Alternative Energy & Power 2019 Comparisons

Last Updated July 22, 2019

Contributed By IMMMA Advocates

Law and Practice

Authors



IMMMA Advocates is a member of DLA Piper Africa is one of the leading full-service business law firms in Tanzania with a multi-disciplinary team of lawyers working on various areas of practice. IMMMA Advocates has 25 lawyers, with three offices in Dar es Salaam, Mwanza and Zanzibar. Senior partner Protase Ishengoma leads this area, assisted by Burure Ngocho, a partner, and Pascal Mwanyika, an associate. The team has significant experience in negotiating, drafting and evaluating key project agreements such as concession and implementation agreements, power sales, throughout and other offtake agreements, EPC agreements, fuel supply, transportation and other long-term supply agreements, operating and maintenance contracts and service agreements. Clients include Equinor Tanzania AS, Puma Energy, Multconsult ASA, RAK Gas Tanzania Limited, the United Republic of Tanzania, the Revolutionary Government of Zanzibar, Ruhudji Power Company Limited, PASH Global Limited, Fauji Fertilizer Company Limited, the Federal Republic of Somalia.

Electricity generation, distribution and transmission is governed by:

  • The Electricity Act.
  • The Energy Water Utilities Regulatory Authority Act.
  • The following regulations/rules are applicable:
  • The Electricity (Generation, Transmission and Distribution Activities) Rules, 2018 GN 442;
  • The Electricity (Development of Small Power Projects) Rules, GN. No 77 of 2018;
  • The Electricity (Grid Distribution Codes) Rules GN No. 441 of 2017;
  • The Electricity (Market Re-Organisation and Promotion of Competition) Regulations, GN No. 325 of 2016; and
  • The Electricity (Licensing Fees) Rules 2016.

Electricity is provided by a central grid which is owned by a state utility known as TANESCO (Tanzania Electricity Supply Company Limited). TANESCO is the primary source for electricity generation, distribution and transmission in Tanzania, with a current generation capacity of 1500MW.

The power industry in Tanzania consist of vertically integrated entities. TANESCO is the main operator in generation, transmission and distribution of electricity. The areas where the main grid is not accessible are provided with electricity by isolated mini grid from renewable energy generators. 

Tanzania National Electricity Supply Company is the state-owned entity that controls generation, transmission and distribution facilities in Tanzania.

Tanzania National Electricity Supply Company is the main generator of electricity, also involved in transmission and distribution in Tanzania. However, there are a few isolated mini grids that generate and distribute electricity in isolated areas.

No information provided.

No information provided.

The Energy and Water Utilities Regulatory Authority (EWURA) was established by the Energy and Water Utilities Regulatory Authority Act, CAP 131. EWURA is an autonomous multi-sectoral regulatory authority in charge of technical and economic regulation of electricity, and electricity generated from alternative energy.

Its functions include, amongst other: promoting effective competition and economic efficiency; protecting the interests of consumers; protecting the financial viability of efficient suppliers; promoting the availability of regulated services to all consumers (including low income, rural and disadvantaged consumers); enhancing public knowledge, awareness and understanding of the regulated sectors, including (i) the rights and obligations of consumers and regulated suppliers, and (ii) the ways in which complaints and disputes may be initiated and resolved

The Authority is directly involved in ensuring promotion of regulated services. This includes ensuring reliable standards of services by TANESCO. EWURA also has a duty of promoting least-cost investment and the security of supply in electricity.

Tanzania has enacted the Electricity (Net-Metering) Rules, 2018 to guide the legal framework in net metering and along with the introduction of the Net Metering Rules, the Electricity (Development of Small Power Projects) Rules 2017 have been enacted to regulate small power projects in Tanzania. May 2019 the Electricity (supply Services) Rules 2019 have been enacted to govern the supply of electricity by licensed personnel.

There have not been any announcements regarding new policy that would result in material changes for the power industry in 2018 – 2019.

Generation is now open for participation to Private sector players via Independent power producers or Renewable Energy.

Distribution has been monopolised by TANESCO.

Transmission from the area, power generation and the distribution point are all done by TANESCO, together with the private power producers.

May 2019: the Electricity (Supply Services) Rules have been enacted to govern the supply of electricity. This shows that there are slow, albeit still unclear, prospects of unbundling the sector.

The principal laws that govern the structure and function of the wholesaler electricity market are:

  • The Energy Water Utilities Regulatory Authority Act.
  • The Electricity Market Operations Services_ Rules 2016, GN 325
  • The Electricity (Market Re-Organization and Promotion of Competition) Regulations, GN No. 325 of 2016; and
  • EWURA (Tariff Application and Rate Setting) Rules 2017, GN 452

The price of electricity is set by laws and regulations. However, a competitive wholesale market does not exist at the moment, since the main distributor of electricity is a state utility with a monopoly in the market.

There are no imports or exports between Tanzania and other jurisdictions. However, Tanzania is a union of Tanzania Mainland and Tanzania Island and the electricity of Tanzania Island is supplied through a 39 kilometres long underground submarine cable of a maximum capacity of 150 MW that crosses the Indian Ocean to Tanzania and Zanzibar. It may appear or be described as though there is exportation from the Mainland to the Island, however, this is referred to as a supply of electricity.

Biomass makes up close to 90% of the total primary energy consumption in Tanzania. Other energy sources are petroleum, which makes up 7.8% of total primary energy consumption, followed by natural gas (2.4%), hydropower (1.2%) and coal/peat (0.3%).

There are no concentration limits regarding the percentage of electricity supply that is controlled in the market by any one entity in Tanzania.

There is no competitive market in Tanzania.

There are intentions for an overall energy security initiative for economic development, encouraged by clean energy technologies for power generation and diverse renewable sources such as natural gas, geothermal, solar, wind and hydro. However, there is no particular policy document or strategy in the energy sector on climate change.

There are no programmes to encourage or require the early retirement of carbon-based generation in Tanzania.

There are no specific laws or policies in place to promote renewable resources. However, there is a scaling up of renewable Energy Program, implemented by the Ministry of Energy as an initiative to promote mini grids and renewable energy generation.

  • The Electricity (Generation, Transmission and Distribution Activities) rules 2019
  • The Electricity (Standardized Small Power Projects Tariff) Order 2019-GN No. 464
  • The Electricity (Development of Small Power Projects) Rules 2019-GN No. 462
  • The Electricity (Standardized Small Power Projects Tariff) Order 2017
  • Available at https://www.ewura.go.tz/electricity-legislation/

There are no large-scale government incentives schemes in relation to renewable energy generation. Also, there are no tradable green certificates issued by the Ministry of Energy or the Regulatory authority.

Principal laws that govern the construction and operation of generation facilities:

  • The Electricity Act;
  • The Electricity (Generation, Transmission and Distribution Activities) rules 2019;
  • The Energy Water Utilities Regulatory Authority Act.

The Generation process referred to in this aspect is generation for small power projects (from 1MW up to 10 MW).

Major steps in the regulatory process are as follows:

  • Project identification;
  • land acquisition;
  • securing rights to the resource;
  • acquiring necessary consents and licences;
  • financing;
  • construction;
  • testing and commissioning; and
  • operation and reporting.

In obtaining the License, the Regulatory authority is required to ensure that the application for the generation license is made public so as to obtain comments/objections from the general public. The Publication is made in two circulating newspapers.

No information provided.

No information provided.

The Electricity (Generation, Transmission and Distribution Activities) rules 2019 has addressed the decommissioning aspect generally without separating the construction under the Generation phase, transmission or distribution. The conditions are as follows:

  • A license is required to submit a decommissioning plan not less than six months prior ot the expiry of the license.
  • The decommissioning plan shall include a schedule of dismantling, re exportation and disposal of the facility. The plan shall also include a restoration statement, for the facility to the original state to the satisfaction of the relevant authority. 
  • The Electricity (Generation, Transmission and Distribution Activities) rules 2019 also provide a general requirement for  decommissioning, which is that, in the event of revocation of the license and in the absence of any other licensee taking over an operation facility then the decommission of the facility should be done in accordance to the prudent utility practise

It is important to point out that the transmission is done by the state-owned entity TANESCO. Small power projects are under an isolated grid.

Nevertheless, there are rules in place that govern transmission of electricity. The Rules with then regulate small power projects that are more than 1MW and less than 10MW - specifically for a grid in isolated area.

The Electricity (Generation, Transmission and Distribution Activities) rules 2019. 

Available at https://www.ewura.go.tz/electricity-legislation/

No information provided.

No information provided.

Transmission rights by TANESCO are obtained under legislation as a right to wayleave. In areas where the wayleave cannot be issued, TANESCO may apply to the relevant ministry to acquire the land. This is a rare case and in the event it occurs, the person acquired is compensated according to the Land Acquisition Act.

The sole transmission entity is TANESCO, which is a state-owned entity and has monopoly rights for transmission. Other than TANESCO, transmission can be done by small power projects developers, who are only allowed to develop and generate electricity in isolated areas and transmit it within the same area.

The Exclusive rights of TANESCO are provided under the Legislation.

No information provided.

No information provided.

No information provided.

It is important to point out that the Distribution is done by the State-owned entity, TANESCO.

Nevertheless, there are rules in place that govern transmission of electricity. The Rules will then regulate small power projects that are more than 1MWand less than 10MWand specifically for a grid in isolated area.

The Electricity (Generation, Transmission and Distribution Activities) rules 2019. 

Available at https://www.ewura.go.tz/electricity-legislation/

No content provided.

No content provided.

No content provided.

TANESCO having the monopoly in the market, dominates the distribution of electricity. The law requires that Small Power Producers to operate only in isolated grids. This means the specified geographical area is influenced with the aspect on whether it is an isolated area, where geographically the main grid does not run.

Principal Laws Governing the Provision of Distribution Service:

  • The Electricity Act;
  • The Electricity (Generation, Transmission and Distribution Activities) rules 2019;
  • The Energy Water Utilities Regulatory Authority Act.

The electricity distribution charges is regulated by EWURA.

The electricity distribution charges are set by a number of laws, that cover a wide range of distribution, the laws are as stated herein below:

  • EWURA Act Cap 414
  • Electricity Act Cap. 131
  • The Electricity (General) Regulations, 2011.
  • EWURA (Tariff Application and Rate Setting) Rules 2017, GN 452
  • The Electricity Market Operations Services_ Rules 2016, GN 325

Law and Practice

Authors



IMMMA Advocates is a member of DLA Piper Africa is one of the leading full-service business law firms in Tanzania with a multi-disciplinary team of lawyers working on various areas of practice. IMMMA Advocates has 25 lawyers, with three offices in Dar es Salaam, Mwanza and Zanzibar. Senior partner Protase Ishengoma leads this area, assisted by Burure Ngocho, a partner, and Pascal Mwanyika, an associate. The team has significant experience in negotiating, drafting and evaluating key project agreements such as concession and implementation agreements, power sales, throughout and other offtake agreements, EPC agreements, fuel supply, transportation and other long-term supply agreements, operating and maintenance contracts and service agreements. Clients include Equinor Tanzania AS, Puma Energy, Multconsult ASA, RAK Gas Tanzania Limited, the United Republic of Tanzania, the Revolutionary Government of Zanzibar, Ruhudji Power Company Limited, PASH Global Limited, Fauji Fertilizer Company Limited, the Federal Republic of Somalia.

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.