Unanswered questions in Tanzania’s Ethiopian electricity deal

One, to combat the crippling transmission losses. Transmitting power from sources in Rufiji and Dar to the North incurs 15 percent losses, costing Sh32 billion. Two, to capitalise on cheaper imports. Ethiopia’s electricity is offered at 7.7 cents per kWh—significantly below Tanzania’s tariff of 13 cents per kWh. Three, to build on established regional precedents and integration. Tanzania already imports power for border regions (Rukwa, Kagera, and Tanga). Four, to ensure grid integration. Importing power from Ethiopia aligns with the EAC’s vision of interconnected East Africa Power Pool (EAPP). This strategy not only enhances efficient cross-border energy trade but also bolsters grid resilience and stability.

On paper, it sounds rational, but always dig deeper. After all, this is Tanzania.

Initially, the announcement sparked an uproar. How could importing power from Ethiopia be cheaper than transmitting it from Rufiji? And why does Tanzania—which claims a 1,000MW surplus—still need imports?

Amidst the noise, voices of reason emerged. Zitto Kabwe, ever the educator, did some good work to demystify the regional grid mechanics: clarifying that we wouldn’t be ‘trucking’ electrons from Addis Ababa. Yet, glaring questions lingered.

I agree with the technical premise: transmitting power from Rufiji to Arusha is inefficient. The ideal distance is usually around 200km, but we often go beyond 400km. This costs Tanzania hundreds of billions annually. Importing Ethiopian power is a band-aid-on-a-bullet-wound solution.

The real issue is our failure to decentralise power generation. Despite 52 geothermal sites nationwide—including all the northern regions—the government’s 2022 pledge for 200MW geothermal by 2025 lies dormant. Solar and wind? Germany, with far less sun, has built 100GW of solar. Our tropical north, ripe with potential, sees no action. A $1.3 billion LNG pipeline, meant to fuel northern gas plants after extension to Tanga and Kenya, gathers dust despite taxpayer payments. Coal? We sit on enough coal to power East Africa for a century yet have no coal plants. Climate concerns? China has 2,000 coal power plants – so let’s stop that climate change talk nonsense.

The crux of the matter, for me, isn’t whether importing from Ethiopia is a solution, but whether it is the best solution, or even a justifiable one. Addressing transmission losses shouldn’t solely rely on external solutions. We have options within our own grasp. We should have invested in power generation capacity within the northern regions themselves.

Let’s go deeper still.

This power deal isn’t new. Signed years ago, possibly under Felschemi Mramba’s Tanesco leadership, it made sense when Tanzania paid 28–40 US cents/kWh to emergency IPPs like IPTL and Symbion. At 7.7 cents, it was a lifeline. But how is 7.7 cents/kWh defensible today?

 At 7.7 cents for 100MW, this deal will cost Tanzania Sh177 billion annually. By 2030, that will be over Sh1 trillion! For less than half that amount, you can construct a 200MW power plant within a year, generating power at well under 4 cents.

Consider this: Just last year, Tanzania decommissioned a 200MW Songas plant, widely considered a top performer in our energy sector. Why? The government rejected Songas’ 6.5 cents per 1kWh renewal offer, calling it “too expensive”, Yet 7.7 cents for Ethiopian imports is now considered cheap. Other offers for power generation, some at even 4.0 cents, have also been turned down. The math defies reason.

Deeper still.

If you are observing the sector, you will keep hearing of grand plans for Zanzibar’s power sector, investments reaching hundreds of megawatts. I applaud that. Tanzania needs lots of power. But Zanzibar’s population is a mere 1.9 million. The combined population of Arusha, Kilimanjaro, Tanga, and Manyara is 10 million. Arusha, Moshi, and Tanga – they all surpass Zanzibar in size. Where are their grand power projects? It appears that the government’s logic is “import for the North but generate for Zanzibar”. Why? If something is good for Zanzibar, shouldn’t it be good for other areas in Tanzania, too?

To be clear, cross-border power purchases, in principle, are not inherently flawed. For remote areas, for grid stability, for regional cooperation, they make sense. But this Ethiopian deal highlights a problem allowed to fester until a foreign import becomes the only palatable “solution”. But why aren’t we fast-tracking building more power plants, diversifying our energy sources, fostering a dynamic power generation sector? The US, with its 11,000 power plants, understands the importance of distributed generation. Why are plants being decommissioned, IPP deals terminated, renewable energy offers ignored? Why does the government cling so tightly to power generation when private sector investment could inject much-needed dynamism?

The reasons provided for the Ethiopian deal are not good enough. Ethiopians and Kenyans are good people. Regional cooperation is vital. But squandering our people’s money for a lack of leadership? That is too high a price for Tanzanians to pay.