While energy demand increased by 11% a year between 2011 and 2014, Tanzania is seriously lagging behind in electricity production. Indeed, only 24% of the population has access to electricity, with an unequal level of services. The financial difficulties encountered by Tanesco, the national operator, hold back the public investments which would finance the maintenance and development of the grid. Generation costs remain high, as is the case with losses, which reach some 20% of the electricity produced. Tanzania does, however, have strong renewable energy potential: hydro power, gas, geothermal energy, solar energy…
Private investment in these untapped resources would allow actors in the productive sector to produce their energy themselves, reduce consumption, and have access to better quality electricity. The Tanzanian Government has established policies to promote clean energies and has made public investments towards this end, while the regulatory framework also aims to promote private sector involvement.
AFD is providing its support to Bank of Africa – Tanzania (BOA-T) in the context of its SUNREF regional program. This support is in two forms:
- A loan to BOA-Tto allow it to allocate loans to finance renewable energy projects or energy efficiency projects that aim to significantly reduce a company’s energy consumption;
- The implementation of technical assistance, benefitting from the expertise of BURGEAP and the Frankfurt School of Management, and under the responsibility of national and international partners: Confederation of Tanzanian Industries (CTI), in cooperation with the Kenya Association of Manufacturers (KAM). This technical assistance is financed by the European Union and is provided upstream to project promoters (companies in industry or the service sector), for the preparation of their proposals, and downstream, to bank branches likely to allocate a loan which will make it possible to move on to the implementation stage.
This is AFD’s first concessional credit line for renewable energy and energy efficiency development in Tanzania.
- Annual reduction in CO2 emissions of 40,000 t;
- Reduction in Tanzania’s dependence on fossil fuels; Improvement in the competitiveness of local companies;
- Private sector involvement in clean energies.
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