Tanzania 2014 | ENERGY | INTERVIEW

TBY talks to Sospeter M. Muhongo, Minister of Energy & Minerals, on managing the country's resources, restructuring TANESCO, and the role of science and technology.

Sospeter M. Muhongo
Sospeter M. Muhongo studied Geology at the University of Dar es Salaam and in Göttingen, Germany. He is the Editor-in-Chief of the Journal of African Earth Sciences, Vice-President of the Commission of the Geological Map of the World, and a full Professor of Geology at the University of Dar es Salaam. He has published over 200 scientific papers and has a long history of promoting science, technology, and innovation on the continent. He entered office in May 2012.

How do you plan to ensure that Tanzania's energy opportunities and resources are used for the country's benefit?

When many people discuss natural resources they think about personal fortune, but in Tanzania our goal is for our natural resources to become a source of prosperity of all people in the country. Energy is the economic engine the world over. Development itself can be measured in terms of a nation's per capita energy consumption. Our economy is small; today, our GDP is at about $28 billion and our GDP per capita at around $600. As a nation, we have resolved to eradicate poverty and have devised a road map to do so. We are working toward a development vision for 2025, which involves becoming a middle-income country. Currently, our installed electricity capacity is 1,438.24 MW. Electricity is essential for growth, and our intention as a government is that by 2015, we will have doubled our installed capacity to 2,780 MW. We are determined to have a minimum generation capacity of 3,000 MW within the next three years. We have changed our energy profile; we were formerly highly dependent on hydropower, but climate change has taught us a major lesson. Therefore, the government today has a broader energy matrix, which is as follows: for the next five, 10, or even 20 years, our electricity will be generated first by natural gas, secondly by coal, thirdly by hydro-energy, and fourthly by renewable energies. For the latter, we will generate electricity from wind, solar, geothermal, and bioenergy. Tanzania is fortunate enough to have abundant generation resources. We have devised our energy matrix for economic reasons, as our economic growth oscillates between 6% and 7%. Our objective for the next two years is minimum growth of 8%. Economically, while this would actually result in a reduction in poverty, it would be insufficient to eradicate it. To do so requires double-digit growth. It should in fact exceed 10%, and preferably be at 12%, and must then remain at that level to enable the current GDP of about $28 billion to exceed $100 billion by the year 2025. This is all contingent upon a reliable power supply. We are currently constructing a pipeline that will help us generate substantially more power from natural gas. We are also starting plans to build new gas-fired power plants. We have learned over time that contrary to traditional thinking the government alone lacks the financial muscle to satisfy national energy demand. Our current approach, therefore, involves both public and private sector investments in a scheme that makes provision for three scenarios: public, private, and public-private. What we have at the moment is an enormous amount of energy, almost equivalent to 8 billion barrels of oil. Our small economy cannot consume all of our natural reserves, which spells export potential. We will use natural gas to propel the economy, to power our industries, and for domestic usage. We will use it in our vehicles and also as an input for fertilizer and other petrochemical industries. At the moment, we are discussing where to locate LNG facilities, and have already begun to engage the private sector in this process. Were an investor to express interest in the energy sector, we would be willing to accommodate them. There are others that would prefer to go into partnership with the government, and these are also invited. We are very open; there is no rigid approach or constraining legal framework. This is a very flexible and open approach, and the key issue here is negotiations with investors.

How will the restructuring of TANESCO increase the availability of electricity for all Tanzanians?

Restructuring TANESCO is obligatory for technical reasons. The predecessors of TANESCO were established during the colonial era. In 1931, during the British period, two companies based in Dar es Salaam formed a single power utility company. The contemporary TANESCO was established in 1964. You do not need to be a high-level professional to grasp what it means when from 1931 until today, only 21% of the country's population has access to electricity, despite our independence in 1964. This indicates that the structure of the national power utility is insufficient to accelerate the widespread availability of power. The second point is that TANESCO has accumulated substantial debt. If we are not careful, it will continue accumulating, and, thus, the issue must be urgently addressed. Since 100% of TANESCO's equity goes to the government those huge debts belong to the government and the people. We have decided as the government to clear these debts. We have to change our current approach; but this requires systemic change to prevent a return to the old problem. The third reason is that if our intention is to become a middle-income country, we must have an adequate, reliable, and predictable power supply. If from 1964 up to today, TANESCO can only generate 1,438 MW, it cannot take us much further toward being a middle-income country and needs restructuring. Economic, technical, and socioeconomic reasons compel us to do this. We have requested that TANESCO itself devise a proposal for a highly efficient, quality-driven organization. A second document is to be submitted by others at the ministry regarding their own perspective on change. A third and final proposal will be delivered by a consultant mandated by the African Development Bank. Tanzania's transmission systems are obsolete, while distribution and efficiency are poor, with a grid loss ratio of more than 20%. We cannot reduce this with the current TANESCO structure.

How does science and technology accelerate growth of the energy and mining sectors and help you to focus on the 2025 goals?

I am a geologist by profession, and I strongly believe that science has the solutions to the problems of global society. I recently told Parliament and the people of Tanzania that economic prosperity for the 21st century, and the subsequent century, has a very simple solution when you put it on paper. However, it is very hard to interpret and implement that equation. Our contemporary economic prosperity is the sum of science and technology, plus innovation, financial and human capital. These are the five obligatory ingredients for any country to become prosperous in our times, both today and tomorrow. Prosperity depends upon the absorption and implementation of knowledge, which in turn underpins innovation. This requires the support of adequate resources, finances, and human capital.

“ We are very open; there is no rigid approach or constraining legal framework. "