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Tanzania opens energy sector to more private investment

3 mins read

Tanzania opens energy sector to more private investment

Habari za Dharura

October 31, 2026 Admin0

Dar es Salaam. The government has pledged to continue strengthening the energy sector by involving the private sector in electricity generation and distribution, promoting domestic investment in major energy projects and developing infrastructure to export electricity to neighbouring East African countries and other African regions.

The commitment was outlined by Deputy Minister for Finance Laurent Luswetula during a panel discussion on energy sector development at the Africa Think Tank Summit (ATTS), held in Cotonou, Benin.

Mr Luswetula, who represented Finance Minister Ambassador Khamis Mussa Omar at the discussion, said the initiative aimed to ensure Tanzania had adequate and reliable electricity for domestic, industrial and commercial use, while exploiting surplus power to strengthen cross-border electricity trading within the regional market.

“The government of Tanzania has opened doors for the private sector to enter power generation and distribution, to ensure we get adequate and reliable electricity for our citizens,” said Mr Luswetula.

He said the 2015 National Energy Policy placed strong emphasis on private sector participation, enabling various companies to venture into electricity generation and distribution across the country.

Mr Luswetula noted that major private companies had so far contributed more than 350 megawatts to electricity generation, particularly in rural areas, while medium-sized producers accounted for more than 59 megawatts and small producers contributed a combined 2.41 megawatts.

However, he said electricity transmission remained largely the government’s responsibility, undertaken through the Tanzania Electric Supply Company (Tanesco), because of the scale of investment required.

Nevertheless, he said opportunities for private sector participation could be explored through consultations and nationally agreed frameworks.

Speaking about the Ministry of Finance’s role in financing electricity generation and distribution projects, Mr Luswetula said the government was committed to using domestic resources to fund major energy projects, citing the construction of the Mwalimu Julius Nyerere Hydropower Project (JNHPP).

He said the project, with an installed generation capacity of 2,115 megawatts, was constructed using domestic funds amounting to approximately Sh7.5 trillion, equivalent to more than $3.5 billion.

Despite the substantial investment required, he said, the government had resolved to use internal resources to implement the strategic project for the country’s overall benefit.

“Mwalimu Nyerere Dam serves as an example of how we decided as a country to use our domestic funds to implement major strategic projects. A lot of money was spent, exceeding Sh7.45 trillion, but today we see its benefits through abundant power generation benefitting Tanzanians and boosting our nation’s energy access capacity,” emphasised Mr Luswetula.

He added that Tanzania currently had an electricity generation capacity exceeding 4,646 megawatts, against domestic demand of more than 2,300 megawatts, creating an opportunity to sell surplus electricity to neighbouring countries.

He noted that the government was continuing to strengthen electricity transmission infrastructure to enable Tanzania to participate fully in the regional energy market, particularly in East Africa, while preparing systems to connect with other African markets through infrastructure passing through Zambia.

Mr Luswetula said that, alongside expanding generation and transmission infrastructure to support regional electricity trade, the government was considering household affordability and industrial requirements by maintaining affordable electricity tariffs.

He said electricity for industrial consumers was priced at Sh100 per kilowatt-hour, while small-scale consumers benefited from lower tariffs across the country.

The measure, he added, reflected the government’s determination to ensure citizens accessed affordable electricity and benefited from power supplied through the national grid.

He also noted that Tanzania was among African countries with the lowest electricity costs.

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