By Dr. Bravious Kahyoza, PhD, Senior Economist at TICGL and Dr. Jasinta Msamula, PhD. Lecturer Mzumbe University. 

The global energy landscape is undergoing a profound transformation as countries strive to balance electricity reliability with the shift to renewable energy. Public-Private Partnerships (PPPs) have emerged as a key strategy to bridge funding gaps, leverage private sector expertise, and distribute project risks.

For Tanzania, embracing energy-based PPPs presents a significant opportunity to enhance electricity access, drive economic growth, and modernize its energy infrastructure.

Global Success Stories in Energy-Based PPPs

Around the world, energy-focused PPPs have delivered groundbreaking achievements, offering valuable lessons on structuring effective partnerships.

The UK, for example, has successfully harnessed offshore wind energy by awarding long-term contracts through transparent bidding processes.

The approach enabled the development of over 10 GW of offshore wind power, including the Dogger Bank Wind Farm (World Bank, 2024).

In Brazil, the Belo Monte Hydropower Project exemplifies the power of government-backed PPPs in delivering large-scale, sustainable energy solutions. With an installed capacity of 11,000 MW, it highlights how well-structured partnerships can mobilize private investment for national energy security.

Various PPP models have facilitated major energy infrastructure projects globally. The Build-Operate-Transfer (BOT) model, for instance, has been instrumental in Turkey’s power grid renovations, allowing private firms to construct and manage facilities before eventually transferring ownership to the government (World Energy Council, 2020).

Likewise, concession agreements have played a crucial role in electricity grid modernization in Chile, enabling commercial operators to manage infrastructure while ensuring public service obligations are met (World Bank, 2021).

Lessons from Africa’s PPP Experience

Closer to home, Kenya’s Power Purchase Agreements (PPAs) have successfully attracted private investment into large-scale energy projects, such as the Lake Turkana Wind Farm—Africa’s largest wind farm, which generates 310 MW and supplies 17% of Kenya’s electricity (African Development Bank, 2018).

The project underscores the role of PPPs in Africa and highlights the importance of interconnection agreements for integrating independent power producers into national grids.

Similarly, South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has been a game-changer.

The program has attracted $15 billion in private investment and awarded contracts for 64 renewable energy projects, generating 3,922 MW of clean energy (World Bank, 2024).

These successes demonstrate that well-structured PPP frameworks can attract international funding, reduce investment risks, and create scalable energy models.

The Future: Climate-Smart PPPs and Sustainable Energy

As the global focus shifts towards sustainable and resilient infrastructure, climate-smart PPPs are becoming increasingly vital.

The World Bank emphasizes the need for climate risk assessments, environmental impact studies, and disaster preparedness planning in energy projects.

A notable example is Japan’s Sendai School Meal Supply Centre, which was designed with resilient infrastructure, allowing it to resume operations quickly after a natural disaster (World Bank, 2017).

Meanwhile, the University of Iowa’s energy PPP initiative sets a benchmark for zero-carbon transition goals, demonstrating how private sector innovation can drive sustainability objectives (PPP Climate Report, 2021).

These global trends highlight the growing importance of climate resilience in energy projects—an area Tanzania must also prioritize as it explores energy-based PPPs.

From global best practices and tailoring PPP models to its specific needs, Tanzania has the potential to unlock vast renewable energy opportunities, strengthen its electricity infrastructure, and position itself for sustainable economic growth.

Tanzania’s Position: Opportunities and Challenges

Despite its vast energy potential, Tanzania faces significant hurdles in fully leveraging its resources. Bureaucratic delays, inconsistent regulations, and limited private sector participation have slowed progress.

However, recent developments—such as the Julius Nyerere Hydropower Plant—suggest that policy shifts may be underway, signaling new opportunities for growth.

One of Tanzania’s key energy-based Public-Private Partnership (PPP) models is the Build-Own-Operate (BOO) approach, seen in projects like Songas Limited.

Songas has played a crucial role in national energy generation, yet it has faced legal and operational challenges that highlight broader structural inefficiencies (Kanyamyoga, 2018).

In addition, issues such as opaque procurement processes, insufficient financial guarantees, and over-reliance on hydropower continue to pose risks, particularly in times of drought. If Tanzania is to unlock its full energy potential, these challenges must be addressed head-on.

What Needs to Be Done?

To establish a robust and investor-friendly energy sector, Tanzania must take decisive action. Strengthening regulatory frameworks is essential, including enacting clear, transparent, and investor-friendly energy policies, establishing open dispute resolution mechanisms, and introducing competitive bidding systems like South Africa’s REIPPPP to ensure fair project allocation.

Additionally, enhancing investment incentives by introducing tax incentives, fixed tariffs, and long-term Power Purchase Agreements (PPAs) will help reduce investor risks.

Diversifying energy sources by investing in solar, wind, and geothermal energy will reduce dependence on hydropower and mitigate climate-related risks.

Improving institutional capacity is equally important. Establishing a dedicated PPP unit within the Ministry of Energy would streamline approvals, enhance regulatory oversight, and facilitate investor coordination.

Implementing capacity-building initiatives for energy-sector regulators will also ensure smoother facilitation of PPP projects, drawing lessons from successful PPP models in Brazil and Kenya.

The Way Forward

Tanzania stands at a pivotal moment. By adopting global best practices and refining its PPP framework, the country can unlock new energy opportunities, enhance power reliability, and drive long-term economic growth.

A transparent, structured PPP model will not only attract investment but also ensure energy security and sustainability for future generations. While the challenges are considerable, the rewards are equally significant. With the right reforms, Tanzania’s energy sector can become a powerful driver of national development.