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Julius Nyerere hydroelectric power project: Tanzania’s catalyst economic growth

TANZANIA: TANZANIA is on the brink of a transformative leap in its energy sector, with the Mwalimu Nyerere Hydroelectric Power Project (JNHP) set to play a pivotal role in the nation’s development.

Named after the country’s founding father, Julius Nyerere, this massive infrastructure project is not only one of the largest hydroelectric plants in Africa but also a cornerstone of Tanzania’s ambitious vision for economic growth and energy security. The JNHP is being constructed on the Rufiji River in the Selous Game Reserve, a UNESCO World Heritage site.

The project is expected to generate 2,115 megawatts (MW) of electricity and will have a significant impact on Tanzania’s energy capacity.

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According to the available reports from the ministry of energy, as of July, this year, the project has reached 97.74 per cent completion overall, with the hydroelectric power plant itself is 93.8 per cent complete, with three out of nine turbines installed and one already generating 235 megawatts of electricity.

The situation that indicated the project is in its final stages of completion. This increase in capacity is crucial for Tanzania, which has struggled with energy shortages and dependency on hydroelectric power that has been vulnerable to droughts and other environmental factors.

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According to the Ministry of energy, official statistics on power generation and the economic impact of the JNHPP, construction began in 2019 and the project is expected to be completed by 2025, where the total cost of the project is estimated at 3.6bn/- USD, funded by the Tanzanian government, with Egyptian companies, Arab Contractors and Elsewedy Electric being the primary contractors.

Boosting energy production

One of the most immediate impacts of the JNHP will be on Tanzania’s electricity generation. The 2,115 MW of power generated by the project will nearly double the country’s current installed capacity, which stands at approximately 1,600 MW.

This surge in energy production will enable Tanzania to meet the growing demand for electricity, driven by population growth, industrialisation and urbanisation. Currently, only about 37 per cent of Tanzanians have access to electricity and the majority of those who do live in urban areas.

The completion of the JNHP is expected to increase the electrification rate significantly, especially in rural areas. This will not only improve the quality of life for millions of Tanzanians but also provide the necessary energy for businesses and industries to thrive.

Economic growth and industrialisation

According to World Bank (WB) Reports on Analysis of the economic impacts of energy infrastructure projects, the reliable and increased power supply from the JNHP is expected to be a major driver of economic growth in the country. With more consistent electricity, the country can attract more foreign direct investment (FDI) into sectors such as manufacturing, mining and agriculture.

According to WB, the project will support industrialisation, create jobs, reduce energy costs and position Tanzania as a key player in the regional energy market.

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The WB said increased power generation capacity will likely lead to a reduction in energy costs for consumers and businesses. Lower electricity prices can enhance the competitiveness of Tanzanian industries, making their products more competitive in regional and global markets.

The WB estimates that a 10 per cent reduction in energy costs could lead to a 2-3 per cent increase in GDP growth, as lower costs drive economic activity. Industries that are currently hampered by power outages and unreliable supply will be able to operate at full capacity, leading to increased productivity and economic output. The project is also expected to create thousands of jobs, both during the construction phase and in the long-term operation of the power plant.

The increase in employment will have a multiplier effect on the economy, as more people will have disposable income to spend on goods and services, stimulating further economic activity. In addition to meeting domestic energy needs, the JNHP positions Tanzania as a potential exporter of electricity to neighbouring countries. Tanzania is a member of the Southern African Power Pool (SAPP), a regional network that facilitates the trade of electricity among Southern African nations.

With the excess power generated by the JNHP, Tanzania could become a significant player in the regional energy market, earning valuable foreign exchange and strengthening its economic ties with neighbouring countries. The country’s geographical location and energy resources make it a strategic player in the regional energy market and she is a member of the Southern African Power Pool (SAPP), a network that facilitates electricity trade among Southern African nations.

Through SAPP, Tanzania has the opportunity to export surplus electricity to neighbouring countries such as Zambia, Malawi and Kenya, which often face energy deficits. The potential for electricity export is significant, given the current energy challenges faced by several East African and Southern African nations.

For instance, Kenya has experienced power shortages due to over reliance on hydroelectric power, which is vulnerable to droughts. Zambia and Zimbabwe have also faced energy deficits due to low water levels in their reservoirs. Tanzania’s ability to provide a stable supply of electricity could position it as a reliable energy supplier in the region.

Earning valuable foreign exchange

Exporting electricity will enable Tanzania to earn valuable foreign exchange, which can be used to strengthen the country’s economy.

According to estimates, Tanzania could earn between 300m/- USD and 600m/- USD annually from electricity exports by 2030.

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Those earnings will come from the sale of surplus electricity to neighbouring countries through bilateral agreements and participation in regional energy markets. The foreign exchange earned from energy exports can be reinvested into the national economy, funding further infrastructure development, improving public services and stabilising the local currency.

Additionally, increased foreign exchange reserves can help Tanzania manage its balance of payments, reduce its dependence on foreign aid and enhance its creditworthiness on the international stage.

Environmental and social considerations

While the economic benefits of the JNHP are substantial, the project has also raised concerns regarding environmental and social impacts.

The construction of the dam and the flooding of the reservoir area will have significant effects on the Selous Game Reserve’s ecosystem, including the displacement of wildlife and potential changes in the river’s flow patterns.

The government under the leadership of President Dr Samia Suluhu Hassan has committed to taking measures to mitigate those impacts, such as the relocation of affected wildlife and communities and ensuring that the benefits of the project are shared with local populations.

Energy security and sustainability

According to African Energy report, the JNHP is a key component of Tanzania’s long-term vision for energy security and sustainability. By reducing the country’s reliance on fossil fuels and increasing the share of renewable energy in its energy mix, Tanzania is positioning itself as a leader in green energy in Africa.

The project aligns with the government’s goal of achieving middle-income status by 2025, as outlined in the Tanzania Development Vision 2025.

The JNHP, which also known as the Rufiji Hydropower Project, is a major infrastructure undertaking in Tanzania that is expected to have significant economic benefits.

However, the multi trillion project is set to be a game-changer for Tanzania’s economy by significantly increasing the country’s energy capacity; the project will provide the foundation for industrial growth, job creation and improved living standards for millions of Tanzanians. While challenges remain, the long-term benefits of the JNHP are poised to far outweigh the costs, making it a cornerstone of Tanzania’s future prosperity.

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The power from JNHPP will address current electricity deficits and eliminate the need for power rationing, thereby ensuring a more stable and reliable power supply.

This stability is crucial for attracting both local and foreign investments in energy-intensive industries such as mining, manufacturing and agriculture, which are key sectors for Tanzania’s economic growth. With a more consistent power supply, businesses can operate more efficiently, reducing production downtimes and costs associated with power outages.

Furthermore, the project is anticipated to create thousands of jobs during both its construction and operational phases, contributing to economic development in the regions surrounding the dam. The increased energy production will also facilitate rural electrification projects, improving the quality of life and economic opportunities for communities in remote areas.

The JNHPP is not only a landmark infrastructure project for Tanzania but also a strategic investment in the country’s future economic resilience. As Tanzania continues to develop its energy sector, projects like the JNHPP will be instrumental in achieving sustainable economic growth and developments.