Tanzania: Issues and Options in the Energy Sector Public Disclosure Authorized
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Report No. 49b4}-1A Tanzania: Issues and Options in the Energy Sector Public Disclosure Authorized November 1984 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Report of the Joint UNDPWobrldBank EnergySector Assessment Program This :dixcunent-has a restricted distribution. Its contents mav no.t be disclosed withoutl auiberinationfrom- the Gwvernrment,thie UNDP or the WVorldBank. -V~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i 14 V ::JOINT U14DP/WORLD'BANKENERGY SECTOR-ASSESSMENT PROGRAM REPORTS ALREADYISSUED, >. .. , ~ ~ ~~outrDate -Number, Indonesia' November 1981 35543-IND; - Mauritius December:' 981 ; 3510-MAS Kenya - May 1982 3800-KE Sri Lanka May 1982 3792-CE Zimbabwe june 1982 3765-ZIM ,fHaiti -June 1982 3672-HA Papua New Guinea June 1i982 3882-PNG Burundi -June 1982 3778-BU Rwanda : June I1982 3779-RW MaLawi :August 1982 3903-MAL Bangladesh October 1982 3873-BD Zambia Januarv 1983 4110-ZA Turkey February 1983 3877-TU Bolivia April 1983 4213-BO Fiji June 1983 4462-FIJ Solomon Islands June 1983 4404-SOL Senegal July 1983 4182-SE Sudan JuLy 1983 4511-SU Uganda July 1983 4453-UG Nigeria August 1983 4440-UNI Nepal August 1983 4474-NEP Gambia November 1983 4743-GM Peru anuary 1984 4677-PE Costa Rica January 1984 4655-CR Lesotho *anuarv 1984 4676-LSO SeychelLes January 1984 4693-SEY Morocco March 1984 4157-MOR Portugal April 1984 4824-PO Niger May 1984 4642-NIR Ethiopia JuLy 1984 4741-ET Cape Verde August 1984 5073-CV Guinea Bissau August 1984 5083-CUB Botswana September 1984 4998-BT St. Vincent and the Grenadines September 1984 5103-STV St. Lucia September 1984 5111-SLU Paraguay October 1984 5145-PA ? ; E FOR OFFICIAL USE ONLY Report No. 4969-TA TANZANIA ISSUES ANDOPTIONS IN TEE ENERGYSECTOR NOVEKBER1984 This is one of a series of reports of the Joint UNDP/WorldBank Energy Sector AssessmentProgram. Finance for this work has been provided, in part, by the UNDP Energy Account and the CanadianInternational Develop- ment Agency through the UNDP; and the work has been carried out by the World Bank. This report has a restricteddistribution. Its contentsmay not be disclosed without authorizationfrom the Government,the UNDP or the World Bank. ABSTRACT Tanzania's economic crisis has led to a contraction in the monetary productive sector, reduced export earnings and a shortage of foreign exchange to purchase recurrent essential imports, including crude oil and petroleum products. One objective of the Structural Adjustment Program (launched in November 1982) was to stimulate the deveLopment of alternative indigenous energy sources while economizing on the use of imported fuel. In this context, the discovery of significant quantities of natural gas off the coast presents Tanzania with some options which could influence further macroeconomic developments through their effect on the foreign exchange situation, notably by reducing imported petroleum products. This report reviews Tanzania's energy resources, incLuding the natural gas reserves. hydroelectricitv, biomass and coal deposits. The report then goes on to make demand projections for a fifteen-year period for each subsector (petroleum. electricity, coal, firewood and charcoal) using two macroeconomic growth scenarios. The main issues and options discussed include: optimal utilization of the natural gas reserves; least-cost system expansion and supply reliability in the power sub- sector; and increased fueLwood production. The report's recommendations focus particularly on investment options and strategies, technical assistance requirements, institutional strengthening and energy con- servation. ABBREVIATIIGS CAMERTEC - Center for Agricultural Mechanization and Rural Technology CIDA - Canadian International Development Agency EEC - European Economic Commumity ESKAP - Joint UNDP/IBRD Energy Sector Management Assistance Program FAO - Food and Agriculture Organization CTZ - German Agency for Technical Cooperation IMP - International Monetary Fund kfW - KreditanstaLt fur Wiederaufbau KILAMCO - Kilva Ammonia Company MNRT - Ministry of Natural Resources and Tourism MWEM - Ministry of Water, Energy and Minerals NORAD - Norwegian Agency for Development RUBADA - Rufiji Basin Development Authority SAP - Structural Adjustment Programme SIDA - Swedish International Development Agency STAMICO - State Mining Corporation TANESCO - Tanzania Electric SuppLy Corporation TARECO - Tanzania Rural Electrification Corporation TIRDO - Tanzania Industrial Research and Development Organization TIPER - Tanzanian-Italian Petroleum Refining Company TPDC - Tanzania Petroleum Development Corporation TWICO - Tanzania Wood Industries Corporation UNDP - United Nations Development Programme UNIDO - United Nations Industrial Development Organization UTAFITI - Tanzania National Scientific Research Council This report is based on the findings of an energy assessment mission which visited Tanzania in June 1983. The mission comprised: R. Bates (Mission Leader), M. Kiwana (Report Coordinator), S. Chitale (Country Economist), E. Terrado (Renewables Specialist), H. Wagner (Forester), V. Mastilovic (Power Engineer), C. Schramm (Energy Economist), C. Poncia (Petroleum Economist), H. Burmeister (Industry and Energy Conservation Specialist), C. Das Gupta (Refinery Engineer Consultant), and C. Mortimer (Cas Specialist, Consultant). CURRENCY0QUIVALENTS 1 Tanzania Shilling = US$0.082 Tsh 12.18 = US$1.0 a/ Tsh 9.33 = USS1.0 b/ MEASUREMENTS Bbl BarreL of Oil = 0.15899 Cubic Meter; 42 US Gallons: 35 Imperial Gallons BTU British thermaL unit = 0.252 kilocalories Btuh British thermal unit/hour CF cubic foot = 0.02832 Cubic Meter Callon = 3.7853 Litre CWh Gigawatt-hour = 1,000,000 kilowact-hours(kWh) K (k) KiLo = 1,000 km Kilometer = 0.62 miles = 1000 meters kV Kilovolt (kV) = 1,000 Volts kWh Kilowatt hours = 1,000 Watt Hours lT/hr pounds/hour m cuoic meter = 6.289 barrels MCFD thousand cubic feet per day MMCF milLion cubic feet MVA megavolt ampere = 1,000 kilovolt amperes MW Megawatt = 1,000 Kilowatts (kW) MWh megawatt hour = 1,000 kilowatt hours TOE (toe.) tonne of oiL equivalent = 39.68 million BTU tonne metric ton = 1,000 kilogram (kg); 2,204.6 Pound (lb) Tpd tonnes per day Tpy tonnes per year TANZANIAN FISCAL YEAR Julv i - June 30 a! As of March 1983. b/ 1982. ENERCY CONVERSION FACTORS Fuel Million Kcal per Unit Physical Units per TOE Liquid Fuels (tonne) Crude Oil 10.2 1.00 LPG 10.8 0.94 Kerosene 10.3 0.99 Jet Fuel 10.4 0.98 Gasoline i0.5 0.97 Gasoil 10.2 1.00 Industrial Diesel Oil 10.1 1.01 Fuel Oil 9.8 1.04 Natural Gas (mmcf) 252 0.04 Electricity (MWh) 86 x 10-2 4.0 Coal (tonne) 5.6 1.82 Fuelwood (tonne) 3.5 2.91 Charcoal (tonne) 7.0 1.46 Memo Items 1 TOE = 10.2 million kcal = 40.5 miLlion BTU = 42.7 GJ 1 kcaL = 3.968 BTU 1 kcal = 4.19 x 10 v GJ 1 MWh = 860,000 kcal = 0.248 TOE at 34% efficiency in thermal (oil) generation TAULE OF WNTBTS Page KEY ISSUES AND RECOMMENDATIONS................................... .,i-xdi I. ENERGY AND THE ECONOM,YOF TANZANIA......................... s 1 Recent Macroeconomic Situation............................ 1 Overview of the Energy Sector...... ........... ....... ... 3 Commercial Energy Sources ...... ***S6C .................3 Electricity...................................... 6 9 Noncommercial and Other Energy Resourceso................ 10 II. ENERGY RESOURCES .................. 122..... Introduction............................................. 12 Petroleum and Gas....................................... 12 ExplorationActivities ................. ......... o . .... 12 Gas Resources and Petroleum Potential.................. 14 Hydroelectric Power...o...............0* 15 Potential ....... me................ ... see............ mc....... ... 15 Future Stutles........................................ is18 Hydrological Data..................................... 19l Coal..................................................... 19 Resources .............................................. 19 ProductiLon.......... e.....e...........ee.....e...e.....s 20 Development Prospects ... 20 Fuelwood.................................................* 22 Resources...................................... 22 The Deforestation .............. ...... .......... ... 23 Nonconventional Energy.......................... 24 Resources..* c....... ................ c. .c 24 Surplus Softwood, Forest Residues and WoodProcessing Wastes ...... ... ... ccc... 24 Agricultural Residues.................................. 24 Animal Wastes .. ccmcmm......................... 25 Sugar Industry Residues.......... e. mc.................... 26 Solar and Wind Energy.... m.ccmm.m.c.c..m.cmc.cmm.cc.... 26 Geothermal Power and Uranium Deposits .................. 27 Conclusionee...m..m..c.m.cc.c.c..............mcme......... 27 III. DEMANDFORECAST SCENARIOS .. ............... 99sesesese.. ..... 28 Introduction. mc..e.m.c....c..c.ce...c.ec..........................e.. 28 Total Coumercial hrergy ................ ........................... me..... c 29 Electricity ............... ............ ..... m.. 31 Fuelvood. ......... c. m.c......... mm...... ......... in................. 34 IV. ENERGY SUPPLY AND INTER-FUEL SUBSTITUTION. ................. 38 Introduction ............................................. 38 Petroleum Products .............. .... ... .. 39 Refining ................. ~~~39 Page Distribution, Transport and Storage.................... 44 Allocation Policy. .................... 45 Natural Gs.............. 46 Methodology of the Economic Evaluation................. 46 Overall Results .......