Tanzania seeks $46.2 billion investment for its power system masterplan

East Africa’s second biggest economy, Tanzania will need $46.2 billion investment over the next 20 years on power generation, as part of a new roadmap to drive the country’s energy sector forward.

The newly released energy blueprint, dubbed Power System Master Plan (PSMP 2016 – 2040), shows that the government, hopes to increase installed generation capacity from the current 1,583 MW to more than 10,000 MW over the next 10 years.

According to the Energy Minister in Tanzania, Sospeter Muhongo, the need to revamp the ailing energy sector, is part of the country’s effort  in meeting to the demand of investors who have over the years complained that a lack of reliable power is an obstacle to doing business in the country.

“By using some of its vast natural gas and coal reserves to end chronic energy shortages and boost industrial growth, the master plan aims to boost power generation capacity to 10,000 megawatts over the next decade from around 1,500MW”

While the fund will be largely sourced through borrowing, funds will be invested, on generation, transmission and sub-stations. “Generation will account for almost 80 percent of the total investment cost.”

Tanzania said in January it was seeking a loan of $200 million from the World Bank for its debt-ridden state power supplier Tanzania Electric Supply Company (TANESCO) after the country’s president refused to allow the utility to raise prices to cover costs.

President John Magufuli wants cheap electricity to drive industrialization, but the World Bank is likely to insist the loss-making utility increases prices so it can cover the cost of producing power and begin much-needed reforms.

The power system master plan said around 40 percent of Tanzania’s estimated population of 50 million currently has access to electricity. The government wants to boost the electrification rate to 90 percent by 2035.

The Power System Master Plan is Tanzania third long term programme, in recent years, towards making electricity available in the country, after Electricity Supply Industry Reform Strategy and Roadmap 2014-2025, Power Sector Reform and Governance Support Programme (PSRGSP).