9 April 2013 – The World Bank has approved two International Development Association (IDA) credits amounting to US$121.46 million for Tanzania to undertake power sector reforms, forge public-private partnerships, and strengthen national capacity for the optimal use of the country’s natural gas reserves.

Tanzania’s minister of energy and minerals, professor Sospeter Muhongo says the country is committed to reducing the cost of power supply by expanding the use of domestic natural gas in electricity generation and promoting private sector participation in both the power and gas sectors. This is as reported in the East African Business Week.

The Tanzanian power sector is facing major challenges due to below average rainfall that have reduced hydropower generation and due to inadequate past investment in power generation capacity.

As a result, the state-owned electricity utility Tanesco has increased the use of expensive emergency generation plants that have placed the sector in financial difficulties. The energy sector’s financial woes are expected to peak in 2014, bringing the cumulative deficit over the period 2011to 2014 to something between US$760 million and US$1 billion.

Less than 19% of Tanzania’s 46 million citizens have access to electricity. "With these two new operations, the World Bank will help to place the power sector on a more sustainable path, and will help create foundations to maximise benefits of natural gas reserves for all Tanzanians," the World Bank’s country director for Tanzania, Philippe Dongier says.