PRIVATE PURCHASE OF ELECTRICITY FROM INDEPENDENT POWER PRODUCERS: INSIGHTS FOR HIGH/MEDIUM VOLTAGE CONSUMERS IN TANZANIA.

The Electricity Act Number 10 of 2008 of the laws of Tanzania (the “Electricity Act”) read together with its Rules and Regulations empower high/medium voltage consumers[1] to procure electricity directly from any person licensed to generate electricity (“Independent Power Producer(s)”). To become an eligible customer (that is, a person who is authorized to enter into contract for the supply of electricity directly with any person licensed to generate electricity), individuals must file an application with the Energy and Water Utilities Regulatory Authority ("EWURA") to obtain approval for registration. An eligible customer is someone authorized by EWURA to engage in a contractual agreement for the direct purchase of electricity from Independent Power Producers.

The customer categorized as an “eligible customer” must be supplied electricity at voltage levels not less than 33 kilovolts and must have a maximum demand of 2 megawatts or more. For clarity, for an independent power producer to supply electricity directly to the eligible customer, the aforesaid threshold must be met.

The application guideline for an eligible consumer is as follows, a prescribed application form has to be filled at EWURA, accompanied by: -

• proof of electric energy consumption capacity;
  • wheeling agreement if any; and

• letter of clearance from the supplying utility (TANESCO[2]) that the applicant has no outstanding liability against the utility where applicable.

Once approved as an eligible customer, one will have the following benefits:-

• an eligible customer can negotiate tariffs directly with an Independent Power Producer without the involvement of EWURA.

• an eligible customer can negotiate the final price of electricity after taxes and other related fees with an Independent Power Producer.

• an eligible customer can negotiate its own corporate power purchase agreement with an  Independent Power Producer.

• if the power plant is located in an eligible customers area, an Independent Power Producer is authorized to agree on the best mode to connect the power generated by an Independent Power Producer to the eligible customers’ site.

• an eligible customer is authorized to dual source in an event where the Independent Power Producer needs backup, then TANESCO will be able to support it. However, the Independent Power Producer has to enter into a separate agreement with TANESCO for it to act as a backup power provider.

By Joel Kimale- Advocate

Note: This is not a legal opinion, and the contents hereof are not meant to be relied upon by any recipient unless our written consent is sought and explicitly obtained in writing.

[1] Ref. Section 3 of the Electricity Act defines medium/high voltage.  

[2] Tanzania Electric Supply Company Limited a Tanzanian parastatal organization wholly owned by the Government of Tanzania and operates under the Ministry of Energy.