New IDA Financing to Add One Million Connections to Electricity Grid in Tanzania

WASHINGTON, September 26, 2022-The World Bank Board of Executive Directors has today approved additional financing of $335 million to support Tanzania’s efforts to scale up grid extension and grid densification, following the country’s important achievement of one of the fastest electricity access expansion rates in Sub-Saharan Africa over the past decade.

The new International Development Association (IDA)* credit to the Tanzania Rural Electrification Expansion Program (TREEP) will facilitate an additional 1,000,000 last-mile grid connections, including 8,500 education facilities and 2,500 healthcare facilities, as well as provide renewable energy options and clean cooking solutions to rural households.

“Scaling up access to modern forms of energy is an important component of the Government of Tanzania’s long-term economic growth plan,” said Preeti Arora, acting World Bank Country Director. “We are pleased that our support to this objective over the past five years helped to provide electricity access to over four and a half million people including 5,900 education facilities, 1,664 healthcare facilities, and 14,316 business enterprises.”

The initial IDA financing of $209 million for TREEP was approved on May 31, 2016 and the program became effective on March 17, 2017. Implemented as a Program for Results (PforR) by the Rural Energy Agency (REA) and the Ministry of Energy, TREEP has supported the government’s National Rural Electrification Program (NREP) by innovatively linking the disbursement of funds directly to the delivery of defined results and achievement of objectives, which include expanding rural access to electricity, increasing the supply of renewable electricity in rural areas, and strengthening the capacity of sector institutions to deliver on the NREP.

Despite Tanzania’s impressive progress in increasing electricity access from 7% in 2011 to 38%in 2020, a large gap remains between electricity access rates in urban areas (73.2%) and rural areas (24.5%) and between national grid coverage (78.4%) and overall access/connectivity rate (38%). The NREP’s new Rural Energy Master Plan 2022-30 builds on the implementation experience of the Prospectus 2013-22 to provide a roadmap to reach 100%energy access by 2030.

“The historical emphasis on backbone grid extensions resulted in the national grid reaching 78% of villages, but remained out of connection distance for most households,” said Jenny Hasselsten, World Bank Senior Energy Economist and Task Team Leader for TREEP. “With this additional financing, TREEP is expected to electrify 15% of the current off-grid population which will increase the access rate in Tanzania from 38% to 45%.”

The additional financing to TREEP is co-financed by a grant from the Energy Sector Management Assistance Program (ESMAP) in the amount of $6 million. In addition to expanding grid connections, TREEP will support implementation of the National Renewable Energy Strategy and the piloting of a Solar Home System (SHSs) and clean cooking results-based financing programs for rural households. TREEP will also support capacity strengthening through annual sector capacity building plans and the design and implementation of a sector-wide monitoring and evaluation framework to facilitate project tracking by the Ministry of Energy, as well as collaboration between various government agencies and stakeholders.

“The cooking subsector in Tanzania extensively utilizes biomass, despite recent progress in the use of modern fuels, with firewood and charcoal as the primary cooking fuels for most households. This is exacting a high toll on the country in terms of premature deaths or lost productivity due to adverse health impacts from exposure, as well as deforestation and associated effects,” said Mbuso Gwafila, World Bank Senior Energy Specialist and Co-TTL.

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