up from 1,874.34megawatts.

“This increase represents a pivotal change in Tanzania’s energy landscape,” he said.

The generation mix, announced by the government, will see hydropower’s contribution rise from 32.33percent to a commanding 67.67percent, reflecting the government’s focus on renewable energy sources. This will also surpass energy generated from Natural Gas.

The share of natural gas in the generation mix will decrease from 62.12percent to 29.87percent, while the contributions of heavy fuel oil and biomass will also decline.

This shift aligns with global trends towards cleaner energy sources and underscores Tanzania’s commitment to reducing reliance on fossil fuels.

Forecasts and growing demand

Ewura’s report highlights a significant increase in energy generation, with a 7.24 percent rise from 9,150.33 GWh in 2021/22 to 9,864.77 GWh in 2022/23.

This growth, however, falls short of the Power System Master Plan 2020 projections, which anticipated 10,176 GWh by 2022.

EWURA’s Director General James Andilile said the electricity’s future forecasts remain optimistic. He said energy generation is expected to reach 17,937 GWh by 2044.

“Power demand has also risen, with maximum demand increasing by 9.68percent to 1,470.50MW,” he added.

The Power System Master Plan 2020 projects a dramatic rise in demand, predicting a need for 17,611MW by 2044.

This surge in demand reflects Tanzania’s economic growth and increased electricity consumption, highlighting the urgent need for continued investment in both grid and off-grid solutions.

Deputy Minister for Energy Judith Kapinga told the Vice President in Kigoma last week that the government’s efforts have been significant with 4,422,955 customers now connected to electricity which represents a 14.44 percent increase from the previous year.

“This expansion in connectivity is crucial for driving economic development and improving quality of life across the country,” she said.

Tanzania’s 2044 goal is to achieve an electrification rate of 96.1 percent, necessitating robust public and private sector engagement.

With such forecasts in place, Tanzania energy utility– Tanesco still faces highest profit losses.

Ewura’s report details that system losses decreased to 14.57 percent in 2023 from 15.43 percent during the previous year, but observers say efforts must be intensified to combat energy theft.

The Power System Master Plan 2020 aims to reduce system losses further to 12 percent by 2026.

Achieving this target will require continued investments in upgrading transmission and distribution networks and implementing effective anti-theft measures.

Notwithstanding, profit margin ratio for FY 2022/23 was 4 percent, down from 6 percent in the previous year.

This equates to 72.4 bil/-, a decrease in profitability.

Also, the profit margin for other utilities, such as Songas Tanzania Limited, Mwenga Power Services and Mwenga Hydro Limited, showed negative margins, reflecting financial difficulties.

The current ratio, which measures a company’s ability to cover short-term obligations, indicates a mixed financial health across utilities.

While Songas Tanzania Limited has consistently maintained a healthy current ratio, TANESCO and Mwenga Power Services Limited recorded difficulties in meeting short-term liabilities.

Ewura said in its report that the issuance of operational and provisional generation licenses have increased power generation capacity.

This has therefore translated into a rise in new customer connections, and improvements in transmission and distribution infrastructure.

The sector remains home to persistent challenges, including low power reliability due to inadequate infrastructure maintenance and insufficient private sector investment.

Stakeholders have voiced concern demanding the government and private sector to address such challenges.

They claim the future of Tanzania’s electricity sector hinges on strategic planning and investment.

Diversifying the power generation mix is crucial for ensuring energy security and sustainability.