• Overview of Licensing Requirements
• Application Process
• Provisional Licenses
• Post-Compliance Requirements
• General Obligations for Licensees

As the world shifts towards cleaner and more sustainable energy sources, Tanzania is making significant strides in harnessing the power of the sun to meet its growing energy demands. With its abundant sunshine, the country is uniquely positioned to become a leader in solar power generation, driving economic growth and improving energy access for its citizens.

In recent years, Tanzania has launched several ambitious solar power projects aimed at expanding the nation’s renewable energy capacity. These initiatives are part of a broader strategy to diversify the energy mix and reduce reliance on fossil fuels, which have long dominated the country’s energy sector.

One of the most notable developments is the installation of large-scale solar farms in various regions of Tanzania. These solar power plants are designed to generate electricity on a commercial scale, contributing significantly to the national grid. The Dodoma Solar Park, for example, is expected to produce up to 100 megawatts of electricity, powering thousands of homes and businesses. This project, funded by international investors and supported by government incentives, represents a major leap forward in Tanzania’s renewable energy journey. In addition to large-scale projects, Tanzania is also focusing on decentralized solar solutions to address energy access challenges in rural areas. Solar home systems and mini-grids are being deployed to provide reliable and affordable electricity to off-grid communities. These initiatives not only improve the quality of life for residents but also foster economic development by enabling small businesses and educational institutions to operate more effectively.

Tanzania Power Sector Overview

In Tanzania, the Ministry of Energy is in charge of overseeing the power sector. This includes shaping and evaluating government policies on energy and gas, organizing the sector, and negotiating agreements for the Government of Tanzania (GoT). The Electricity Act of 2008, along with its regulations, forms the core of the legal framework governing electricity.

The Tanzania Electric Supply Company (TANESCO) is the main player in the country’s power sector. As a state-owned utility, TANESCO handles the generation, transmission, distribution, and sale of electricity throughout Tanzania. It operates under government ownership and manages the transmission and distribution networks. TANESCO is also the primary buyer from independent power projects, like Songas, which uses local natural gas resources to contribute to Tanzania’s energy mix. Other independent power producers also supply electricity exclusively to TANESCO.

Regulation of the power sector falls under the Energy and Water Utility Regulatory Authority (EWURA). EWURA is responsible for regulating the power, water, and parts of the petroleum and natural gas sectors. It issues licenses for electricity activities as per the Electricity Act of 2008, sets and enforces tariffs and fees, and reviews electricity supply agreements, including Power Purchase Agreements (PPAs), in consultation with the Minister of Energy.

For rural areas, the Rural Energy Agency (REA) works to improve energy access by supporting mini-grids and off-grid solutions. It funds rural energy projects through the Rural Energy Fund, which provides grants for capital expenses. The Rural Energy Act of 2005 is the legislative foundation for these efforts.

Basic Application Requirements:

• Certified Copies of Registration Documents: Proof of the applicant’s legal standing.
• Proof of Payment of the Application Fee: A non-refundable fee as prescribed by the Authority.
• TIN and VAT Registration Certificate: Essential for tax and business compliance.
• Project’s Financing Source: Detailed information on the financial backing of the project.
• Environmental and Social Impact Assessment Certificate: Proof of compliance with the Environmental Management Act.
• Additional Information: Any other details required by the Authority.

2. Additional Documentation Based on License Type:

• For a Generation License:
  • Letter of Support: From the Ministry responsible for electricity.
  • Proof of Local Government Support: Endorsement from local authorities.
  • Water Rights: For hydro power projects.
  • Land Use Rights: Documentation for the facility’s location.
  • Development Authorization: Including building permits.
  • Feasibility Study Report: Comprehensive analysis of the project.
  • Power Purchase Agreement: If applicable.
  • Site Layout and Facility Description: Detailed design and functionality of the generation facility.
  • As-Built Drawing and Commissioning Report: Evidence of completed construction and operational readiness.
• For a Transmission License:
  • Proof of Electric Energy Availability: Includes agreements or licenses for energy transmission.
  • Service Area Description: Outline of the area to be served.
  • Transmission Network Description: Details of the network infrastructure.
  • Right of Way: Documentation of land access rights.
  • Feasibility Study Report and Network Expansion Plan: Analysis and future growth plans.
  • As-Built Drawing and Commissioning Report: Completed construction and operational documentation.
• For a Distribution License:
  • Support Letters: From the Ministry and local government authorities.
  • Proof of Electric Energy Availability: For distribution purposes.
  • Feasibility Study Report: Detailed project analysis.
  • Service Area and Network Description: Details of the distribution network and coverage area.
  • Expansion Plan: Future growth plans if applicable.
  • As-Built Drawing and Commissioning Report: Evidence of completed and functional infrastructure.
• For Cross-Border Electricity Trade:
  • Power Purchase Agreement and Interconnection Agreement: Details of cross-border agreements.
  • Bilateral Agreement Between States: If applicable.
  • Wheeling Agreement: Where necessary.

Note: Transmission licenses are only granted to state-owned entities.

Before applying for a full license, applicants may obtain a provisional license to conduct preparatory activities. The provisional license application requires:

• Certified Registration Documents
• Application Fee Proof
• Project Financing Plan
• TIN and VAT Registration Certificates
• Environmental Clearance Proof or Initiation

Additional Documents for Provisional Licenses:

• For Generation License: Site layout, technology details, construction schedule, support letters, and pre-feasibility reports.
• For Transmission License: Proof of energy availability, service area description, network details, and a sketch map.
• For Distribution License: Support letters, energy availability proof, area description, and expansion plans.

Upon receipt of an application, the Authority will evaluate its completeness and legality. A notice of the application will be published in two widely circulated newspapers in Tanzania—one in English and one in Kiswahili—to solicit public comments. The public will have 21 days from the date of publication to submit feedback, which the Authority will consider in its decision-making process.

After the 21-day public consultation period, the Authority will decide whether to grant the license, refer it back for modifications, deny it, or grant an exemption. It is important to note that transmission licenses are exclusively granted to state-owned entities. The Authority’s decision will be based on factors including environmental protection, economic efficiency, public benefit, public comments, and compliance with safety, health, security, and environmental standards.

In addition to applying for a full license, applicants may obtain a provisional license to conduct preparatory activities. The application for a provisional license must include certified registration documents, proof of the application fee, a project financing plan, TIN and VAT registration certificates, and proof of environmental clearance or initiation of the process to obtain it. Provisional license applications also require additional documents specific to the type of license being sought, such as site layouts, technology details, and pre-feasibility reports.

Once a license is granted, licensees must adhere to several post-compliance obligations. For a generation license, the licensee is required to provide reliable generation services to customers, operate and maintain the generation facility, charge the approved tariff, and carry out all works related to the provision of generation services, including engineering, construction, rehabilitation, operation, and maintenance of the generation facility in accordance with Prudent Utility Practices and a power purchase agreement. A generation licensee may use part of the power generated to meet its own demand at the generation facility.

A transmission licensee must conduct transmission activities in the service area, operate and maintain the transmission network, charge the approved tariff or comply with applicable laws, and carry out all related works, including engineering, construction, rehabilitation, operation, and maintenance of facilities in accordance with applicable laws and Prudent Utility Practices. The transmission licensee must also provide access to its transmission assets on a non-discriminatory basis and publish procedures governing requests to connect to its transmission facilities.

A distribution licensee is required to conduct distribution activities in the service area, operate and maintain the distribution network, charge the approved tariff, and carry out all related works, including engineering, construction, rehabilitation, operation, and maintenance of facilities in accordance with applicable laws and Prudent Utility Practices. Additionally, the distribution licensee must, as far as practicable, purchase all required electric energy from the least cost generation licensee first.

For cross-border electricity trade, the licensee must undertake cross-border trade in a manner that does not jeopardize national grid security, notify the Authority of any changes to cross-border agreements affecting the approved tariff, and submit an annual audited financial report and technical performance to the Authority. The licensee must also submit the Power Purchase Agreement, Wheeling Agreement, and applicable charges and tariffs for Authority approval. The Authority may issue guidelines to provide for the operations of cross-border electricity trade.

General obligations for all licensees include observing rules and guidelines issued by the Authority, charging tariffs approved by the Authority, paying all applicable fees and levies, conducting regulated activities without discrimination or bias, and notifying the Authority of any cessation of regulated activities. Licensees must also report any accidents occurring during licensed activities within 24 hours for fatal accidents and annually for non-fatal accidents.

Distribution licensees must prepare and submit a Customer Service Charter to the Authority for approval within 3 months from the date of issue or transfer of the license.

As Tanzania continues to invest in solar power, the country is not only taking a significant step towards energy independence but also contributing to global efforts to combat climate change. Solar energy offers a clean and renewable alternative to traditional energy sources, reducing greenhouse gas emissions and promoting sustainable development. By leveraging its solar potential, the country is paving the way for a brighter, more sustainable future.

Disclaimer: This article is authored by Ruwaida Manji, Associate Corporate, Head of Mining and Energy Department at Rive & Co, a new and innovating law firm as a result of the partnership between ABC Attorneys and Stallion Attorneys, built on the foundation of trust, credibility, and novelty, offering expert legal solutions.  This Article is for informational purposes only and should not be construed as legal advice. It is recommended to consult with a qualified legal professional for advice specific to your situation.