Electricity generated from natural gas, rather than from oil imports, and then sold to the state-run Tanzania Electric Supply Company (TANESCO), is expected to save the Tanzania energy sector as much as USD 6 billion by the year 2024.
Since 2004, electricity has been sold to TANESCO by Songas, which is an alliance between the state-run Tanzania Petroleum Development Corporation and the Bermuda-based Globeleq.
Currently, the natural gas sold by Songas generates approximately 190 Mega Watts of power and comes from deposits on Songo Songo Island, off the Indian Ocean coast near Dar es Salaam.
According to representatives from Songas, natural gas has already begun to be extracted from local deposits and has subsequently been used within the country.
In addition, according to the government of Tanzania, apart from the deposits that have been found in Songo Songo, two trillion cubic feet of proven deposits have also been discovered southeastern Tanzania, in Mnazi Bay.
Songas representatives have said that, because of these findings, the east African economy has saved approximately USD 1.2 billion and, in doing so, has been able to redirect some of the funds which would have otherwise been used in order to purchase oil for the purpose of producing power.
At a meeting of regional electricity regulators earlier this month, the director of business development for Songas, Oswald Mutaitina, spoke about the predicted savings that his company would provide as well as the future plans and needs of the company in order to accomplish its expansion and development projects.
“Because the power purchasing agreement is for 20 years, we predict to bring more savings, maybe $5-billion to $6-billion,” said Mr. Mutaitina, “[and for] the expansion project we are looking at approximately $60-million.”
According to Mr. Mutaitina, the current energy demand in Tanzania is between 100 million and 105 million cubic feet per day and, in order to address the ever-rising demand, Songas was in the process of expanding its processing capacity to accommodate 140 million cubic feet per day by the middle of 2010.
Currently, the overall power production capacity of the country is 600 MW, which is still below the peak demand of 700 MW, but is also slightly above the average overall demand of 570 MW.
According to recent utility forecasts, the demand for energy in the country is expected to grow at a rate of between 8 and 10 percent each year.
Furthermore, according to TANESCO estimates, in order to meet the rising demand, the investment requirement over the next five years will be 1.5 trillion shillings.