Tanzania eyes first PPP power transmission project

TANZANIA: THE government is in talks with two foreign investor companies that have expressed interest to build power transmission projects worth 1.2 billion US dollars (about 3.3tri/-).

If successful, these will be the first ever Public-Private Partnership (PPP) power transmission projects in Tanzania’s history.

Power transmission is currently being done solely by the state-run Tanzania Electric Supply Company (TANESCO).

Involvement of the private sector in the construction of high-voltage power lines is a new phenomenon in Tanzania.

The Executive Director of Tanzania’s PPP Centre, Mr David Kafulila said the government is exploring best practices from countries that have experience in PPP projects in power transmission lines in Latin America and Asia.

“There are success stories in this area (PPPs in power transmission projects) in countries such as India, Peru, Chile, Brazil and Philippines,” he said.

At least two foreign companies have expressed interest to the PPP Centre to invest in power transmission lines.

“The mandate of the PPP Centre is to coordinate and scrutinise investment proposals with public-private partnerships,” he said.

Tanzania faces key challenges in implementing PPPs in transmission lines, including regulatory, legal and institutional barriers and limited skills in key government entities.

There is a need for technical and capacity building support for the government to adopt PPPs in the energy sector.

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Some development partners have been pushing for this PPP agenda in power transmission for all East African countries and is currently working with Kenya and Uganda, according to Kafulila.

“Experience from energy economists suggests that the energy sector can be self-financed if tariffs are commercially set. Tanzania is charging the lowest electricity tariffs in East Africa. This is one reason why Tanzania is leading sub-Saharan African countries in having an inclusive economy,” Kafulila noted.

The Tanzanian government announced in 2022 that it plans to invest 1.9 billion US dollars (about 5.2tri/-) to upgrade the country’s electricity transmission infrastructure.

Tanzania currently has a surplus of power, yet parts of the country do not have access to electricity.

The government also cannot export the surplus electricity to energy-starved neighbouring countries due to inadequate power transmission networks.

The involvement of the private sector in power transmission projects is expected to bring significant economic benefits to the country.

These include improvements in access, quality and reliability of electricity across the country and development of regional power trade.

The PPPs are also expected to reduce power transmission losses and could further cut the cost of electricity to consumers by absorbing the capital cost of transmission lines.