He said during a discussion on ‘Mobilizing Private Investment in African Energy’ on the sidelines of the World Economic Forum (WEF), that the government alone cannot adequately finance the energy sector. He noted that a challenge was on how to finance transmission and distribution of electricity once it is generated.
The president noted further that despite having sizable natural gas reserves and huge coal reserves, financing of the projects to generate, transmit and distribute power remained a challenge. He said that Tanzania had invested heavily in hydro power but due to changing of climate, hydro-power generation had drastically gone down.
“We used to generate 40 per cent of total power through hydro sources but now the generation has gone down to 20 per cent. Now we’re migrating to the use of natural gas and coal but the challenge is how to get funds... this is an area for PPP,” he explained.
President Kikwete stated that most potential investors in energy sector in the country had more interest in generating power and selling to utility company (TANESCO) rather than transmission and distribution. He, however, said that to attract private sector and development partners, there is need to reform policies and laws governing the sector.
The president hinted that the government would transform TANESCO in a bid to tackle emerging challenges. Meanwhile, former British Prime Minister Mr Tony Blair challenged African countries to pool resources together including the use of PPP in order to address challenges in power sector.
He challenged further the African countries to invest in the sector considering its impact on the economy and lives of people. Mr Blair noted that investment should also be in areas of expertise and capacity building.
On his part, the Prime Minister of Ethiopia, Mr Hailemariam Desalegn, echoed President Kikwete’s statement on the use of PPP and combination of hydropower and other sources of power such as wind, solar and gas. “The combination of the sources will balance energy pool in the system, for example, hydro is very useful during rainy season while wind during dry season,” he expressed.