Rural Electrification Tanzania
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Reference is made to the request from the Ministry of Finance, Tanzania, in December 2014 requesting Sweden for a financial contribution of 600 000 000 SEK from Sweden and £ 30 000 000 from the United Kingdom to the government agency Rural Energy Agency (REA) for the 2015-2019 period with the purpose of scaling up modern rural energy access. The development ob...
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More about the contribution
Reference is made to the request from the Ministry of Finance, Tanzania, in December 2014 requesting Sweden for a financial contribution of 600 000 000 SEK from Sweden and £ 30 000 000 from the United Kingdom to the government agency Rural Energy Agency (REA) for the 2015-2019 period with the purpose of scaling up modern rural energy access. The development objective of the intervention is poverty alleviation in rural mainland Tanzania through the providing of access to modern energy services based on renewable resources. Lack of access to electricity has been shown and is widely accepted as one of the main constraints to growth.REA was established in 2007 under the Rural Energy Act to promote and facilitate access to modern energy services in rural areas of mainland Tanzania by providing grants, subsidies and capacity building to developers of rural energy projects. The ambition in Tanzania is to increase energy access in the rural areas from 21% in 2014 to 50% per cent by 2020. In this regard REF is key to reach those results.The overall objective of the proposed programme is to contribute to the Tanzanian Government’s aim to reach the UN initiative Sustainable Energy for All (SE4ALL) ambition of universal energy access by 2030. Support to energy use that will lead to increased economic activity will be stimluated, with specific focus on female business owners. The Programme will also have incentives for connecting the poorer household segments, where female headed households are constituting a large share.The Programme funds will be divided into two REF financing windows: The on-grid electrification window includes two predefined village electrification schemes as well as two Result Based Finance (RBF) pilots which will be tested for so called densification of connections. It also includes a sum that will be used for distribution extensions based on RBF but defined more specifically at a later stage through the annual planning process. Parts of the financing in this on-grid window will be used for technical assistance and community mobilization.The off-grid, private sector renewable energy window aims at attracting and leveraging private sector finance by applying various financial instruments with the threefold purpose of;• Increasing access to renewable energy services in rural areas not yet reached by the national grid;• Achieve a market expansion for rural renewable energy provision;• Reaching the poorest household segment (‘Bottom of the Pyramid’) in already electrified areasDue to the required in-depth knowledge of selecting and applying suitable financial instruments, REA will outsource the financial management of both the on-grid as well as the off-grid component to a Trust Agent. The Trust Agent is the commercial bank Cooperative Rural Development Bank, CRDB, and has been selected through a procurement process. The Programme will be closely coordinated and aligned with support from other development partners supporting rural renewable energy in Tanzania. These include support from World Bank, IFC and USAID, EU and Norway. Division of labour, joint technical assistance, joint programming and allocation of expertise, joint monitoring system, and financial instruments complementarities are main features of this coordination.The Programme will provide predictable funding in support of REA’s goals and priorities, as embedded in REA’s five year Strategic Plan 2012/13 – 2016/17 adopted by the Rural Energy Board, and will be highly relevant to Tanzania’s national development priorities in the Five Year Development Plan as well as the Second National Strategy for Growth and Reduction of Poverty (MKUKUTA II).
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Total aid 599,119,431 SEK distributed on 0 activities
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Result
During the period under review, the Agency received a total of TZS 247.99 billion from Development Partners which was used to finance rural energy projects. As of the reporting period, a total of 10,435 villages out of 12,318 villages (GN of 2018), equivalent to 84.7% are connected to electricity by extending the infrastructure to the village headquarters. During the period under review 1,796 villages were electrified. It should be noted during the reporting period Sweden did not disburse to REA, but REA was using funds for ongoing project activities which was disbursed during the previous year. The report covers progress of projects implemented under the support of Development Partners (DPs) and the performance of the Rural Energy Fund (REF) in provision of modern energy services in the rural areas of Mainland Tanzania. Some of the key milestones achieved during the period include electrification of 45 villages out planned 65 under the Turnkey Phase III Round I project, electrification of 1,751 villages out of 2,157 planned for 2022/23 under Turnkey Phase III Round II, completion of structural works of 1x 20MVA, 220/33 kV Substation in Ifakara and extension of distribution line in Kilombero and Ulanga Districts. Under Result Based Financing, 399 households were connected which lead to connection of 17,302 out of 20,020 initial customers which is equivalent to 86.42%. The RBF is 100% funded by Sweden. Further, through the DPs initiatives, the BTIP VEI achieved connection of 8,617 cumulatively a total of 32,628 out of 35,391 initial customers were connected equivalent to 92%. The project electrified 115 electrified and six (6) hamlets. Initiatives are ongoing to electrify rural health and water facilities to prevent spread of infectious diseases including COVID19 whereby 229 out of 403 facilities equivalents to 50% were electrified. Contractors for Densification IIB have completed site mobilization, detailed survey and design & drawings have been completed, funded by Sweden and Norway. Furthermore, 200 hamlets were electrified through REDP 2A during the period under review and 71,639 customers were connected. Cumulatively, a total of 1,065 out of 1,265 have been electrified and 73,557 customers have been connected equivalent to 71.3% increase, funded by Sweden, Norway and EU. Initiatives under the Peri Urban are also going on to ensure those areas are electrified according. A total of 127 villages electrified equivalent to increase of 76.97 percent. Cumulatively a total of 165 villages electrified, which is 100% and 11,860 customers connected, cumulatively makes a total of 13,418 out of 16,707 initial customers equivalent to 80.3% were connected. The Agency received UNQUALIFIED OPINION for fiscal year 2022/23 from the audited conducted by Controller and Auditor General. According to the Annual Progress Report, the Agency will continue to perform its obligations to ensure there is a good value for money and the intended results is achieved.
The objective with this rural elecrification programme is to electrify large areas of rural Tanzania that have to date not been electrified. This will be achieved both with grid extension projects and with offgrid electrification, e.g. isolated so called minigrids. There will also be densification projects, adding more customers to already electrified rural areas. Electrification is just a means to an end. It will enable e.g. households to light up for children to study better, for charging of phones, watching TV etc. It will also enable smallscale businesses to develop, rural schools to light up, medical clinics to store medicine and provide safer birth deliveries. Generelly, electrification is one of the key enablers for development. The development objective of Tanzania's Rural Energy Agency (REA) and its Rural Energy Fund (REF) is socio-economic development and poverty alleviation in rural Tanzania through the provision of increased access to modern energy services. The overall objective of the Swedish support to REA and the REF is to contribute to reliable and sustainable energy access for poor people with low climate impact, as well as increased procurement transparency and regulatory improvements that strengthens private sector investments in renewable energy.
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