Energy for Sustainable Development 17 (2013) 378385

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Energy for Sustainable Development

It's about dam time: Improving microhydro electrication in Tanzania

Eric Adebayo, Benjamin K. Sovacool , Sara Imperiale
Vermont Law School, Institute for Energy & the Environment, PO Box 96, 164 Chelsea Street, South Royalton, VT 05068-0444, USA

a r t i c l e

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a b s t r a c t
Tanzania currently suffers from a severe shortage of electricity with only 14% of the total population connected to the national grid, and access in rural areas below 2%. This article therefore analyzes an internationally sponsored energy development program for microhydro electrication in Tanzania to provide recommendations for how the country's rural energy sector can be improved. More specically, it investigates the Mini-Grids Based on Small Hydropower Sources to Augment Rural Electrication program (MBSH for short), a $13.4 million effort backed by the United Nations Industrial Development Organization, Global Environment Facility, and national actors to build 3.2 megawatts (MW) of microhydro capacity from 2011 to 2014. After introducing readers to the study's research methods, primarily semi-structured interviews, and to Tanzania's energy background, the article details the design, stakeholders, and targets of the MBSH. It then presents four major challenges the MBSH must overcome to be successful: seasonal changes in hydroelectricity output, nancial problems at the national electric utility TANESCO, historically low electricity tariffs, and high rates of poverty and electricity theft. The article concludes by calling on ve sets of national reforms including the scaling up of pilot projects and increasing investment in microhydro projects. 2013 International Energy Initiative. Published by Elsevier Inc. All rights reserved.

Article history: Received 10 August 2012 Revised 9 March 2013 Accepted 9 March 2013 Available online 9 April 2013 Keywords: Microhydro Rural electrication Energy poverty

Introduction Tanzania has an abundance of hydroelectric resources that it could harness to alleviate chronic energy shortages and lower energy prices. In 2009, Tanzania had an exploitable hydropower potential of 4700 megawatts (MW), but had developed only 562 MW. This amount, though meager, still accounted for more than half of the country's total 961 MW of installed electricity generation capacity in 2010. That same year, per capita consumption of electricity in Tanzania stood at about 55 kilowatt hours (kWh) per year, a mere 1.8% of the average for OECD countries and only 5.5% of the average for developing countries as a whole (Felix and Gheewala, 2011a,b, 2012; Mwandosya and Luhanga, 1993; Reegle, 2013). Furthermore, in 2009, energy imports, mostly of petroleum and petroleum products, amounted to $160 million per year, representing 30% of the country's foreign currency earnings and 8% of total national imports (Reegle, 2013). The proliferation of hydroelectric dams, especially microhydro dams, could thus help reduce dependence on imported energy supplies while lowering energy prices and mitigating greenhouse gas emissions by reducing dependence on kerosene lanterns and diesel generators (CEST, 1999; Mwampamba, 2007).

To jump start the microhydro sector in Tanzania, the government, in cooperation with international donors, has committed to a $13.4 million program (large for a country such as Tanzania) known as the Mini-Grids Based on Small Hydropower Sources to Augment Rural Electrication Project, hereinafter MBSH, which would build 3.2 MW worth of microhydro installations. As discussed below, however, the potential of the MBSH remains impeded by a collection of serious barriers that policymakers must overcome if they are to expand access to rural energy services throughout the country.

Research methods To explore the intricacies of the MBSH and the rural energy challenges confronting Tanzania, we relied on an inductive, narrative case study approach based on data collected from semi-structured research interviews. This format enabled us to ask expert participants a set of standard inquiries, but then allowed the conversation to build and deviate to explore new directions. We relied on qualitative methods because many of the variables that interest us, such as the ongoing energy policy challenges facing Tanzania, or the factors explaining the trials and tribulations of the MBSH, are difcult to measure, and cannot be accurately described through quantitative data alone. We contacted 54 participants for interviews from a mix of government ministries and agencies, international organizations, civil society groups, research and university institutes, and energy and

Corresponding author. Tel.: +1 802 831 1053; fax: +1 802 831 1158. E-mail addresses: Bsovacool@vermontlaw.edu, sovacool@vt.edu (B.K. Sovacool).

0973-0826/$ see front matter 2013 International Energy Initiative. Published by Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.esd.2013.03.003

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equipment suppliers over the course of June, July, and August 2012. These included: Government agencies such as the Tanzanian Ministry of Energy and Minerals, Rural Energy Agency, Energy and Water Utilities Regulatory Authority, and the Ruji Basin Development Authority; International organizations such as the World Bank, Global Environment Facility, United Nations Industrial Development Organization, and Swedish International Development Cooperation Agency; Civil society groups such as the Tanzania Traditional Energy Development and Environment Organization, Tanzania Renewable Energy Association, and the Helios Foundation; Research institutes such as the Institute of Development Studies and the University of Dar Es Salaam; Energy providers such as the Tanzania Electric Supply Company and the Andoya Hydro Electric Power Company. We conducted every interview in English, and we relied on a purposive sampling strategy rather than a random one, meaning that experts with extensive knowledge of the Tanzanian energy policy or the MBSH were chosen to participate. During our interviews, we asked participants to (a) identify the most serious energy challenges facing Tanzania; (b) state the expected benets of the MBSH; (c) summarize some of the key barriers in implementing the MBSH; and (d) discuss general lessons that the MBSH offers other energy development programs. At the request of some participants, we present such data in our article as anonymous, though information from the interviews was often recorded (when done verbally), and always carefully coded. We supplemented these interviews with a review of reports and peer-reviewed articles relating to energy policy in Tanzania. We present the information collected from our interviews in a narrative, case study format, one widely used in this journal by the author and colleagues to gain insight into the dynamics of particular energy development programs (see Bambawale et al., 2011; Sovacool et al., 2011a,b; and Sovacool and Valentine, 2011 for a small sample). Background: Tanzania's energy supply Tanzania is the largest country in east Africa, covering 364,900 mile2 of varying terrain. The country is bordered by Kenya, Rwanda, Burundi, The Democratic Republic of the Congo, Zambia, Malawi, Mozambique, and the Indian Ocean. More than 120 distinct ethnic groups populate Tanzania, which collectively gained independence from Britain in 1963. After independence, the country was a socialist state until 1992, when the constitution was amended to change the government to a democracy. While Tanzania is rich with culture and home to beautiful wild ora and fauna, the nation's economic and energy development faces a number of challengesmany of them depicted in Table 1. Tsetse y infestations prohibit large-scale animal husbandry operations, and deteriorating travel infrastructure places constraints on the agricultural and mining industries. The economy is largely dependent upon agriculture, which accounts for about 60% of GDP (Felix and Gheewala, 2011a,b;

Kitula, 2006). Another limitation has been the lack of adequate electricity infrastructure, both in its availability to a vast majority of the population, and in its reliability when available (National Geographic, 2010). As Fig. 1 illustrates, Tanzania is highly dependent on biomass for its national energy needs, with electricity meeting only 1.2% of the country's energy demand (Odhiambo, 2009). Seventy percent of the Tanzanian population lives in rural areas of the country. Of this rural population, only about 2% has access to electricity from the national electric grid. This is largely unsurprising, given that only 14% of the entire population of Tanzania has access to the national grid (GEF and UNIDO, 2011). In some places, such as the capital city of Dar Es Salaam, Fig. 2 shows that almost 9 million sacks of charcoal are consumed every year (Mwampamba, 2007). Making matters worse, the nationwide supply of domestic fuelwood is about 20 million cubic meters per year, with demand reaching more than 40 million cubic meters per year, resulting in persistent shortages throughout the country (Sheya and Mushi, 2000). When programs have emerged to overcome these challenges, they have frequently been parochial in nature. For example, there have been previous projects aimed at increasing hydropower in Tanzania, but as one Rural Energy Agency (REA) ofcial told us, Most minigrids were constructed by missionaries only in southern and northwestern Tanzania for their own use and that of social services, including hospitals, not for general consumption. Rural Tanzanians could therefore stand to accrue social and economic benets through more widespread public access to modern forms of energy such as microhydro-powered electricity (Lipscomb et al., 2011).

The promise of Tanzanian microhydro electrication With this very goal in mind, the Tanzanian government established a National Energy Policy in 1992, and then revised it in 2003. The revised policy calls for increased fossil fuel resource exploitation, various supply and demand-altering programs aimed at reducing deforestation, and large increases in construction of public hydroelectric power capacity (Felix and Gheewala, 2011a,b). The government has placed emphasis on implementing these policies in an environmentally benign manner (Global Environmental Facility, 2009a,b). The Tanzanian government, through enactment of the Rural Energy Act Number 8 of 2005, established the Rural Energy Agency (REA), a Rural Energy Board, and a Rural Energy Fund, thus committing itself to facilitating electrication projects in rural areas, promoting rural energy services, and providing technical support to developers of rural electrication projects (Global Environmental Facility, 2009a,b; REA, 2012).

Electricity 1.2% Petroleum 8%

Solar and wind 0.8

Table 1 Economic and demographic indicators for Tanzania, 2010. Source: World Bank. Population, total (millions) Population growth (annual %) GDP (current US$) (billions) GDP per capita (current US$) GDP growth (annual %) Life expectancy at birth, total (years) Mortality rate, infant (per 1000 live births) Literacy rate, youth female (% of females ages 1524) Prevalence of HIV, total (% of population ages 1549) 44.8 3.0 22.9 527 7.0 57.4 60.2 76.4 5.6

Fuelwood and charcoal 90%

Fig. 1. National energy consumption in Tanzania by source, 2009.

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Fig. 2. Locations of microhydro pilot sites in Tanzania (red circles). Source: GEF and UNIDO, 2011.

Despite these goals, and the commitments having been made part of the public record, the microhydro sector in Tanzania remains signicantly underdeveloped (Kassenga, 1997). As of 2010, no fabricators of hydroelectric components or dam construction companies existed within the country. A 2011 Global Environment Facility (GEF) and United Nations Industrial Development Organization (UNIDO) report noted that the country lacks the technical, human, and institutional capacity to build small-scale dams, and has a weak policy and regulatory environment for facilitating markets for renewable energy (GEF and UNIDO, 2011). Out of a potential 250 MW of commercially exploitable microhydro resources, only 5 MW have been harnessed. Despite the potentially large marginal gains from investment in an underexploited sector, the lack of mature regulatory regimes and the dispersed and remote locations of microhydro sites act as substantial barriers to international investment. To overcome these challenges, the government has embarked upon the MBSH, which is designed to act as the cornerstone of a national energy policy and to remove barriers to the development of the country's small-scale hydropower resources (Barbut, 2011). As one of its project documents summarizes, the MBSH: Aims to promote a market based approach for small hydro-power (SHP) based mini-grids. [Developing] mini-grid[s] for decentralized needs is a very important concept for promoting rural electrication in Tanzania, since the spread of the national grid is very low or almost absent in remote rural areas. Thus, renewable energy-based decentralized power generation and distribution provides [an] opportunity for improving the quality of life in rural communities and also reducing [greenhouse gas] (GHG) emissions (though [its GHG impact] may be only marginal). [STAP, 2010]

Project design and key stakeholders The MBSH has been many years in the making, and as one UNIDO representative explained, The inception of this project started some years back when the United Nations and the Ministry of Energy and Minerals initiated a discussion on promoting SHP in Tanzania of course the country needs nancial support to be able to develop hydropower, thus the MBSH seemed like an ideal conduit. The MBSH kicked off in June 2011 with a total project budget of $13.4 million to be spent over the course of 48 months. Its primary stakeholders include UNIDO, the Global Environment Facility (GEF), the Ministry of Energy and Minerals, REA, the Tanzanian College of Engineering and Technology, and TANESCO, the Tanzanian national electric utility. The responsibilities for primary stakeholders are detailed in Table 2. The MBSH has four components and three goals. The rst goal is to establish a partnership between the GEF, the REA, and TANESCO to create a positive market environment, develop regulatory frameworks to promote utilization of Tanzania's abundant potential hydroelectric generation capacity, secure nancing avenues for microhydro projects, and strengthen related institutions. Relying on this partnership, the second goal seeks to promote domestic production capacity of microhydro turbines through technology transfer. The third and nal goal is to increase personnel skill in identifying, designing, implementing, and operating microhydro projects, in addition to developing 3.2 MW of demonstrable microhydro capacity at the nine pilot dam sites depicted in Fig. 2 and Table 3. Interestingly, though REA is involved in each project, developers of each site range from electric cooperatives and private companies to churches and nongovernmental organizations. The idea is that the development of these sites will help to meet growing residential, commercial, and industrial demand for

E. Adebayo et al. / Energy for Sustainable Development 17 (2013) 378385 Table 2 Institutional responsibilities within the MBSH. Stakeholder Ministry of Energy and Mines (MEM) Tanzania Electricity Supply Company (TANESCO) College of Engineering and Technology (CoET) Project Management Unit (PMU) UNIDO and GEF Responsibility Providing additional institutional support for the recommendations on microhydro and other renewable energy projects Publishing the adapted guidelines for microhydro installation and management Training engineers and managing a National Micro-hydropower Technical Center Coordinating all of the project activities carried out by the national experts and other partners by having close association with MEM and CoET Providing the PMU with the necessary management and monitoring support and offering nancial support for the project evaluation Executing the proposed project

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98 kW to 1 MW. The demonstration sites will feature small-scale dams that use simple reservoir and gravity-driven turbine designs to create electricity. The contractors and subcontractors responsible for constructing the equipment will design each site, including the hydroelectric dam and the mini-grid used to distribute the electricity created. Because each project location is different, the size of the generators and the components used to design and build the dams and mini-grids will vary at each site (GEF and UNIDO, 2011). Figs. 3 and 4 are examples of what the nine MBSH demonstration dams might look like once built. Targets and benets The project is designed to benet a number of stakeholder groups. A representative of REA envisions these benets going primarily to local communities, churches, and particularly those who would use the electricity for expanding economic activities. TANESCO would benet through gaining institutional and personnel experience in creating and servicing mini-grids and microhydro plants. The MBSH will also reduce the territory into which TANESCO must expand the national grid, saving the electric utility money and allowing it to concentrate on improving the deteriorating condition of the existing transmission and distribution network. Private hydropower developers in Tanzania will get a substantial boost in revenue and market share through the proliferation of available contracts to be lled. In the case of Andoya Hydro Electric Power Company, it will be investing $2.5 million in the pilot projects alone, and, depending on pilot project performance, the company will theoretically be a main contractor for subsequent microhydro system installations. The MBSH seeks to create a Tanzanian microhydro component manufacturing industry to support the construction and maintenance of microhydro systems. These industries should create high skill jobs, increase GDP, and increase industrial and commercial rms that would purchase and use power from the microhydro systems. Development of a countrywide microhydro industry is anticipated to spur large levels of commerce related to the installation of the microhydro systems. Multiple respondents explained that microhydro contractors will need to hire and train personnel in the installation of microhydro systems, which will create both skilled and unskilled positions for Tanzanian citizens. Because the systems will need ongoing maintenance as with any other complicated machinery, there will be many long term positions available for people trained in operating and maintaining the facilities. Both rural and urban populations would have access to new career sectors, spurring the need to create educational facilities in order to train the workforce for these jobs. Ideally, the electrication of rural areas through the MBSH will lead to a decrease in the amount of income spent by rural households on energy fuels. The increase in standard of living associated with access to electricity correlates to a decrease in the percent of household income spent on energy needs, a decrease of 35% for households living in poverty and of 14.5% for those not living in poverty. This increase in disposable income would theoretically enable households to engage in other forms of commerce, which may further increase their standard of living. Achieving this target, however, requires accomplishing a number of goals: Increasing access to modern and more environmentally friendly energy sources to improve rural life; Creating a receptive environment for developing the country's abundant microhydro resources by removing existing economic and regulatory barriers; Increasing awareness among key decision-makers, consumers, and other relevant stakeholders of the potential capacity of small-scale hydro power-based mini-grids; Facilitating local production of microhydro equipment and accessories;

Rural Electrication Agency

electricity, while reducing GHG emissions from the energy sector. If the demonstration sites are successful, support from GEF will allow the Tanzanian government to scale up microhydro projects and develop other sites around the country. To achieve these three goals, the MBSH consists of four components. The rst component will conduct feasibility studies for identied dam demonstration sites. As part of this component, the REA will work with the Tanzanian College of Engineering and Technology and TANESCO to prepare detailed feasibility assessments of the technical and economic viability of microhydro projects. Dedicated to building the capacity of microhydro stakeholders, the second component aims to train at least 50 individuals in the construction, operation, and maintenance of microhydro dams, at the National Micro-hydropower Technical Center. Trainees would ideally come from a variety of sectors, including engineering and business rm employees, government planners, bankers, contractors, and mini-grid operators. This Center will also train engineers in the fabrication and maintenance of hydropower equipment, and it will publish guidelines and technical standards for implementation and project management. It will operate for free for the duration of the project (or, more accurately, it is funded by the project's budget), but will begin to charge tuition for training services after the project closes. The third component encourages private investment in microhydro mini-grids and emphasizes the development of business models to do so. It will utilize seminars and consultative meetings to spread awareness about credit lines, nancing options, and rates of return for microhydro projects throughout the country. The nal component will build and develop 3.2 MW of demonstration plants. The initial nine MBSH project sites shown in Fig. 2 and Table 1 will include dams ranging in output capacity from

Table 3 List of Tanzanian microhydro demonstration projects under the MBSH. Source: GEF and UNIDO, 2011. Site number 1 2 3 4 5 6 7 8 9 Name Tandala Andoya Chita Mpando Chala Uliwa Salala-Ludilu Macheke Mhangazhi Total Capacity (kW) 407 1000 400 271 130 407 98 290 190 3193 Project developers REA, Tandala Diaconical Center, Bruderhaus DIAKONIE Germany REA, Andoya Hydroelectric Power Company REA, Chita National Service Camp REA, Imilinya Village REA, Chala Parish REA, RC Njombe Diocese REA, KKKT Makete REA, Mlangali Village REA, Mhangazi Electric Cooperative Association

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Fig. 3. A 9 kW run-of-the-river microhydro dam generating electricity in Tanzania. Source: UNIDO.

Developing business models that will enable the widespread development of small-scale hydro power-based mini-grids in Tanzania; Reducing GHG emissions resulting from carbon intensive energy sources like diesel fuel and kerosene burning generators and stoves (technologies used by the majority of Tanzanians in rural areas). Proposed project sites are expected to reduce GHG emissions by 335,648 t CO2e directly and 2,685,185 t CO2e indirectly, through reducing reliance on diesel generators (GEF and UNIDO, 2011).

The project should also have a number of other benets. As one respondent from UNIDO shared: MHP demonstration projects are also expected to bring about considerable socioeconomic benets by improving the electricity access situation, industrialization, and employment generation. The project will bring new technology, knowhow and skill level to Tanzania. The increased availability of power will spur the growth of other industries nearby the project location. The direct and indirect employment generation

Fig. 4. A 14 kW microhydro dam generating electricity in rural Kenya. Source: UNIDO.

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will be an added economic benet. Due to the increased electricity availability, productive activities will be increased so that the people will be empowered enough to pay the electricity bills. Moreover, the increased availability of electricity will in turn increase the productivity of the industries, which will ensure their repayment capacity for electricity bills. Table 4 also illustrates how grain mills, primary and secondary schools, and a variety of other microenterprises, will benet from rural electrication. One independent, peer-reviewed study of electrication efforts in Tanzania conrmed some of these benets (Kooijman-van Dijk and Clancy, 2010). The study found that the unreliability and low quality of existing energy sources force many shop owners and enterprises to either cease operations, or to carry dual sets of tools (those that run on electricity and those that need human or animate power and run manually), adding to their costs and reducing available working capital. Reliable electricity from sources such as microhydro dams, however, enabled these enterprises to invest only in one set of the most efcient machines, and have already been shown to reduce milling times for grain and the drudgery associated with water pumping. Grain millers especially have reported an increase in incomes after switching from diesel to electricity due to faster equipment operation and the ability to serve larger numbers of customers. As electrication spreads, tourism rms, schools, and government ofces can become large consumers in new markets for electricity. As demonstrated below, however, meeting this promise of microhydro electricity faces many challenges in practice. The challenges of Tanzanian microhydro electrication Although the hydrological potential of many rivers and waterfalls in Tanzania is well known, tapping these sources of energy can be difcult. Our respondents identied no less than four major barriers to fulll the promise of microhydro in Tanzania. Unreliable fuel supply The rst major challenge is drastic seasonal changes in the ow of Tanzanian water resources. The rivers in Tanzania that would be used to provide hydroelectric power are rain fed, and ow at low speeds. Large hydropower dams are constructed to increase the accumulation of water available for electricity production, and to store water for use in times of low rainfall. Fig. 5, however, shows that microhydro

generation therefore drops precipitously near the end of the calendar year. For four out of the last seven years, this dependency on hydroelectricity has created repeated serious power generation crises due in large part to drought; a recent crisis from October to November 2009 forced TANESCO to implement 14 h of daily load shedding (Rickerson et al., 2010). So while hydroelectric power has the potential to meet a great deal of Tanzania's electricity needs, it is signicantly less available during the dry season when the tropical rainstorms are far less frequent. As one respondent added: In severe droughts and prolonged dry seasons, levels of water in the dams may reach minimum level for technical operation of the generators. Apart from high evaporation rates, irrigation, which is highly necessary during dry spells, but often carried out upstream of reservoirs, accelerates depletion of water level in the dams. In such situations, electric power generated is often under the targeted production level. Unfortunately, most existing hydroelectric facilities in Tanzania are run-of-the-river facilities that are unable to store water in reservoirs, meaning they lack the capacity to buffer or mitigate such shortages of water. Financial problems at TANESCO A second signicant barrier is TANESCO's inability to accumulate the large amounts of foreign currency needed to build capital-intensive dams, and to purchase fuel and replacement parts, which are necessary to keep other electricity generation sources running during the times of low hydroelectric energy production. TANESCO's operation of the national electricity grid has not been marked by signicant successes. Energy losses within their system are high above 25% in most areas of the grid and they result from a complex combination of electricity theft, aging equipment, underrated equipment, erroneous meter readings, transformer overload, excessive reliance on low voltage lines, poor maintenance, substandard construction, and the use of inappropriate materials. Low electricity tariffs A third barrier relates to inappropriately low electricity tariffs throughout Tanzania. TANESCO's electricity tariffs are affected by long term nancial agreements with its debtors, which often lead to the necessity of rate increases. Most of TANESCO's foreign loans are

Table 4 Potential users of microhydro electrication in Tanzania. Source: GEF and UNIDO, 2011. Potential users Tandala No. Households Primary schools Secondary schools Grain mills Micro-businesses Mission centers RC mission center Focal development college Carpentry workshops Welding workshop Sunower oil extractors Mission vocational training center Health center Total 1457 4 1 15 40 3 Demand in kW 364.25 40.00 20.00 180.00 80.00 150.00 Andoya No. 759 75 Demand in kW Chala No. 1824 3 2 1 12 10 1 1 10 1 4 Demand in kW 456.00 15.00 10.00 20.00 144.00 20.00 30.00 20 120 12 48 Uliwa No. 600 1 1 2 10 2 Demand in kW 150.00 5.00 5.00 24.00 20.00 30.00 Salala-Ludilu No. 256 1 0 3 5 1 Demand in kW 64.00 5.00 0.00 36.00 10.00 15.00

15

1 1 834.25 895.00 30.00 264.00

20.00 150.00

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energy capacity approximately 28 developing countries have enacted national feed-in tariffs (Rickerson et al., 2010). Expand stakeholder involvement Inclusion of Tanzanians living in rural areas in the investor-pool would not only increase the funds available to the project, but it would substantially increase the rural populations' involvement and stake in the success of the MBSH. Without stakeholder involvement, projects can end up being thwarted by the very people that they are designed to help. Past hydrological study projects have encountered vandalism and theft of equipment by local residents, and these challenges should be considered a possibly serious problem for the pilot project dams. During previous hydrological research projects in Tanzania, Research catchments [were] typically established without involving the key stakeholders, which results in instruments being installed at inappropriate places as well as [placing the projects] at high risk of theft and vandalism (Gomani et al., 2010). However, if a large enough segment of the local population has a stake in the project, societal pressures could deter against vandalism or theft of the equipment. Financial institutions could even provide small loans to rural Tanzanians in order to allow them to participate in the project nancing. The loan money could be transferred to the project partners on behalf of residents, who would then be entitled to a rate of return on the funds greater than the rate imposed for the loanthis cooperative model has worked explicitly for microhydro dams in Indonesia, Nepal, and Sri Lanka (Sovacool, 2013; Sovacool and Drupady, 2012). This could spread the debt risk over a larger group of people, and give the rural poor the potential to earn a return on their investment, ideally increasing their upward mobility and standard of living. Improve project oversight The fact that the project was originally scheduled to start in 2011, but didn't start until 2012 signals the need for improved oversight. This could mean more direct interaction between the project partners and the contractors in charge of constructing the dams, or simply hiring someone to be in charge of holding various parties to more strict deadlines. Without more information about what held up the project for a number of months, it is difcult to determine what changes should be made. However, it is clear that something must be done in order to ensure that such delays do not arise in the future. Long term oversight of the power providers and guaranteeing that equal and fair prices are charged to electricity customers will be crucial for building trust between stakeholders. Without this, customers may start to refuse to pay bills that they feel are in error due to the lack of transparency in accounting procedures, as is the case with electricity customers in Bengali and Zanzibar (Winther, 2012). The project could also mitigate this lack of trust through the increased stakeholder involvement mentioned above. Break dependence on imported technology The large international investment presence in funding the MBSH reects the fact that Tanzania lacks the necessary expertise to develop its own microhydro systems, and means that the project's nancial success is partly tied to the interaction between the Tanzanian shilling and other foreign currencies. As one respondent put it, the industrial revolution has not yet reached Tanzania, so our ability to manufacture microhydro units ourselves is nonexistent. The problem is that dependence on imported technology and licenses could be potentially crippling if the exchange rate rises to the point of making it impossible to secure the needed components or personnel for the duration of the project. This risk is compounded by the fact that

Fig. 5. Electricity generated from the Kidatu and Mtera hydroelectric dams in Tanzania. Source: Kainkwa, 1999.

denominated in foreign currency, so when the Tanzanian shilling faces devaluation against one of those foreign currencies, the utility needs to raise rates in order to meet its foreign debt obligations. There are many special interest groups that lobby TANESCO for placement in lower tariff classes, which creates pressure to increase tariffs on other customer groups. Because TANESCO's grid is nationalized, electricity prices throughout the country are standardized by region, which leads to subsidization of expensive-to-serve customers by those who are inexpensive to serve. Hydropower-connected generation stations are inexpensive to run, and end up subsidizing the sale of electricity from diesel-powered generation stations, and the various electricity tariffs do not always reect the true costs of production. Poverty and theft TANESCO has also had problems with accumulating the debt of its customers, who are themselves poor and frequently below the international poverty line, as more than half of Tanzania's population lives in poverty. The Tanzanian poor expend more than 35% of their household income in order to meet their energy needs, through purchasing kerosene, charcoal, and biomass fuels (GEF and UNIDO, 2011). In the past, many private customers have simply refused to pay electricity tariffs. The Tanzanian public sector borrows services such as electricity and water from the utilities, which results in an unsustainable accumulation of accounts receivable for public utilities like TANESCO (Mwandosya and Luhanga, 1993). Policy recommendations How, then, can these barriers be overcome so that the MBSH can achieve its targets and expand access to electricity in Tanzania? We present ve recommendations in this concluding section. Bundle hydro with other sources of electricity Creating abundant electric power generation capacity in rural Tanzania drawing only from microhydro sources is potentially fruitless as it does not successfully ensure that such units are integrated into a diversied portfolio of power plants. For example, promoting microhydro in tandem with wind turbines could help smooth out the variability of both, especially if storage facilities are built to help handle the intermittency of hydroelectric generation near the end of the calendar year (Kainkwa, 1999). Another way of encouraging a diverse mix of renewable resources would be introducing a feed-in tariff, or FIT, to subsidize wind, landll gas capture, and solar electricity. As one study recently noted, feed-in tariffs are the world's most prevalent renewable energy policy and have driven approximately 75 [percent] of the world's installed [photovoltaic] capacity and 45 [percent] of the world's wind

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internationally developed and produced technology is being used to construct the dams. Furthermore, UNIDO has warned that: Though the potential for microhydropower plants is high in Tanzania, this potential is not transformed into realistic projects, as the knowledge level and technical capacity within Tanzania is limited Investors lose their interest due to very high expenditures incurred on the imported equipment. This risk is even more relevant when all the equipment (turbines, control systems, etc.) have to be imported from abroad. This leads to higher investment cost and increased payback period, which are unattractive to most of the private investors. Creation of [a] local equipment fabrication platform will considerably reduce the investment cost of such projects. [UNIDO, 2011] The project's chances of success could be increased by creating, in advance, the support infrastructure industries, rather than hoping that they will develop over time as a result of the program. If time and money were set aside to develop and manufacture the needed technology within the country, domestic materials and parts could be used for the construction of the dams, and domestic currency could be used to purchase these components from local suppliers. This would help to create jobs in the hydroelectric sector, and reduce the project's susceptibility to unforeseen international changes. Scale up pilot project dams The MBSH could also benet from a clearer plan for scaling up the number of microhydro dams from the original pilot projects producing 3.2 MW. As one respondent explained: There is a need for clear strategy for scaling up. Strengthening of nancial and institutional mechanisms to support small hydropower projects on a commercial scale may be a challenge as well. There has to be a commercial demand from entrepreneurs or energy service companies for installing and operating decentralized systems in rural areas, in the face of minimal commercial demand for electricity. Thus, government support will be required for any scaling-up of small hydropower systems beyond the demonstration units. If large or rapid enough, scaling-up would have the ancillary benet of facilitating domestic manufacturing of microhydro parts and accessories, and eventually the units themselves, capacity that a country like Tanzania sorely needs. References
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