By Faith Jemosop
Tanzania launched an ambitious $12.9 billion plan aimed at adding 2,000 megawatts (MW) of new electricity capacity within five years. The initiative seeks to achieve universal energy access by 2030, signaling a major leap in both domestic energy development and regional energy trade.
Despite steady improvements in electrification over the past decade, large swathes of Tanzania, particularly in rural regions still lack reliable power. As of 2023, the World Bank estimated that just over 40% of the population had access to electricity, with the disparity even starker in remote and underserved areas. The newly unveiled plan seeks to accelerate rural electrification, expand the grid, and integrate renewable and non-renewable resources to close the energy gap.
A budget of $426.9 million has been allocated specifically for rural electrification and national grid expansion. This includes a first-of-its-kind policy shift that allows private sector investment in transmission infrastructure, a space previously dominated by state-run entities like TANESCO (Tanzania Electric Supply Company).
From Hydropower to Nuclear
Tanzania is not placing all its bets on one energy source. Instead, the plan integrates gas, geothermal, hydro, nuclear, and renewable energy investments to create a diverse and resilient energy mix.
At the heart of the hydropower strategy is the Julius Nyerere Hydropower Project, a 2,115 MW facility that, once fully operational, will become one of Africa’s largest hydroelectric plants. The project is already showing early signs of success, positioning Tanzania to become a key energy exporter in the region.
In a major policy departure, nuclear energy is also being explored. With feasibility studies underway and international consultations in progress, Tanzania aims to leverage nuclear power for long-term stability and low-carbon energy reliability.
Boosting Gas and LNG for Domestic and Export Markets
Natural gas continues to play a central role in Tanzania’s energy strategy. The Mnazi Bay gas fields, which had seen limited activity in recent years, have been revived with new drilling operations, supported by private investment and government backing.
In a notable development, Tanzania recently signed a landmark LNG (liquefied natural gas) agreement with Energetech-Tantel, aimed at harnessing and processing the country’s vast gas reserves for both domestic use and export. With over 57 trillion cubic feet of recoverable gas reserves, Tanzania’s LNG ambitions could significantly transform its fiscal base while boosting regional energy security.
Geothermal Energy Gains Ground
Another major shift in Tanzania’s energy portfolio is the commitment to geothermal development. With $600 million allocated for exploration and infrastructure, the government aims to generate 200 MW of geothermal power by 2030.
Tanzania’s volcanic belt, particularly in the East African Rift region, offers high geothermal potential, and feasibility studies are already underway in regions like Mbeya and Lake Ngozi. Geothermal energy is especially attractive because of its low emissions and consistent baseload power supply, complementing intermittent sources like solar and wind.
Regional Power Trade and the Eastern Africa Power Pool
Tanzania’s energy transformation is not just domestic, it’s increasingly regional. The country is expanding its role in cross-border electricity trade, particularly through the Eastern Africa Power Pool (EAPP).
In 2024, Tanzania successfully conducted a cross-border wheeling trial, enabling energy transfer between its grid and those of neighbouring countries. This capability not only provides an additional revenue stream but also enhances energy security across the region.
Tanzania’s geographic position, bordering eight countries, makes it a natural transmission corridor, and recent infrastructure investments are designed to leverage this strategic advantage.
Private Sector Involvement: A Paradigm Shift
One of the most ground-breaking aspects of the new plan is the invitation for private sector participation in transmission projects, a sector traditionally monopolized by the state. This move is expected to attract foreign direct investment (FDI), reduce project lead times, and inject innovation into Tanzania’s energy system.
Already, international energy firms, multilateral development banks, and green financing institutions have expressed interest in participating in Tanzania’s energy transition. This public-private collaboration could prove vital in overcoming chronic financing constraints.
Challenges: Financing, Climate, and Technical Capacity
While the goals are ambitious, significant challenges remain. Chief among them is financing. Although the government has committed $12.9 billion, more than half of this funding is expected to come from external partners, grants, and private investors. Securing these funds particularly in a volatile global economy remains uncertain.
Climate risks also loom large. Hydropower, while renewable, is vulnerable to prolonged droughts and shifting rainfall patterns caused by climate change. Balancing energy generation with environmental sustainability will be a constant struggle.
Moreover, technical capacity from engineering expertise to grid management must be scaled up significantly. Tanzania will need to invest heavily in workforce development, technology transfer, and institutional strengthening to sustain the rapid expansion.
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To mitigate these challenges, Tanzania is actively courting partnerships with institutions such as the World Bank, African Development Bank, China’s Exim Bank, and regional partners like Kenya and Zambia. These collaborations are designed not only to provide funding but also to offer technical support and policy guidance.
The government is also rolling out incentives for independent power producers (IPPs), including favourable feed-in tariffs, land acquisition support, and tax breaks. This aligns with Tanzania’s broader aim of becoming a net energy exporter by the early 2030s, particularly as demand from neighbouring countries continues to rise.
