Date: Tue, 28 Oct 2014 08:05:07 -0600
http://m.engineeringnews.co.za/article/tanzanian-energy-roadmap-to-unbundle-state-co-increase-capacity-to-10-000-mw-by-2025-2014-10-27/rep_id:3182
*Tanzanian energy roadmap to unbundle State co, increase capacity by 2025*
BY: NATALIE GREVE
The Tanzanian Ministry of Energy and Minerals (MEM) has published an
Electricity Supply Industry Reform Strategy and Roadmap for 2014 to 2025,
which aims to implement sweeping structural reforms that would streamline
project finance structures and liberalise the country’s burgeoning energy
sector.
While keen to participate in local energy projects, project developers had
historically encountered issues of nonproject financeable risk allocation
in power purchase agreements (PPAs) and had expressed concern about tariff
structures.
Against this backdrop, the roadmap sought to strengthen the governance and
performance of the sector and would likely involve investment of
$11.4-billion, or $1.9-billion a year, of which 73.5% was allocated towards
energy generation.
The roadmap further acknowledged that such funds could not be raised by the
Tanzanian government and development funds alone, and therefore, that
private sector involvement was required, particularly in respect of
generation.
“This reference has been accompanied by clear statements of recognition
across the government energy sector that private sector involvement is
required and that such involvement entails credible financial and
institutional reform,” African energy industry support firm EnergyNet said
in a statement.
Following the recommendations of a series of external consultants’ reports,
the roadmap proposed the staged unbundling of State-owned Tanzania Electric
Supply Company (Tanesco), provision for Tanesco to pay off its current
debts, and the retirement of costly emergency power producers (EPPs).
The roadmap took a long-term view, focusing on an increase in installed
power capacity to at least 10 000 MW by 2025, at which point the phased
unbundling of Tanesco would be completed.
The time periods were broken down into immediate, short, medium and long
term.
In terms of structure, the electricity sector was set to transition from
the current integrated monopoly model through to a single-buyer model –
with a separate State generation company and distribution companies – and,
thereafter, to a retail competition model, which should ensure competition
and cost efficiency.
Ibrahim I. Suliman
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