How Power Investments Are Fuelling Tanzania's Economic Expansion

DAR ES SALAAM — Tanzania's electricity and gas sector grew 11.8 percent in 2025, the National Development Plan 2026/27 confirms, making it the second-fastest growing sector in the economy behind finance and insurance. The growth reflects the operational impact of the Julius Nyerere Hydropower Project whose all nine turbines were connected to the national grid during the FY2025/26 period, delivering 2,115MW of hydroelectric capacity. What the JNHPP completion means for the economy The Julius Nyerere Hydropower Project is the largest single infrastructure investment in Tanzania's history and its completion is an inflection point in the economy's energy infrastructure story. The project displaced petroleum-based generation that was expensive, import-dependent, and subject to global oil price volatility. Every megawatt of hydro capacity that displaces diesel or heavy fuel oil reduces the imported energy cost burden on manufacturing, cold chain logistics, telecommunications, and hospitality sectors simultaneously. The electricity sector growth rate of 11.8 percent is not solely a generation story. It reflects the demand-side expansion: more factories, more commercial premises, and more households connecting to the grid as connection costs fall and reliability improves. Private sector credit to mining and quarrying, the sector with the highest electricity demand among commercial users, grew 91.1 percent in 2025, the fastest of any credit category, confirming that commercial electricity demand is expanding at a pace that supply can now support. The electrification geography All 12,318 villages in Tanzania Mainland were connected to the electricity grid by FY2024/25, completing a programme whose political significance matches its economic importance. By December 2025, 39,003 of 64,359 hamlets, or 61 percent, had electricity access through the Rural Energy Agency's implementation programme. The 39 percent of hamlets without electricity as of December 2025 are primarily in remote areas where grid extension is cost-prohibitive without subsidisation or where stand-alone solar systems are the economically appropriate technology. The FY2026/27 budget allocates TZS 350 billion to hamlet electrification and TZS 128 billion to the Rural Energy Agency, reflecting the government's commitment to completing the rural electrification programme within the Vision 2050 timeframe. The 2030 energy ambition The plan targets 8,000MW of installed capacity by 2030, requiring approximately 3,477MW of new generation from the current 4,522.54MW base. The pipeline includes Ruhudji at 358MW receiving TZS 115 billion, Rumakali at 222MW receiving TZS 20 billion, Kakono at 87.8MW receiving TZS 95.2 billion, Ngozi-Songwe geothermal receiving TZS 27.3 billion, Shinyanga solar at 150MW receiving TZS 83.5 billion, and LNG-based generation whose fuel supply the Ntorya and Songo Songo developments are intended to secure. The Rosatom small nuclear plant discussions add a longer-term diversification option beyond 2030. Per capita energy consumption targeted at 528kWh by 2030, up from 170kWh in 2025, is the demand-side ambition whose achievement requires both the generation expansion and the household and commercial connection programme to both proceed as planned.