By Nicholas Bariyo
The Tanzanian government is planning to invest at least $1.2
billion to revamp its ailing state power utility, the East African
nation's latest effort to guarantee reliable power to domestic and
industrial consumers, the energy and minerals ministry said
Monday.
The investment will enable East Africa's second largest economy
to reform its Tanzania Electricity Supply Co. to enable it to
attract necessary investments from the private sector to boost
generation, transmission and distribution facilities, the ministry
said in a report.
The reforms are expected to help the country attract enough
investments to diversify power sources and boost generation
capacity to at least 10,000 megawatts over the next ten years, from
the current 1,600 MW, the report said.
The investment, one of the largest in the sector in more than a
decade underscores how urgently Dar Es Salaam wants to heal its
economy from years of chronic power shortages as it positions
itself to become the region's next energy hub, after discovering
huge natural gas reserves.
"The Reform Strategy also proposes the desired market structure"
the report said "A state-owned generation company will be
established through unbundling from the transmission and
distribution segment ...this is expected to intensify competition
in power generation."
The reforms are also expected to help the country connect at
least 75% of its citizens to the national grid. Currently, only 24%
of Tanzanians are connected to the national grid.
Around half of the projected new power capacity will be
generated from natural-gas fired plants. Tanzania started turning
to gas-fired power plants three years ago to wean its electricity
sector from the unreliable hydro power stations.
Gold mining companies such as Africa Barrick Gold. and AngloGold
Ashanti remain some of Tanzania's largest power consumers.
Exploration companies have struck a flurry of natural gas
discoveries off Tanzania's southern coast, increasing the country's
proved natural gas reserves to 47 trillion cubic feet from less
than 10 trillion cubic feet five years ago.
The discoveries have rendered the country a hotspot for natural
gas exploration, attracting a host of international companies,
including China's largest offshore oil producer, Cnooc Ltd., U.S.
's ExxonMobil Corp., U.K.'s BG Group as well as Russia's state-run
Gazprom. Around a dozen deepsea blocks are yet to be explored due
to disputes over revenue- sharing with the semi-autonomous
archipelago of Zanzibar. The U.S. Geological Survey estimates that
East Africa's coastal region holds up to 441 trillion cubic feet of
natural gas.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
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