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US & CHINA INVESTMENT EFFECTS ON TANZANIA’S ENERGY SECURITY AMY ROZNOWSKI TANZANIA’S ENERGY FUTURE (?) NATURAL GAS – 53.28TCF (9.2B BARRELS OF OIL EQUIVALENT) COAL – 1.9B TONS (25% PROVEN) HYDRO – 4.7GW POTENTIAL (12% DELIVERED) SOLAR – 200Wp/m² GEOTHERMAL - ~5000MWe 50 IDENTIFIED SITES CURRENT TRILEMMA STATUS ENERGY SECURITY ABUNDANT RESOURCES DEPENDENT ON ENERGY IMPORTS ELECTRICITY GENERATION PRIMARILY HYDRO DROUGHT, XMSN, & DISTRO LOSSES ENERGY EQUITY HIGH PETROLEUM IMPORT AND ELECTRICITY COSTS AKA UNAFFORDABLE 24% ACCESS TO GRID ELECTRICITY ENVIRONMENTAL SUSTAINABILITY LOW CARBON EMISSIONS INCREASING DEMAND FOR ENERGY ~10% PER YR MAINTAIN CARBON FOOTPRINT? HIGH RELIANCE ON BIOMASS FUEL & DEFORESTATION GOVERNMENT OF TANZANIA ENERGY SECTOR OUTLOOK GOALS FOR ENERGY SECTOR INCREASE ELECTRICITY ACCESS TO 50% BY 2025 AND 75% BY 2033 INCREASE ELECTRICITY GENERATION TO 3000MW BY 2018 AND 10000MW BY 2025 REDUCE TRANSMISSION LOSSES TO 12% BY 2018 NEED TO ATTRACT INVESTORS AND REFORM ENERGY SECTOR EWURA, TIC, PPP ACT, SOUTHERN AFRICAN POWER POOL IMPROVE BUSINESS ENVIRONMENT INCREASE COMPETITIVENESS & TRANSPARENCY FOCUS AREAS RESOURCE DIVERSIFICATION (RENEWABLES & NG) IMPROVE EFFICIENCY ENCOURAGE PPP MOBILIZE FINANCING FOR INVESTMENTS DEVELOP HUMAN CAPITAL CUE THE INVESTORS CANNOT ENHANCE ENERGY SECURITY WITHOUT OUTSIDE INVESTMENT/ASSISTANCE CHALLENGES TO ATTRACTING INVESTORS ARE THE SAME ISSUES THAT NEED REFORM Source: Frost & Sullivan KEY INDUSTRY CHALLENGES 2010-2015 US INTEREST – POWER AFRICA INITIATIVE MOBILIZING PARTNERSHIPS & INVESTMENTS IN ENERGY PRIVATE SECTOR LED MODEL “TOOLBOX” APPROACH RESOURCES AND TOOLS TO ADVANCE KEY PROJECTS ON THE NATIONAL GRID TECH ASSISTANCE, TECH ADVICE, REGULATORY REFORM, & FINANCIAL RESOURCES SUSTAINABLE ENERGY DEVELOPMENT COMMITMENTS $20B FROM PRIVATE SECTOR FOR NEW ON-&OFF-GRID PROJECTS TO SSA $7B IN FINANCIAL SUPPORT, LOAN GUARANTEES, AND TECHNICAL SUPPORT INTERNATIONAL POWER AFRICA FUNDING $9B AfDB, WB, AND SIDA 2008-2013 15 TO 24% ACCESS WHAT DOES POWER AFRICA INITIATIVE MEAN FOR TANZANIA? TRANSACTION ASSISTANCE FOR GENERATION PROJECTS TECHNICAL ADVICE PRIVATE SECTOR INVESTMENT AND KEY INSTITUTION CAPACITY BUILDING TECH TRANSFER GE TURBINES FOR 150MW KINYEREZ I GAS-FIRED THERMAL PLANT PORTABLE LOAN FOR SMALL HYDRO PROJECTS PROMOTE ENERGY DIVERSIFICATION RENEWABLE ENERGY FEED-IN TARIFFS IMPROVED POWER PURCHASE AGREEMENT FOR RENEWABLE ENERGY PROJECTS IMPROVE ENERGY SECTOR VIABILITY ASSIST TANESCO WITH LOAD MANAGEMENT STRATEGIES & REDUCE LOSSES LIMIT EMERGENCY POWER PLANT GENERATION US INTEREST – MCC COMPACT I IMPROVE ELECTRICITY SERVICE AND COVERAGE NEW POWER GENERATION, TRANSMISSION AND DISTRIBUTION CAPACITY REINFORCEMENT OF THE EXISTING NETWORK INCREASE INVESTMENT AND ECONOMIC ACTIVITY TO BUSINESSES AND COMMUNITIES INITIAL ACCESS/CONNECTION TO ELECTRICITY SUBMARINE ELECTRIC TRANSMISSION CABLE FROM THE MAINLAND TO ZANZIBAR EXTEND AND REHABILITATE THE DISTRIBUTION NETWORK AND INFRASTRUCTURE LINE EXTENSIONS TO UNSERVED AREAS IN SIX REGIONS RESULTS INVESTMENT AND COOPERATION FROM 10 US COMPANIES IN ENERGY SECTOR $698M FROM 2008-2013 ON 3 PROJECTS ENERGY, TRANSPORT, AND WATER SECTORS US INTEREST – MCC THRESHOLD PROGRAM $11.2M GRANT RESULTS TANZANIA PUBLIC PROCUREMENT REGULATORY AUTHORITY AUDIT 39 PROCURING ENTITIES 1 IRREGULARITY UNCOVERED NATIONAL ELECTRICITY PURVEYOR IMPROVED TRANSPARENCY STRENGTHENED ANTI-CORRUPTION REGULATION RESIGNATION OF SENIOR GOVERNMENT OFFICIALS & PRIME MINISTER CHINA INTEREST – DEVELOPMENT MODEL CHINA DEVELOPMENT MODEL ECONOMIC GROWTH OVERSEEN BY A DISCIPLINED, ONE-PARTY TOTALITARIAN STATE WITH FULL AUTHORITY, IF NOT CONTROL, OVER ALL ASPECTS OF ECONOMIC ACTIVITY NON-INTERFERENCE AND LIMITED CAPACITY TO PARTICIPATE IN GLOBAL ENERGY POLITICS CHINESE BIT POLICY SIMILAR TO OECD COUNTRIES AND POTENTIALLY MORE COOPERATIVE ON AN INTERNATIONAL LEVEL INVESTOR’S RIGHTS AND INTERNATIONAL ARBITRATION BUT…. TRANSACTIONS LACK TRANSPARENCY TRADE FOR RESOURCES AT LOW COMMODITY PRICES LIMITING NEW DEALS DEVELOPING EXPORT CAPABILITIES VS DOMESTIC CAPABILITIES WHAT HAS CHINA BROUGHT TO THE GAME? INVESTMENT & HUMAN CAPITAL – 500 CHINESE COMPANIES CREATED 150,000 JOBS, 552 TIC APPROVED PROJECTS CORPORATE SOCIAL RESPONSIBILITY PROGRAMS PASSIVE PUBLIC RELATIONS AND EDUCATION CAMPAIGN RESOURCE-BACKED LOANS INFRASTRUCTURE DEVELOPMENT DOMESTIC & EXPORT POTENTIAL WITH A PITFALL NATURAL GAS PIPELINE PROJECT $1.2B 523KM PIPELINE FROM MTWARA TO DAR ES SALAAM INCREASE POWER GENERATION TO 3000MW LOWER ELECTRICITY PRICES ENCOURAGE FUEL SWITCHING LESS EXPENSIVE GAS-POWERED REDUCE RELIANCE ON EPP (DIESEL FIRED) THE PITFALL SOCIAL CONFLICT LACK OF INFO & COMMUNICATION DISPLACEMENT WITHOUT RELOCATION OR COMPENSATION FOREIGN DIRECT INVESTMENT, NET INFLOWS (% OF GDP) Total FDI net inflows – 2004 1.8% GDP 2013 4.3% GDP US FDI – 2012 $319m USD 2015 est $588m USD China FDI – 2014 $4b (2014) Bagamoyo Port Project and infrastructure SOURCE: “The U.S. Spends $35 Billion Helping Out The World… But Where Does All this Money Really Go?” 28 October 2015, http://howmuch.net/ THE GOOD/BAD NEWS OF US & CHINA INTEREST GOOD ENERGY DIVERSIFICATION INFRASTRUCTURE & INSTITUTIONAL ASSISTANCE PIPELINES, PORT FACILITY, FINANCIAL & TECH ASSISTANCE ENERGY & PUBLIC SECTOR REFORM ASSISTANCE REVISED NAT’L ENERGY STRATEGY, PWR SYS MASTER PLAN, NG POLICY, INCREASED PRIVATE INVESTMENT PPP ACT, TZ INVESTMENT CENTRE COMPLEMENTARY APPROACHES (KIND OF) BAD CONTRADICTORY TRANSPARENCY STANDARDS LACK OF PUBLIC EDUCATION OF NECESSITY FOR ENERGY SECTOR IMPROVEMENTS POLITICAL CONFLICT BETWEEN MAINLAND AND ZANZIBAR CORRUPTION DESPITE INCREASED ANTI-CORRUPTION INITIATIVES SHORT-TERM INVESTMENT OUTWEIGHS MEDIUM TO LONG-TERM OBJECTIVES GROWTH RATE – 7.2% CONT INCREASE SINCE 2010 4.8% PER CAPITA - $2700 BY SECTOR: AG – 26.9% (80% OF LABOR FORCE) IND – 25.2% SVC – 48% EXTRACTIVE REVENUE ~10% OF TOTAL REVENUE ON-SHORE NATURAL GAS PRODUCTION OFF-SHORE NATURAL GAS DISCOVERED HOW IS TANZANIA MOVING AHEAD? SENIOR LEVEL RESTRUCTURING FOLLOWING ENERGY SECTOR SCANDAL (LATE 2014) RESIGNATION & INVESTIGATION OF PRIME MINISTER, ATTORNEY GENERAL, MINISTER OF ENERGY AND MINING, HOUSING MINISTER DIRECT ECONOMIC ASSISTANCE SUSPENDED IEA & EITI COMPLIANT STATUS SUSPENDED BIG RESULTS NOW INITIATIVE – TZ INITIATIVE BASED ON MALAYSIA DEVELOPMENT MODEL PRIORITIES: ENERGY AND NATURAL GAS AGRICULTURE WATER EDUCATION TRANSPORT MOBILIZATION OF RESOURCES CONCERN OVER UNFAIR INTERNATIONAL ENIVRONMENTAL STANDARDS HINDERING INDUSTRIALIZATION TRILEMMA TREND Q U E S T I O N S Q U E S T I O N S