Impact of Reforms on Energy Sector Performance in Tanzania.

Andilile, James (2021) Impact of Reforms on Energy Sector Performance in Tanzania. Doctoral thesis, The Open University of Tanzania.

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Abstract

In the 1990s, Tanzania mooted the reforms to improve investment, efficiency and financial condition of the power sector, but little is known about the outcomes. This study deployed the ARDL Model, paired-sample t-statistic test on a dataset from 1989 to 2020 to examine the impact of reforms on capacity, electricity connectivity, labour productivity, system losses, profitability, and liquidity of the sector. The results reveal that capacity growth, electricity connectivity, and labour productivity had modestly improved after the reforms, but system losses, profitability, and liquidity did not. The investment growth however was largely sponsored by the government, which appears to disconnect with the central tenet of reforms enshrined in the laissez-faire theory, that links investment gains to private ownership. We, therefore, contend that to bridge infrastructure deficits and ensure long-term secure supply, investments from both public and private sectors should be encouraged. We also uncovered that commercialization, competition, liberalization law, and independent regulation had a positive impact on performance improvement. We, thus, recommend that these policies should be prioritized regardless of the form ownership. To address infrastructure deficits and ensure long-term secure supply, we suggest that both public and private sector investment should be encouraged while promoting improved sectoral governance and effective competition. These findings are significant as they are likely to help stakeholders to appreciate the value and limitations of the existing reform model when formulating or reformulating their reform programs. Keywords: Efficiency, Financial condition, Investment, Reforms.

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