Tanzania: New Procedure to End Dubious Contracts in Energy Sector

Procedure to invite investors to invest in the energy sector will now be done openly to avoid dubious contracts, Energy and Minerals Minister Professor Sospeter Muhongo has announced.

Prof Muhongo said yesterday that the ministry is later next month going to start new system of publicly welcoming interested companies to invest in electricity production plants, starting with the gas-fired power plant at Somanga Fungu in Lindi Region, which will produce between 200 and 400 MW.

He said on August 30, the ministry would start to improve the system of inviting investors in the gas sector by openly welcoming those who want to invest in Somanga Fungu plant.

Prof Muhongo revealed that his ministry would extend the invitation internationally so that anyone interested could bring their offers, which would compete for the contract.

"This will avoid bad contracts that many Tanzanians have complained about. You must have taken note that some of us were not yet in office when the contracts were entered. But we find ourselves carrying the burden of the agreements, which we are not aware of," he said.

"We want to get rid of the system whereby an investor comes and enter into secret talks and later sign the contracts, which have always been bad for the country," he noted.

The minister further noted that corruption-laced contracts in the energy sector have been adding a burden to the government. He said after the ministry is done with the Somanga Fungu investment deal, it would move to announce investment opportunities in other all sources of energy like coal, hydro power and wind.

He said the investment opportunities in the energy sector would take on board both local and foreign investors, who would be interested and qualify for the investment. Tanzania has experienced real annual GDP growth rates of three per cent to seven since the 1990s.

In 2012, Tanzania's real annual GDP grew by 6.4 per cent according to 2014 World Bank (WB) report. The report says despite these positive developments, under-investment and weak financial performance in Tanzania's energy sector continue to be significant barriers to continued economic growth.

Electricity demand in the country is increasing rapidly mainly due to accelerated productive investments, increasing population and access to the energy source. The government has been encouraging investments to increase available generation, further expand access, reform the distribution system and develop new indigenous sources of energy.

Source: Tanzania Daily News