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Power Sector in Tanzania

Power Sector in Tanzania. Recent Developments, Current Crisis, Issues, Challenges and Solutions. AGENDA. Recent Developments Current Crisis Issues Challenges Solutions. Recent Developments. Power System Characteristics

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Power Sector in Tanzania

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  1. Power Sector in Tanzania Recent Developments, Current Crisis, Issues, Challenges and Solutions

  2. AGENDA • Recent Developments • Current Crisis • Issues • Challenges • Solutions

  3. Recent Developments • Power System Characteristics • Installed generation capacity of 947 MW (Hydro 562 MW, Diesel 85 MW, IPPs 295 MW, Imports 5 MW), 550,000 consumers • 4 IPPs – IPTL, Songas, Kiwira Coal Mine, TANWAT selling power to TANESCO • Electricity imports from Uganda and Zambia, and exports power to Kenya • EWURA established – not yet fully operational • Several privately owned generation facilities mostly for standby

  4. Hydropower Resources

  5. Mtera Dam Water Levels

  6. Nyumba ya Mungu Dam Levels

  7. Annual Generation - GWh

  8. Current Crisis • Generation shortage  load shedding (power rationing) in February and March, June to October/November • Severe cash shortage  O&M costs financed through overdraft (now TShs 70 billion, expected to increase) • Under recovering about TSh 8.3 billion per month due to low electricity tariffs

  9. Issues • Shortage of generation • High liquid fuel prices form about US$40/barrell in 2003 to over US$70/barrell now • High technical and commercial losses • Lack of investments since 1997 when TANESCO was specified • Low tariffs that under recover O&M costs • Poor quality of supply and service • Conflicting uses for the water and poor catchment management • Load shedding 1994, 1997, 2000, 2006

  10. Issues • Delays in commissioning of Ubungo units 5 & 6 in 2005 • Outages of Songas’ generating sets and transformer in 2005 and 2006 • Sub-optimal operation of the hydro/thermal system (overuse of hydro system) • Unsuccessful procurement of emergency power plant in 2004 (IDA funding),

  11. Challenges • Lower than average hydrology (drought) • High cost of thermal generation • Financing of future investments • Overloaded transmission and distribution • Unbalanced electricity tariffs – Zanzibar at TShs 26/kWh (US$0.0211/kWh)  much lower than LRMC of US$0.04/kWh

  12. Challenges • Costs about US$1.1 per kWh not served • TANESCO estimate load shedding to year end to be about 199 GWh • Cost to the economy estimated to be US$219 million • In addition, the government will loose VAT on electricity consumption amounting to about US$3 million

  13. Solutions • Short Term • Procurement of leased gas based generation • Increase electricity tariffs by 25% • Convert IPTL to natural gas firing • Purchase of the IPTL power plant • Demand side management • Hydro/thermal generation optimization • Negotiate long term gas prices for new plant • Procurement of 100 MW gas based generation

  14. Solutions 2) Short Term • Enforcement of water rights, catchment's management and protection, prohibit agro activities close to rivers, proper environmental management of river basins • Rehabilitation, reinforcement and expansion of the T&D systems, replace billing system and faulty meters

  15. Actions with High Impact on TANESCO’s Financial Performance

  16. Actions with High Impact on TANESCO’s Financial Performance

  17. Solutions 3) Short Term – Studies and TA • Long Term Power Master Plan (2007-2032) • Demand Side Management • Capacity building • IPP Strategy and standardized bidding documents • Hydro/thermal generation optimization • Grid extension to Kigoma, and mines • Preparation of a new Sector Reform Strategy

  18. Solutions 4) Short to Medium Terms • Demand side management: Replace incandescent lamps (ILs) with compact fluorescent lamps (CFLs) – less wattage on equivalent light output • Benefits to both the consumers (reduced energy consumption) and the utility (reduction of demand)

  19. Comparisons CFLs and ILs on Equivalent Light Output

  20. Comparisons CFLs and ILs on Equivalent Light Output • On equivalent light output, replacement of 23 @ 60 W ILs with 15 W CFLs would reduce the peak demand by about 1 kW • Consumers would save TShs 23 per day in electricity charges for every 60 W IL replaced (assuming usage of 5 hours/day) • Replacing just 2 ILs per consumer for the 550,000 consumers, would reduce the peak demand by 50 MW and the energy demand by 90 GWh annually (assuming usage of 5 hours/day)

  21. Solutions • Medium to Long Term • TANESCO;s capital investments needs 2006 to 2010 TShs 1.3 trillion for: • New generation additions 345 MW • Transmission and distribution system rehabilitation and expansion • Increasing access to electricity in rural areas • Interconnections – EAC and SADC

  22. Comparison of Tanzania’s Electricity Tariffs with selected African and OECD Countries US$ cents per kWh

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