Gridworks, the UK government-backed investor in Africa’s electricity networks, has today announced its intention to develop and invest in the North East Grid transmission project in Tanzania.
Gridworks, which was established and is wholly-owned by British International Investment, the UK government’s development finance institution, will work with Larsen & Toubro Construction (L&T), an Indian multinational conglomerate, and the Tanzania Electric Supply Company (TANESCO) to improve the transmission network connecting the central, coastal and north-eastern regions of the country. A memorandum of understanding was signed by leaders of the three organisations at a ceremony in Dar es Salaam, Tanzania on Thursday 27 July 2023. The signing was also attended by Anna-Maria Mbwette, the UK government’s Country Director for Tanzania Business & Trade, and Amol Pinge, Gridworks’ Director of Business Development.
The North East Grid project is part of the Government of Tanzania’s 2025 Power System Master Plan and is being structured in three phases. Gridworks will work on the phase of the project that includes a 400kV transmission line from Dodoma (in the central part of the country) to Chalinze (to the east), a 400kV transmission line from Chalinze to Segera (in the north east) and a 220kV from Segera to Tanga (in the north). Gridworks will also develop new substations at Segera and Tanga and upgrade the Dodoma substation.
Gridworks’ investment will deliver high development impact and will support the government’s aim to increase electrification to achieve universal access for the country’s population. It will increase the reliability of the grid, connect demand centres, and ensure grid-quality power can reach regions that previously didn’t have access. The grid extension will also support regional inter-connectivity with neighbouring Kenya.
The project forms part of the Government of Tanzania’s plans to improve power access and reliability, as it manages rising demand for electricity in the country. 6,200 MW of new generation capacity is planned to be added to the grid by the end of the decade, and Tanzania is developing the transmission network required to evacuate this power. More than 9,000km of high voltage lines, 12,090 MVA of transformer capacity and 56 new substations are being targeted over the next 10 years by the government. This project highlights the growing interest in private participation in the transmission sector as governments look for complementary and alternative means to fund critical infrastructure.
Simon Hodson, Chief Executive Officer of Gridworks, said:
“Investment in transmission is critical to the energy transition. It is also critical to economic development and energy access in Africa where grid power still represents the best quality, lowest cost solution for businesses and local communities.
“Transmission infrastructure is capital intensive and increasing available sources of finance for it is vital. It’s important that pools of private capital from development banks, infrastructure funds and pension funds respond to this, and continue to support this nascent market so that African governments have access to the same funding models that have been used successfully in other markets.
“This is the second transmission project we have announced, and we are working on a wider pipeline with a number of African governments. Our ambition is to show that the huge funding shortfall of Africa’s electricity networks can be met more quickly by creating sustainable business models that attract private sector capital and expertise.”
Rahul Sikka, VP and Head, Power T&D for Africa of L&T, said:
“Collaborating with TANESCO and Gridworks on the North-East Grid transmission project in Tanzania is a significant opportunity for L&T. This project will play a crucial role in enhancing power access and reliability in Tanzania. It will strengthen the transmission network that connects key regions of the country, paving the way to meet the rising demand for electricity, stimulating economic growth, creating opportunities for more businesses to thrive, and improving the overall quality of life for local communities. In addition, it further aligns with the nation’s broader vision of enhancing interconnections with neighbouring countries like Zambia and Kenya.
“L&T has a strong track record in the power sector and has successfully delivered high-quality electricity transmission & distribution projects across various countries in Africa and globally. L&T is proud to be a catalyst for the nation’s growth by supporting Tanzania in achieving its energy goals and development objectives.”
Maharage Chande, Managing Director of TANESCO said:
“We are excited to have signed a memorandum of understanding between Tanesco, Gridworks and Larsen & Toubro to construct the North East Grid transmission lines, specifically in Arusha and Tanga. The Government of Tanzania is ready to work closely and increase cooperation with Gridworks and L&T in investing in the grid transmission lines for the development of the people of Tanzania.”
Chris Chijiutomi, Managing Director and Head of Africa, British International Investment added:
“I’m delighted that Gridworks is announcing a new transmission project that will benefit the people and businesses of Tanzania. When Gridworks was established in 2019 we wanted it to be a platform that would work alongside governments and stakeholders to improve the quantity and quality of energy to drive economic and social development in Africa. Today’s announcement shows that Gridworks is delivering on that promise.
“The amount of private capital flowing into Africa’s energy infrastructure is increasing, and there is a growing interest from African leaders that want to benefit from this trend. There is a huge need for funding of Africa’s electricity networks. With BII’s backing, Gridworks is standing by to meet that need.”
David Concar, the British High Commissioner to Tanzania, said:
“Gridworks’ collaboration with Larsen & Toubro and TANESCO to develop the North East Grid transmission project is a significant and welcome step forward. By improving the transmission network, this project will ensure grid-quality electricity reaches regions previously underserved. The UK Government is proud to support Tanzania’s vision of achieving universal access to electricity through strategic partnerships and investments.”