The Energy Sector 

The Government of Tanzania (GoT) has identified the development of electricity and natural gas sectors as a key mechanism to support economic growth, and aims to increase energy access in the country from 24% in 2014 to 50% by 2025. Tanzania has taken steps to increase generation capacity by entering into contracts with independent power producers, but the off-taker, government-owned utility Tanzania Electric Supply Company Limited (TANESCO), is struggling to make payments for the supplied power. Nonetheless, stakeholders in the energy sector are making significant strides on prioritizing generation projects and focusing on capacity building for key institutions to overcome these challenges.

Currently, natural gas and hydroelectric plants provide over 80% of Tanzania’s power production, with natural gas providing 62.41% of total power in the main grid.[1] Recently, however, severe droughts have induced government efforts to decrease dependency on hydropower in order to maintain energy security. Accordingly, the Government of Tanzania’s Power System Master Plan (PSMP 2016-2040) aims to bring about socio-economic development and incentivize foreign direct investment by increasing electricity access, improving key infrastructure, and attaining a stable power supply.

Compared to the current energy mix, the plan estimates that natural gas will be the biggest contributor by 2040, making up 40% of power generation while 35% will come from coal-fired thermal power, 20% from hydropower, and 5% from others including renewables.[2] While Tanzania’s abundant supply of renewable energy resources (e.g., wind, solar, geothermal, etc.) is largely unexploited, the country is making efforts to foster renewable energy adoption as a means of shifting the energy mix toward more efficient, sustainable, and least-cost generation.[3]

In 2015, the Tanzanian government passed a new Petroleum Act that designates the Tanzanian Energy and Water Utilities Regulatory Authority (EWURA) as regulator for midstream and downstream natural gas activities. EWURA is also responsible for the technical and economic regulation of Tanzania’s electricity, petroleum, and water. It has has a broad spectrum of powers related to licensing, tariff review, and monitoring performance and standards with regard to quality, safety, health, and the environment.[4]

 

Our Work

Through the support of the United States Agency for International Development (USAID) and Power Africa, NARUC works to enhance EWURA’s ability to oversee the country’s energy sector by strengthening its technical capabilities to regulate electricity and natural gas. In line with Power Africa priorities, NARUC has supported EWURA in developing and implementing a regionally aligned regulatory accounting framework and advancing reforms toward achieving cost-reflective tariffs. NARUC also supports EWURA’s development of a natural gas regulatory framework, with a particular focus on natural gas pricing regulation and additional support for technical regulation to ensure the continued and reliable supply of natural gas for electricity generation.

 

Focus Areas and Selected Engagements

Net Metering Rules

The Ministry of Energy published the Electricity (Net Metering) Rules in 2018. The Rules define net metering as “measuring the difference between an imported and exported energy in kilowatt hours over the applicable billing period.”[5] It allows business and individual customers generating their own electricity through renewable energy sources to deliver and store unused or excess energy in the local electric grid.[6]

Following passage of the Rules, EWURA developed a draft framework to guide development of a net metering program in Tanzania. In 2020, NARUC sponsored a governmental delegation comprised of key energy sector stakeholders to visit the Seychelles to study the country’s net metering program, gather insights on potential implementation challenges, and build a practical understanding of best practices. During this engagement, Seychelles regulators emphasized the importance of conducting extensive public engagement and understanding grid capacity.  Afterwards, EWURA submitted formal recommendations to government decision makers to inform the drafting of a net metering regulation Once in place, Tanzania’s net metering regime will enable increased renewable energy penetration into the grid while enhancing system reliability.

Natural Gas Regulation

Tanzania’s abundant natural gas resources are poised to constitute a major component of Tanzania’s efforts to enhance energy security through increased domestic energy generation, connect large numbers of unserved communities to the grid, and create new private sector investment opportunities. Through NARUC support, EWURA staff in the natural gas division have been working toward obtaining credentials as industry-recognized Certified Natural Gas Transmission and Distribution Professionals since 2019. Having properly trained staff with appropriate knowledge on natural gas systems and operations is imperative for ensuring informed decision making as Tanzania’s natural gas pipeline network continues to grow. The skills and knowledge attained by EWURA regulators will assist them in their day-to-day operations, including performing field inspections, conducting reviews of performance standards, and approving construction permit applications.

Additionally, one of EWURA’s long-term goals is to establish appropriate safety standards to reduce the number of incidents on the expanding pipeline network. Through a series of activities on gas safety and service quality, NARUC has shared knowledge and international best practices on designing, implementing, and enforcing safety standards for natural gas generation, transmission, and distribution. Based on lessons learned from these activities, EWURA took the initiative to prepare a memorandum of understanding (MOU) for information sharing on existing and planned pipelines among all parties involved in construction or maintenance work along shared infrastructure corridors (which may contain oil and gas pipelines, power lines, telephone lines, etc.). The MOU, signed in 2020, is expected to be the cornerstone toward establishing a stakeholder association similar to the Common Ground Alliance (CGA) in the United States to formulate and share policies on safety procedures.                                  

Promoting Gender Equity

Women are consistently underrepresented in the energy sector – there are fewer women in oil and gas than almost any other major industry, and on a global scale only 15% of women are in senior management in the power and utilities industry. Launched in 2017, the USAID and NARUC Women in Energy Regulation internship program aids in creating opportunities for the advancement and employment of young women in energy regulation by facilitating placements in short-term positions within their country's energy commissions. EWURA was one of two host commissions that participated in the pilot internship program in 2017 and has hosted three interns in total.

Through this experience, interns developed foundational understandings of key regulatory functions in the natural gas and electricity sectors such as data collection, tariff setting, and stakeholder engagement, and participated in site visits to conduct equipment inspections. In addition, they developed critical experience in navigating a professional office setting, managing their time and resources, and networking with colleagues at the EWURA and other energy sector organizations.

 

Related Publications and News

• An Interview with Tanzanian Interns on their Professional Development and the Importance of Female Representation in the Energy Sector
• Tanzanian Utility Regulator Spearheads Stakeholder Agreement to Strengthen Natural Gas Pipeline Safety
• Tanzanian Regulators Make Strides in Unlocking Energy Sector Potential through Safe Expansion of Natural Gas Utilization
• Tanzania Advances Natural Gas Pipeline Safety Rules Following USAID, NARUC Support
• Tanzanian Officials Agree on Key Plan to Improve Energy System Through Time-of-Use Rates
• Exploring Africa's Mini-Grid Tariff Methodologies
• Practical Guide to Women in Energy Regulation

 

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Photo Credit: © Igor Groshev  / Adobe Stock