Makamba calls for private investment to fill energy gap

Dar es Salaam. Yesterday, the Energy Ministry appealed to the international community for help in increasing the country’s energy production in order to meet the rising demand of the country’s growing economy.

Energy Minister January Makamba told representatives from various diplomatic missions in Dar es Salaam that President Samia’s decision to open up the country to investment was creating the need to boost energy generation further to meet the current and anticipated rise in demand.

Data from the Ministry of Energy show that, as of December 2022, Tanzania produced 1,777.05 megawatts of power.

This was less than the 5,760-megawatt target that the country wants to achieve by the end of its National Development Plan 2025.

Mr Makamba said yesterday at the 4th Tanzania Energy Cooperation Summit in Dar es Salaam that Tanzania is now highly calling out on private financing for the energy sector, that the business environment has improved significantly, and that the government is committed to providing a conducive environment for long-term partnerships.

“We currently have a higher desire for capital, and we invite more from the private sector,” he told the event participants, who included high-level representatives from the European Union, America, and Asia, among others.

Organised by EnergyNet, the event seeks to tell the world that Tanzania is once again open for business.

“Tanzania has the resources and ability to scale renewables up but there needs to be better channeling of resources to more strategic fronts such as investing in research and development with active collaborations between the government and the private sector,” he said.

He insisted that the energy sector was more ‘capital-hungry’ now than ever, saying this invites more private investment to fill the power supply gap in the country.

During the event, Dr Mursali Milanzi, the commissioner for national planning in the Ministry of Finance and Planning, stated that more resources were still required to meet the country’s energy demand as outlined in the Development Vision 2025.

“We have nearly three years to complete the National Development Vision, 2025 but we have a shortage of 3,983 megawatts on power generation, which is also an opportunity for private investors to chip in,” he said.

According to Dr Milanzi, the country requires at least 78 percent of private sector investment to meet its power generation target, taking into account the available capacity of public funding.

He said the value of government-planned projects in the energy sector from fossil fuels (natural gas, coal, petroleum) and renewable energy (solar and wind) as per the 2025 development blueprint is valued at Sh89 trillion.

“Based on this, we expect government funding to cover approximately Sh19.5 trillion by 2025, with the remaining 78 percent, or more than Sh69 trillion, coming from the private sector,” Dr Milanzi said.

The specific achievements to be attained by 2025, according to the National Development Vision 2025, include a strong and competitive economy with an adequate level of physical infrastructure needed to cope with the requirements of the Vision in all sectors. It also requires the building of infrastructural amenities whereby investment in energy is one of the key elements for the stimulation of local and foreign investment and for creating wealth and employment-generating activities.

According to Mr Makamba, Tanzania has an ambitious energy development plan with a focus on renewables and accelerated projects in gas and liquefied natural gas (LNG). Currently, the government is in talks for its $30 billion project in Lindi region, which will facilitate the export of natural gas to the world market as European countries look for sources that can be long-term replacements for energy supplies from some of their traditional sources.

The Julius Nyerere Hydroelectric Power Project (JNHPP), a Sh6.5 trillion project that will be completed by 2025 and which is expected to produce 2,115 megawatts, is being built by the government.

Some of the topics to be discussed at the summit include Tanzania’s energy development project roadmap and setting up for success; procurement options to support private sector participation; procurement opportunities present in 2023; the role of gas in Tanzania’s energy mix; and Tanzania as Africa’s newest regional LNG hub. Also to be discussed is the role of the private sector in procuring solar and wind capacity among others.