Energy & Natural Resources
The Energy and Water Utilities Regulatory Authority (EWURA) recently released new rules to govern various electricity matters. These relate to the development of small power projects (SPPs), generation, transmission and distribution activities along with supply services. The new rules attempt to address some of the challenges contained in the previous (repealed) rules by providing less procedural requirements. In this article, we provide an overview of the recently released Electricity Rules and how this affects businesses in Tanzania.
The DSPP Rules repeal the Electricity (Development of Small Power Projects) Rules (the DSPP 2018 Rules) and govern the regulatory and procedural matters relating to DSPPs in Tanzania.
A SPP developer shall not develop a SPP in areas other than those declared to be of strategic nature; or where the proposed total installed capacity of a SPP exceeds the maximum demand of the local distribution network. An area is deemed to be of strategic nature if it offers technical benefits to a DNO. A determination on whether the area is of strategic value or not is made by the DNO on its own motion or upon receipt of a project proposal from a project developer.
Upon receipt of a project proposal from a project developer, a DNO shall make a decision within thirty (30) days from the date of receipt of such request to determine whether the proposed area is strategic or not. A project developer who is aggrieved by the decision of a DNO may appeal to EWURA for determination. A DNO is also required to publish the list of strategic areas in widely circulated newspapers.
A VSPP is only developed in a remote area where the Ministry has certified a letter of support that the area is suitable for development. A VSPP developer is prohibited from developing a VSPP without first applying and obtaining a letter of support from the Ministry. The letter of support issued by the Ministry shall be in the prescribed form set out in the Second Schedule to the DSPP Rules. The letter of support issued by the Ministry will cease to have effect if a VSPP developer fails to commence construction of the facility within twelve months (12) from the date of issuance of the said letter.
Under the DSPP Rules, the procurement of SPPs can be through unsolicited and solicited proposals.
A SPP developer is required to apply to a DNO for a letter of intent by filling in the application form prescribed in the Third Schedule to the DSPP Rules. The application has to be accompanied by:
The list of documents to be attached has been reduced from seven (7), in the Repealed Rules, to four (4) under the DSPP Rules. Other procedures for acknowledgement, notice of decision and the time frame remain as they were in the Repealed Rules.
The procedures for application for interconnection remain unchanged. It is the duty of the DNO to bear the cost for interconnector lines for projects that are within ten (10) kilometres from the point of interconnection at the time the SPPA is signed. However, if the DNO is unable to bear such costs, it shall negotiate with a SPP developer with a view to ascertaining the possibility of the latter meeting the said costs subject to the terms and conditions to be agreed upon. A SPP developer shall bear all interconnection costs beyond ten (10) kilometres of the interconnection point.
A public owned DNO will only procure a solicited power project in accordance with the DSPP Rules. A private DNO may procure a solicited power project using the procedures prescribed under the DSPP Rules or their own procedures. However, the procedures have to be competitive and approved by EWURA.
After a DNO declaring or identifying an area to be strategic, it will issue a Request for Qualification (RFQ) documents inviting SPP developers to submit bids for qualification. The RFQ has to be open for a period of forty five (45) days and any response to the RFQ submitted after the specified deadline will not be accepted. Bids are received by a DNO and evaluated in accordance with the Public Procurement Act No.7 of 2011 (the Procurement Act). Under the DSPP Rules the DNO is to conduct bid evaluations in accordance with the provisions of the Procurement Act. There is no requirement to send them to the Electricity Infrastructure Permanent Committee, as was the case in the Repealed Rules.
Part VI of the DSPP Rules provides for post procurement activities. These activities include signing of a SPPA; licensing and registration procedures; commissioning procedures and connection to the main-grid. The term of the SPPA has been reduced from twenty five (25) years to twenty (20) operating years after reaching commercial operation date.
The DSPP Rules have also set a time limit for interconnection certificate and require the DNO to ensure that the interconnection certificate is issued as soon as possible and in any event not more than fourteen (14) days after verification.
The GTDA Rules have repealed the Electricity (Generation, Transmission and Distribution Activities) Rules 2018 (the GTDA 2018 Rules). The application of the new GTDA Rules has been extended to cover cross border trade in electricity activities in Mainland Tanzania. The GTDA Rules also govern the regulatory matters related to eligible customers.
The supporting documents for a licence application for generation, transmission and distribution licences remains as it was in the 2018 Rules. The GTDA Rules list the accompanying documents for a cross-border electricity trade licence. Rule 5(2) (d) provides that an application for cross-border electricity trade licence has to be accompanied by:
Rule 7(3) allows a licensee to apply for renewal of the licence upon its expiration in the manner prescribed by EWURA. An application for renewal shall be accompanied by all the information and documents that were used in the initial application for a licence as listed under Rule 5.
Under Rule 21(1), a licensee is required to:
EWURA is also empowered to make guidelines to provide for operations of cross-border electricity trade.
In addition to submitting to EWURA annually audited financial statements, a licensee is required to submit regulatory financial reports within ninety (90) days from the end of the financial year.
A licensee is also required to submit regulatory financial reports in accordance with the standards specified by EWURA. The regulatory financial reporting standards and frequency of reporting shall be as prescribed in the Regulatory Financial Reporting Manual issued by EWURA. This entails EWURA issuing the Regulatory Financial Reporting Manual, which will provide the standards and frequency of reporting by the licensee.
For a person to be designated an eligible customer, they must apply to EWURA in a manner prescribed in the Schedule to the GTDA Rules and the application accompanied by:
The following criteria must be met:
The rights of eligible customer:
The SS Rules repeal the Electricity (Supply Services) Rules of 2017 (the SS 2017 Rules) and govern the regulatory and licensing matters related to electricity supply services in Mainland Tanzania.
The procedures for licence application remain the same as in the 2017 SS Rules. However, the 2019 SS Rules require more documents, see below
SS 2019 Rules
SS 2017 Rules
The procedure for the renewal of a licence has not substantially changed from what was set out in the 2017 SS Rules. The documents to accompany an application for renewal have been reduced from nine (9) to five (5) and the accompanying documents that are no longer required include:
The general penalty for any person who contravenes any provision of the SS Rules for which no specific penalty is prescribed is a fine of three (3) million Tanzanian Shillings (about USD 1,304), while the 2017 SS Rules prescribed a penalty of ten (10) million Tanzanian Shillings (about USD 4,350). In addition, the penalty for continued contravention has been reduced from five (5) million (about USD 2,174) to one (1) million Tanzanian Shillings (USD 434) for each day of the continuing contravention.
This briefing is prepared for clients and contacts of Clyde & Co Tanzania. We aim to keep our clients abreast of developments in Tanzania as they happen and if you have any questions on the issues raised above please contact us directly.
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