The energy sector in Tanzania is undergoing a major transformation following the increasing use of Compressed Natural Gas (CNG) as an alternative to petroleum and diesel.
Over the past decade, the country has witnessed a strategic shift where the government and private sector have invested heavily in the natural gas value chain.
This article examines in depth the key drivers driving the growth of the CNG business in Tanzania, touching on economic, policy, technological, and environmental aspects.
- Cost Difference and Economic Viability.
The primary and biggest driver for the growth of the CNG business in Tanzania is the savings in operating costs . For the average car user, fuel costs are a major component of daily expenses.
- Cheaper than Oil: CNG is about fifty percent cheaper than gasoline. In an environment where global oil prices are unpredictable and affected by geopolitical conflicts, CNG offers price stability. For example, the cost of one kilogram of natural gas that can be used to travel the same distance as one liter of gasoline is very low, which is why commercial drivers such as Taxi, two and three wheelers (Bajaji) are resorting to this technology to increase their profits.
- Domestic Price Stability: Unlike fuel that is imported in foreign currency (Dollar), natural gas is produced domestically. This means that the price of CNG is not significantly affected by the depreciation of the Shilling against the Dollar, which gives investors and consumers long-term budget certainty.
- Large Domestic Gas Reserves.
Tanzania is blessed with vast natural gas reserves, with over fifty-seven trillion cubic feet (57 TCF) of proven reserves. This domestic availability of the resource is a key driver of business.
- Energy Security: The availability of sufficient natural gas in Lindi and Mtwara regions ensures that the CNG business will not face a shortage of raw materials. This gives confidence to companies looking to build Mother and Daughter Stations that there will be enough gas to serve the growing market.
- Reducing Foreign Dependence: By using its own resources, Tanzania is reducing the amount of foreign exchange spent on oil imports, something the government is encouraging as part of its strategy to industrialize the economy.
- Government Policies and Regulatory Framework
The deliberate efforts of the Government of the United Republic of Tanzania through the Ministry of Energy, TPDC, and EWURA have been key pillars.
- Gas Utilization Master Plan: The government has set guidelines to encourage the use of gas in homes, industries, and vehicles. This includes expanding locations for the gas filling stations at strategic location along major roads and in major cities such as Dar es Salaam, Morogoro, and Dodoma.
- Simplification of Licensing: The Energy and Water Utilities Regulatory Authority (EWURA) has simplified the licensing procedures for private investors wishing to set up Conversion Centres and filling stations. To date, dozens of companies have been granted permits, which encourages competition and lowers service costs for the end customer.
- Infrastructure Development
The growth of any energy business depends on the ease of access to the product. Currently, Tanzania is witnessing a significant increase in CNG infrastructure.
- Filling Stations:The construction of large gas filling stations in areas with high vehicle traffic, such as near airports and highway intersections, has reduced “range anxiety” for drivers.
- Mobile Stations and Virtual Pipelines:For areas not served by mainline gas pipelines, the use of specialized trucks transporting compressed gas to daughter stations has begun to gain momentum. This allows the CNG business to expand beyond Dar es Salaam to other regions
- Public-Private Partnership (PPP)
The relationship between government agencies like TPDC and international and local investors has been a major catalyst.
- International Investment: Companies like TAQA Dalbit and others have brought in capital and modern technology to build CNG stations that are integrated with other services (Integrated Stations). This has helped bring international standards of safety and efficiency to Tanzania.
- Research and Development (R&D):Educational institutions such as the Dar es Salaam Institute of Technology (DIT) and the University of Dar es Salaam have been at the forefront of conducting research and providing professional training on how to modify vehicle systems. This has reduced the reliance on outside technicians and increased consumer confidence in the technology.
- Environmental Benefits and Clean Energy (Environmental Factors)
As the world moves towards reducing its carbon footprint, CNG is considered a “transition fuel” that is cleaner than gasoline and diesel.
- Emissions and Pollution Reduction: Natural gas emits very little carbon dioxide, twenty-five percent less than gasoline, and contains no lead or sulfur particles that pollute the air. This makes the CNG business part of the national agenda to combat climate change.
- Influence of International Organizations: Aid agencies and development banks tend to finance clean energy projects, making loans and subsidies more accessible to CNG investors than those for fossil fuels.
- Automotive Market Growth and Transportation Demand
Tanzania has a large number of vehicles entering the country each year, many of which are used vehicles that have great potential to be converted to run on gas.
- Public Transport Needs: The public transport sector, including regional buses and freight trucks going to neighboring countries (Zambia, DRC, Rwanda), is looking for ways to reduce costs. If these trucks use a gas system, their profits will double, creating a sustainable market for CNG providers.
- Social Awareness: The success of early adopters of CNG has spread rapidly through social media and casual conversation. This has created a huge demand among private vehicle owners who now see CNG not as an experimental technology, but as a permanent, economical solution.
- Development of Conversion Technology
In the past, installing gas systems was considered difficult and disruptive to the engine. However, technological advances have changed that.
- Fifth Generation Systems (Sequential Injection):Modern gas injection technology allows the car’s computer to dictate the exact amount of gas needed, which prevents the engine from overheating or losing power. This has reduced the fear of luxury and modern car owners switching to gas.
- Cylinder Safety: The use of cylinders made of solid seamless steel has proven that CNG is safe even if the vehicle is involved in an accident, something that was a psychological barrier for many in the past.
Conclusion
The growth of the CNG business in Tanzania is not a coincidence, but the result of a combination of natural resource wealth, sound government policies, and strong consumer economic demand. As infrastructure is brought closer to the people and taxes are reduced on packaging equipment, this sector is expected to become a major transportation energy source in the country. For an investor, this is the right time to enter the market, and for a consumer, this is the right time to save costs. CNG is not just the energy of the future, but the energy of the present that is taking Tanzania to a modern and green economy
