Tanzania’s energy market going international

Electricity pylons carry power from Cape Town's Koeberg nuclear power plant

In bids to promote transparency in the energy market, energy and minerals minister Professor Sospeter Muhongo has this week announced that as of 30th August 2016, the ministry intends to introduce a system of welcoming interested companies to invest the country’s energy generation.

Muhongo said the first venture that will be opened to investors to capitalise on will be the gas-fired power plant at Somanga Fungu in Lindi Region, which is anticipated to produce between 200 and 400MW.

The minister explained to the media that his ministry is targeting to extend the invitation internationally so that anyone interested could bring their offers, which would compete for the contract.

Tanzania energy and minerals minister Professor Sospeter Muhongo
Tanzania energy and minerals minister Professor Sospeter Muhongo

He said: “This will avoid bad contracts that many Tanzanians have complained about. You must have taken note that some of us were not yet in office when the contracts were entered [into]. But we find ourselves carrying the burden of the agreements, which we are not aware of.”

Muhongo added: “We want to get rid of the system whereby an investor comes and enter into secret talks and later sign the contracts, which have always been bad for the country.”

Energy market opportunities

Muhongo said upon executing the Somanga Fungu investment deal, the ministry would then move forward to announce investment opportunities in other sources of energy such as coal, hydro power and wind.

According to the media, a report by the World Bank issued in 2014 indicated that Tanzania’s real annual GDP grew by 6.4% in the year 2012. However, for these positive developments, the energy sector is said to contribute significant barriers to continued economic growth.

The minister’s announcement is a follow up on the pledge he already made in May this year, when he said from now onwards public power utility Tanesco will do business by the books when awarding electrification bids.

Source: ESI Africa