A historic event took place in Eastern Africa on September 9, 2025. On that day, the Grand Ethiopian Renaissance Dam (GERD) was officially inaugurated by Ethiopia’s Prime Minister, Abiy Ahmed, in the presence of African leaders and representatives of international organisations. The US$5 billion dam has a generating capacity of 6,450 MW, making it the largest hydropower station in Africa.
The inauguration of GERD is significant for the energy sector, not only for Ethiopia but also for countries across Eastern Africa. For Tanzania in particular, by purchasing competitively priced power from Ethiopia through secure power-purchase agreements and wheeling arrangements under the East African Power Pool (EAPP), the country will be anchoring itself within a stable energy framework.
Reliable access to electricity is a critical driver of industrialisation, social development and economic competitiveness. Tanzania has made progress in expanding generation capacity, particularly through hydropower and natural gas. However, demand continues to rise rapidly as a result of urbanisation, industrialisation, and population growth. To meet this demand sustainably, Tanzania must look beyond its borders and take advantage of regional opportunities. Two avenues stand out: GERD and the EAPP.
Industry experts estimate that the price of electricity from Ethiopia will be US$0.077/kWh delivered—lower than current average Tanzanian retail prices. To leverage the benefits of GERD and the EAPP, Tanzania should focus on four priority actions.
First, Tanzania should negotiate firm, long-term power-purchase agreements (PPAs) with the Ethiopian Electric Company (EEC) for a guaranteed baseline supply through both normal and drought periods. Long-term contracts also improve bankability and remove the risk of price volatility for Tanzanian consumers.
Second, Tanzania must negotiate and sign wheeling agreements with Kenya as the transit country. These should secure predictable charges and service standards, and include provisions for compensation in the event of curtailment. In doing so, Tanzania should seek advice from regions with long experience in power pooling, such as the Southern African Power Pool, which has operated successfully for over 30 years.
Third, investment should be directed towards reinforcements and interconnections in the regions where GERD imports will flow—most likely the northern corridor and the Lake Zone. Grid reinforcement is essential; without it, transmission losses will erode the benefits of cheap imported power before it can reach households and industries.
Finally, the Energy and Water Utilities Regulatory Authority (EWURA) and TANESCO should design pass-through mechanisms to ensure that cost savings from imports reach domestic and industrial consumers, while also safeguarding the utility’s financial health.
In conclusion, Tanzania’s pathway to reliable and affordable electricity lies not only in expanding its own generation capacity but also in leveraging regional resources. By securing power from GERD through well-structured agreements, strengthening interconnections under the EAPP, and actively participating in a harmonised regional power market, Tanzania can improve energy security, lower costs and accelerate its progress towards industrialisation and universal electrification.
Elly Manjale is an economic, business and management consultant based in Arusha who writes on economic, business, social and political issues. Email: emanjale@gmail.com
