Natural gas output and use fall, hydropower generation rises

The BoT attributes the decline largely to reduced use of gas in power generation following the commissioning of the Julius Nyerere Hydropower Project (JNHPP).

With the new hydropower plant significantly boosting electricity supply, demand for gas-fired power generation fell, leading to lower overall natural gas consumption and production.

Power-generating plants remained the largest consumers of gas, accounting for 75.2 per cent of total consumption, while industrial users made up 23.9 per cent and other sectors consumed a minimal share.

The report notes that the reduction reflects a shift in the country’s energy mix rather than an economic slowdown. Greater reliance on hydropower has eased pressure on gas resources and altered long-standing consumption patterns within the energy sector.

Overall, domestic electricity generation increased by 19.5 per cent to 12,728.8 Gigawatt hours (GWh) due to expanded economic activity and rural electrification. Growth was particularly notable in the South Eastern and Lake zones, driven by the operationalisation of the JNHPP and the Rusumo hydropower plant.

Conversely, electricity generation in Dar es Salaam declined as thermal power was replaced by hydropower from JNHPP. Meanwhile, production in the Northern, Central and Southern Highlands zones fell due to ongoing rehabilitation works at Hale, Kidatu, Kihansi and Mtera power stations.

In September, the Petroleum Upstream Regulatory Authority (Pura) and the Tanzania Petroleum Development Corporation (TPDC) said the drop does not indicate weakening prospects for the sector. Natural gas remains vital to Tanzania’s economic growth, supporting industry, transport, households and the government’s clean cooking initiatives.

Pura Director General Charles Sangweni told The Citizen that while Tanesco has historically been the main gas consumer, new demand is emerging.

“We are implementing the clean cooking agenda and natural gas is among the renewable energies where demand will grow,” he said, adding that Pura will continue to explore petroleum resources and foster a favourable environment for investors.

He noted that natural gas will play a key role in Vision 2050, which aims for a $1 trillion economy powered by diverse renewable sources.

TPDC Acting Director for Petroleum and Gas Business Gilbert Emmanuel said the decline was expected as hydropower capacity expanded, stressing that transitioning supply from Tanesco to new customers takes time.

“For example, a factory must first be built and equipped to use gas—it is not a matter of Tanesco releasing gas today and another customer immediately taking over,” he explained.

TPDC is seeking customers in fertiliser production, industry, households and transport. Mini-LNG technologies are also being explored to supply gas to areas beyond pipeline reach.

Earlier this year, TPDC Production Manager Felix Nanguka said discussions with companies interested in mini-LNG were advanced. “Transporting natural gas via pipeline is expensive. Once finalised, regions beyond pipeline reach will be able to access gas through these technologies,” he said.

TPDC is also in talks with Uganda on constructing a pipeline along the East African Crude Oil Pipeline (EACOP) corridor, opening another potential export market.

Despite the shifts in consumption, Tanzania’s gas sector has recorded strong revenue growth. Figures from the National Bureau of Statistics show earnings rose from $55.1 million in 2020 to $144.1 million in 2024, a 161 per cent increase.