- Tanzania is negotiating its first $1.2 billion Public-Private Partnership for power transmission to boost its energy infrastructure.
- The initiative aims to improve electricity access and reduce costs amid transmission challenges.
The Tanzanian government is discussing with two foreign investor companies interested in developing power transmission projects valued at $1.2 billion (approximately 3.3 trillion TZS). If these talks succeed, they will mark Tanzania’s first Public-Private Partnership (PPP) power transmission initiatives.
Currently, the state-run Tanzania Electric Supply Company exclusively manages power transmission in Tanzania. However, the involvement of private companies in constructing high-voltage power lines represents a significant shift in the country’s energy sector.
David Kafulila, Executive Director of Tanzania’s PPP Centre, stated that the government studies best practices from countries experienced in PPP power transmission projects, including India, Peru, Chile, Brazil, and the Philippines. He emphasised, “The mandate of the PPP Centre is to coordinate and scrutinise investment proposals related to public-private partnerships.”
However, Tanzania faces several challenges in implementing these partnerships, including regulatory, legal, and institutional barriers and limited expertise in key government departments. Kafulila noted the need for technical and capacity-building support to adopt PPPs effectively in the energy sector.
Development partners have advocated for the PPP approach in power transmission across East Africa and are collaborating with Kenya and Uganda. Kafulila added, “Experience from energy economists indicates that the energy sector can be self-financed if tariffs are set at commercial rates. Tanzania currently has the lowest electricity tariffs in East Africa, contributing to its leadership in fostering an inclusive economy.”
In 2022, the Tanzanian government announced plans to invest $1.9 billion (around 5.2 trillion TZS) to enhance the country’s electricity transmission infrastructure. Despite having a surplus of electricity, many areas still lack access, and the government struggles to export excess power to neighbouring countries due to insufficient transmission networks.
The anticipated private sector involvement in these power transmission projects is expected to yield significant economic benefits, including improved access, quality, and reliability of electricity nationwide and fostering regional power trade. Additionally, PPPs could reduce power transmission losses and lower consumer electricity costs by alleviating the capital burden associated with building transmission lines.