Private power transmission plan sparks optimism

DAR ES SALAAM: ECONOMISTS have welcomed the government’s plan to involve the private sector in electricity transmission and distribution, describing the move as crucial to improving power supply in line with the country’s growing electricity generation capacity.

They said the approach would mobilise private capital, ease pressure on the government budget, meet rising electricity demand and free up public resources for other development priorities.

The experts’ views follow the recent two-day Africa50 General Shareholders Meeting and Infra for Africa Forum in Dar es Salaam, where Tanzania signed several Memoranda of Understanding (MoUs), including an agreement aimed at integrating private investment into the expansion of electricity transmission infrastructure.

The Tanzania Electric Supply Company (TANESCO) signed an MoU with Africa50 to unlock private investment in the country’s electricity transmission network.

Commenting to the Sunday News yesterday, economist Professor Samuel Wangwe said adopting the Public-Private Partnership (PPP) model to expand and strengthen the electricity transmission network would complement government financing by mobilising additional capital.

“This is a very good idea because by combining funds from the government budget and the private sector, we can move forward much faster in supplying electricity across the country. It will boost power supply reliability,” Prof Wangwe said.

Prof Wangwe, who is Chairman and Consultant at Daima’s Associates, said the new approach would create an enabling environment for private investors to participate effectively, contributing to job creation, a broader revenue base and overall economic growth.

He said private sector participation would ease pressure on the government budget while accelerating investment in infrastructure needed to improve the reliability of electricity supply.

Prof Wangwe further noted that increased investment in transmission infrastructure would ensure electricity generated by existing and future power plants is efficiently delivered to households, industries and businesses.

He said reliable power supply would stimulate industrial growth, create employment opportunities, expand the tax base and accelerate economic development.

Prof Wangwe added that the decision was consistent with the Tanzania Development Vision 2050, which envisages the private sector as the principal driver of economic transformation and contributing about 70 per cent of the country’s development agenda.

“This marks the beginning of translating the aspirations of Dira 2050 into concrete action,” he said.

He noted that Tanzania was making progress in electricity generation, adding that improvements in transmission infrastructure would help stabilise power distribution across the country.

Meanwhile, University of Arusha economist Professor Kitojo Wetengere said PPPs were a globally recognised model for financing strategic development projects, enabling governments to attract private capital and bridge financing gaps.

“Demand for electricity is much greater than the government’s capacity to distribute it, while the private sector has financial resources,” Prof Wetengere said.

He described the adoption of PPPs in expanding electricity transmission networks as a positive development that would attract private investment to complement government efforts in implementing strategic energy projects while generating returns for investors.

Prof Wetengere expressed confidence that private sector participation would help address challenges affecting electricity supply, including outages caused by ageing distribution infrastructure.

He underscored the importance of stable electricity supply to socio-economic development, noting that reliable power was essential for households, industries and all productive sectors of the economy.

Associate Professor of Economics at the University of Dar es Salaam, Dr Martin Chegere, said the PPP framework would reduce the need for the government to rely heavily on taxes and other levies to finance public services, including electricity distribution.

Dr Chegere said effective private sector participation in project implementation could, over time, reduce pressure on the government to impose additional taxes to finance development programmes.

“When the private sector invests, it reduces the government’s need to collect high taxes to finance public services. Private investment allows services to be provided either through direct payment by citizens or through gradual payments by the government,” he said.

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“As a result, it eases the financial burden on the government, reducing the need to impose high taxes or levies,” he added.

Dr Chegere said the approach would enable the government to implement more development projects simultaneously than would be possible by relying solely on public funds.

The Africa50 General Shareholders Meeting and Infra for Africa Forum brought together more than 1,200 senior government officials, financiers, development partners and private sector leaders from across Africa to explore innovative financing models and strengthen collaboration in delivering critical infrastructure projects.