Tanzania’s Energy Sector Faces Critical Transformation: Unbundling Tanesco Key to Economic Growth
Tanzania stands at a critical crossroads in its energy development, with the current power sector structure threatening the nation’s economic potential. The existing monopolistic model, dominated by Tanesco, has consistently failed to deliver on ambitious power generation targets, leaving the country struggling to meet its energy needs.
Current Power Landscape: A Stark Reality
Initially projected to have over 25GW of installed capacity by 2025, Tanzania now barely reaches 3GW of power generation. The government’s modest 2020 Power Master Plan aims for 20GW by 2044, but current trajectories suggest the country may struggle to achieve even half of that target.
Critical Challenges Demand Immediate Action
The energy sector requires an estimated $50 billion investment over 25 years, with $28 billion needed for generation alone. The existing model has proven unsustainable, with:
– 15% technical losses draining approximately 700 billion in annual revenues
– Limited private sector participation
– Restricted grid development
– Inefficient power distribution
Five Key Imperatives for Transformation
1. Reduce Technical Losses: Targeted strategies could recover up to 250 billion annually by cutting technical losses.
2. Attract Private Capital: Breaking the monopoly could unlock billions in infrastructure investment.
3. Establish Precise Tariff Mechanisms: Enable cost-reflective pricing and regulatory certainty.
4. Enhance Regional Power Trading: Create an independent transmission system to optimize regional power exchange.
5. Accelerate Renewable Energy Integration: Competitive markets can rapidly increase renewable energy capacity.
The Cost of Inaction
Each year of delay represents:
– $150 million in preventable losses
– 500MW of unrealized renewable capacity
– $200 million in missed export revenue
Recommended Path Forward
1. Full legislative unbundling of Tanesco
2. Competitive tenders for transmission corridors
3. Strengthen regulatory oversight
4. Implement cost-reflective tariff models
Conclusion
Unbundling Tanesco is not merely an administrative change but a fundamental transformation necessary to unleash Tanzania’s economic potential. The energy sector’s restructuring represents the master key to national industrialization and sustainable development.
