The Ministry of Energy is currently in talks with Ministry of Finance and Planning to seek a tax exemption on renewable energy (RE) as a way of encouraging more investments in the sector whose infrastructure set up is expensive.
This is according to the Energy engineer from the ministry of Energy, Ms. Nyaso Makwaya, during a conference themed: “Towards 100 Per cent RE for Tanzania.”
According to a report on 100 per cent Renewable Energy for Tanzania, approximately $160 billion in investments is required for the renewable energy sector to become a reality, including investments in replacements after the economic lifetime of plants expire, totalling around $5 billion annually.
The total amount required for advanced investment to 2050 is $310 billion, averaging $9 billion annually.
Tanzania would shift almost 99 per cent of the entire investment towards renewables and cogeneration. In view of this, she said that the ministry wanted to create a favourable environment for the sector, including having appropriate strategies, policies and special tax preferences for REs.
“We have had a number of investors coming into the country to invest in renewable energy, but there have been a number of challenges including community misunderstandings with the investors,” she said, adding that such hindrances were setting back plans for feasibility studies, investments and acquisition of grants for the project.
Currently, sources of renewable energy in the country include solar energy, geothermal, wind and bio-energies that are yet to come to their full potential as currently it only constituted 2 per cent of the power generation.
She said the ministry had now come up with a new plan where all investors in energy were invited to apply for projects through tenders and not individually as initially done. She stressed that the new plan ensured the investors competed at favorable interest rates that ensured the government benefited.