Power shortages choke industrial growth

DAR ES SALAAM: POWER shortages are choking industrial ambitions, slashing output, raising costs and deterring investment, as manufacturers grapple with unreliable electricity in an increasingly competitive regional market.

Experts meeting in Dar es Salaam on Monday called for increased investment and stronger public-private partnerships (PPPs) to turn around the situation in the national interest.

A senior corporate lawyer Dr Eve Hawa Sinare said electricity demand far exceeds current generation and distribution capacity, slowing the pace of industrial growth.

“No meaningful development can be achieved without adequate electricity. Energy is the backbone of industrial growth and the economy at large,” said Dr Sinare.

She noted that more than 1,000 industries, according to her spot survey, require reliable power to meet their production targets, warning that without sufficient energy, development efforts will fall short of expectations.

Additionally, latest national data show that the country has a population of over 62 million people, yet electricity customers have not reached even four million, highlighting a significant access gap, particularly in rural areas.

Dr Sinare said that achieving middle-income status and the national vision of a trillion-dollar economy will largely depend on the availability of sufficient, reliable and affordable energy.

Furthermore, she insisted on the importance of honoring PPP agreements and adhering to established legal frameworks, alongside maintaining continuous dialogue among stakeholders.

“These measures are essential in minimising government losses, building both domestic and international investor confidence, and ensuring the sustainable and effective implementation of development projects,” Dr Sinare said.

The PPPC chief Executive Officer, Mr David Kafulila, said the government continues to collaborate with the private sector to strengthen the energy sector and attract more investment.

“This dialogue aims to build a shared understanding on how best to engage the private sector in strategic projects, including energy,” said Mr Kafulila.

He noted that the PPPC has initiated a broad professional dialogue on private sector participation in PPP projects as part of implementing the Fourth Year Development Plan aligned with the Development Vision 2050.

The forum brought together stakeholders including legal experts, private companies and research institutions to discuss legal, financial and economic issues affecting investment in the power sector.

Participants agreed that government resources alone are insufficient to finance major infrastructure projects, underscoring the need to strengthen PPP frameworks to allow greater private sector participation.

However, it was noted that earlier PPP models have faced challenges, particularly where the government shoulders the capital-intensive responsibility of power generation, while the private sector is largely involved in transmission and distribution.

Economists believe these measures will strengthen the energy sector, boost industrial production and accelerate overall economic growth.

Meanwhile, Ambassador Modest Mero said that beyond generation, a major challenge lies in electricity transmission infrastructure, calling for targeted incentives to attract private sector investment in that area.

“We must create clear and attractive incentives for private investors to enter the transmission segment. The government alone cannot do everything,” said Amb Mero.

The government, the Ambassador said, cannot simultaneously finance large-scale generation and transmission projects, making private sector involvement essential.

He added that a conducive business environment is critical to attracting investors and ensuring they earn legitimate returns, which in turn will stimulate further investment.

“We need to provide incentives that allow investors to come in, invest and make profits. That is how we grow both the sector and the economy,” he stressed.

Amb Mero also called for institutional reforms, particularly in regulatory bodies, to eliminate bureaucratic barriers that hinder investment.

“We have all the necessary resources. What we need now is a shift in mindset, adoption of technology and active promotion of investment,” he added.

He further urged collective support from both the government and citizens in advancing the energy sector, rather than maintaining negative perceptions toward private sector involvement.