How Sh1.88 trillion Energy funds will be spent

Dar es Salaam. The government on Wednesday outlined priorities for the Energy ministry which is planning to spend 95 percent of its next budget for development projects.

Deputy Prime Minister and Energy minister Doto Biteko tabled the Sh1.88 trillion estimates for 2024/25 in Parliament, stating the focus areas which include accelerating rural electrification, connecting remaining regions to the national grid and implementing strategic projects in the sector.

Some of the key projects include the Julius Nyerere Hydropower Project (JNHPP), the planned Liquefied Natural Gas (LNG) Plant, the East African Crude Oil Pipeline (EACOP) and taking natural gas to neighbouring countries like Kenya, Uganda, Zambia and Malawi.

Other priorities include accelerating oil and gas exploration, connecting industries with natural gas, deepening the use of compressed natural gas (CNG) and promoting clean cooking, among others.

“Considering the importance of energy in stimulating and accelerating economic and social development for our nation, the Ministry of Energy will continue taking comprehensive measures to manage, strengthen and develop the energy sector, to ensure that it contributes adequately to the development of our nation and its people,” said Dr Biteko.

Increased electricity generation

The new budget has dropped by Sh1.16 trillion compared the current financial year as the JNHPP is almost to complete.

Dr Biteko said the Sh6.55 trillion project which is expected to generate 2,115 megawatts of electricity upon completion, was implemented by 97.43 percent by March 2024.

One of the nine plants at the project had already started generating 235 megawatts that are supplied to the national grid, hence easing the power challenges.

Dr Biteko said electricity production increased by 14.2 percent to 2,138 megawatts this March compared to 1,872.1 megawatts last May.

According to him, 39.1 percent of the electricity installed capacity (836.3 megawatts) comes from hydro sources while natural gas accounts for 56.1 percent (1,198.8MW), as heavy oil and biomass accounts for 4.3 percent (92.4MW) and 0.5 percent (10.5MW) respectively.

Rural electrification

Tanzania has a total of 12,318 villages but Dr Biteko said 96.37 percent or 11,837 villages were already connected with electricity by March this year. He outlined other ongoing projects which are expected deepen the supply of electricity to hamlets and villages in the coming financial year.

LNG plant

On the LNG plant which is planned in Lindi Region, Dr Biteko said the government negotiation team had analysed the draft host government agreement (HGA) and the amended Production Sharing Agreement (PSA) through discussions with the investors, before the agreements are approved by the Attorney General’s Office.

Shell and Equinor have been in the discussions with the government about the $42 billion project after the discovery of 57.5 trillion cubic feet.

EACOP in focus

Another priority project is the East African Crude Oil Pipeline (EACOP) which will transport oil from Hoima in Uganda to Chongoleani in Tanga, Tanzania.

According to Dr Biteko, compensation worth Sh34.93 billion to 9,823 persons out of the 9,904 affected persons were already issued and that 400km pipes were so far received for the project.

Despite some achievements and progress in the energy sector, the Parliament’s Energy and Minerals committee asked the government to expedite ongoing electricity production projects like the JNHPP and Shinyanga solar project which is scheduled to produce 150 megawatts so as to connect the remaining areas of the country with reliable power.

“Since Tanzania is now becoming self-sufficient in terms of electricity generation, the government should now ensure that areas like mining, factories and in irrigation schemes, are connected with reliable electricity,” said committee chairperson David Mathayo.