On-grid power projects in Tanzania

Tanzania Electric Supply Company Ltd (Tanesco) has issued three invitations for qualification for utility-scale power projects in the country. The utility is inviting companies to build, own, operate and transfer solar and wind plants as well as looking for suppliers for the rehabilitation of a cascade of hydroelectric projects at Pangani Falls.

Tanesco is looking for companies to develop up to 200MW of wind power at Singida, Njombe and Dodoma regions. The tender outlines a heavily ambitious, if not impossible, target of completing the projects between 2018 and 2020, the year of the next general election. Each project will be larger than 50MW but no more than 100MW can be connected to a single substation.

There have previously been discussions with existing project developers about the possibility of ‘grandfathering’ their projects after President John Magufuli stated early in his presidency that all projects would be competitively tendered. Grandfathering allows projects to continue to be developed under the previous regulatory regime in recognition that investments have already been made in development on the basis of those rules. Notable amongst these projects is Wind East Africa Singida wind project, which was being developed by Aldwych International Ltd – now part of Anergi Holdings Ltd – Six Telecoms and International Finance Corporation (IFC) Infraventures, part of the World Bank Group.

African Energy has not yet established whether an exemption has been secured for the project. The tender documents, however, say that “prospective developers who have earlier expressed their interests to develop wind power projects by way of concept note, memorandum of understanding or any other form and have submitted documents to Tanesco are advised to participate in this tendering process”.

Tanesco is also inviting companies to qualify to develop up to 150MW of solar photovoltaic (PV) capacity in Dodoma, Singida, Shinyanga, Mwanza, Simiyu and Iringa regions, also by 2020. Projects must be larger than 20MWp but no more than 50MWp will be allowed at any one substation. Again, developers who already have projects are advised to bid.

Submissions for both the wind and solar tenders are due by 19 October. Contact: Secretary of the tender board, Tanesco Head Office, Umeme Park Building, Ground Floor, Room No. 4 Ubungo Area, Morogoro Road, P.O. Box 9024, Dar es Salaam. Tel: +255 222 210 231 / 210 232.

The utility is also seeking suppliers in ten tenders for the rehabilitation of a series of hydropower plants comprising the new Pangani Falls hydroelectric plant. The tenders are mostly for the supply and installation of new equipment or repair and overhaul of existing equipment at the plants. The deadline for submissions in these tenders is either 2 or 18 October. Contact: Zonal Procurement Specialist, Fifth Floor, Room No. 503/505, Tanesco Regional Office Building, Swahili/Market Road, Tanga Region. Tel: +255 685 630 123 / 788 507 760 / 717 629 038.

Interest in the solar and wind tenders is likely to be limited. Tanesco has accumulated substantial arrears to its existing suppliers and President John Magufuli has refused to allow any increase in tariffs, even directing Tanesco to find ways of lowering tariffs. This comes despite Tanesco’s weak financial position, which has been made worse by bad governance both at the utility and the government, and the already below cost tariff.  

Alongside these issues are disputes with international companies. Tanesco has been at the centre of a number of high-profile international arbitrations, including with Standard Chartered Bank Hong Kong (SCBHK) and Symbion Power. SCBHK won its case and sources inside both the government and private sector believe that Symbion Power have a strong case as well.

This means that moves to force arbitrations to take place in Tanzania through the Public Private Partnership (Amendment) Bill 2018 will deter many investors, as it reduces their ability to seek redress against the government. Some Tanzanian court decisions were strongly criticised in the High Court in London, in the United Kingdom, in a case brought by SCBHK against VIP Engineering and Marketing Ltd, Independent Power Tanzania Ltd and Pan Africa Power Solutions (T) Ltd which concluded in 2015.

Coal tender

Kibo Energy plc, which is developing the Mbeya integrated coal power project in Tanzania, announced that a tender process has also been initiated by Tanesco for “superior coal technology and integrated gasification combined cycle power plants”. African Energy has not seen the tender, which was released on 18 September, according to Kibo. The company said that it will seek clarification as to whether the tender will affect its negotiations with Tanesco over a power purchase agreement.

 

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