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Tanzania Struggles to Tap Natural Gas Potential

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Only about two percent of rural residents in Tanzania have electricity. Here, the Swedish International Development Cooperati (SIDA) has installed access. (Photograph by SIDA/Flickr)

Despite a yawning deficit in energy supply that has plunged Tanzania into a serious electricity crisis, the country has failed to tap the massive potential of recently discovered natural gas stores.

Although the government is boasting of major gas discoveries in the country’s offshore fields, very little investment is already under way to supply gas for electricity generation.

Over the past several years, Tanzania has discovered and developed gas deposits in four areas: Songo Songo Island off the eastern coast; Kiliwani, near Songo Songo; Mnazi Bay in southeastern Tanzania; and Mkuranga, near Dar es Salaam. Two of these areas are already being tapped to produce electricity for the country’s commercial capital, Dar es Salaam. But it is not enough to alleviate the nation’s energy woes.

According to the country’s Ministry of Energy and Minerals, the current discovered natural gas reserves hold over 10 trillion cubic feet, a third larger than the previous estimate of 7.5 trillion cubic feet.

These stores have the potential to relieve the country from its heavy reliance on non-performing hydropower, which constitutes 71 percent of total electricity generation. Water simply isn’t flowing as needed through the hydro turbines, due to persistent drought across East Africa.Power outages so far have crippled various sectors of the economy, affecting ordinary people whose livelihoods depend on electricity. Manufacturers have suffered huge losses because of power shedding, according to the Confederation of Tanzania Industries.

According to the government’s Tanzania Petroleum Development Corporation (TPDC), currently only about 5 percent of the country’s gas is being processed by the British firm PanAfrican Energy (a subsidiary of Orca Exploration), whose offshore processing plant on Songo Songo Island in the Indian Ocean has the capacity to produce over 110 million cubic feet of gas per day.

The company has a 229-kilometer pipeline connected to the electricity plant in the commercial city of Dar es Salaam, which supplies enough gas to produce 112 megawatts of power.

A researcher with TPDC, Joyce Singano, says massive investment in natural gas could offset the current shortage of electricity generation, adding that it would also relieve the state-run utility firm, TANESCO, from the heavy costs of production using diesel and thermal turbines.

“From a technical point of view, gas exploration and production requires commitment and heavy investment. There has to be a political will to accomplish this mission, since the setting up of the infrastructures to [meet] total energy demand needs a lot of funds,” she said.

Tanzania’s interconnected national grid uses a combination of sources to deliver about 773 megawatts of electricity—including natural gas and diesel oil, but mostly, hydropower, according to TANESCO. In what appears to lack of political will among leaders to make adequate domestic use of Tanzania’s energy resources, Energy and Minerals Minister William Ngeleja has been clear that the government is considering exporting some of its natural gas.

“Preliminary indications show that Tanzania may have sizeable gas reserves of more than 10 trillion cubic feet, which can beneficially be developed to meet our local demand and for export,” Ngeleja told a press conference recently.

But export of gas seems unlikely to happen anytime soon, given TANESCO’s inability to meet domestic demand.

In its bid to further explore gas deposits, Tanzania has sought a loan amounting to $1.06 billion from China to build a natural gas pipeline from Mtwara region in the southern part of the country to Dar es Salaam.

The pipeline would relieve the government from huge cost of purchasing gas from firms such as PanAfrican Energy to run electricity turbines. Minister Ngeleja has called it “a priority and strategic project for the government in pursuit of securing sufficient natural gas.”

He added that implementation of the pipeline project, which would enable thermal power plants to switch from expensive oil imports to natural gas, was expected to start in December this year.

Meanwhile, Tanzania’s gas production will get an incremental bump in the coming months as PanAfrican Energy begins work on a $130 million expansion of its Songo Songo operations, which would more than double capacity. A drilling rig for that work was delivered this week.