Solar Business Webinar

- Legal terms and opportunities for investors in Tanzania

Peter Kasanda, Partner, Dar es Salaam – Tanzania

5 April 2017
 Overview of presentation
1 – Legal framework and opportunities in Tanzania

1A – Legal framework – general

1B – Legal framework – solar sector

1C – Terms and conditions in a PPA

1C – Terms and conditions in a PPA (cont.)

2 – About Clyde & Co

3 – Contacts

1
 1. Legal framework and opportunities in Tanzania
About Tanzania

 Peaceful and politically stable since independence in 1961

 Consistent annual economic growth rates of 7%

 Receives more than US$ 100 million in Foreign Direct Investment every year

Opportunities in Tanzania’s solar sector

 Population of 50 million of which only 30% have access to electricity

 More than 3,000 hours of sunshine every year

 Solar sector has the potential for rapid expansion

2
 1A. Legal framework – general
Framework – general

 Based on English common law

 Different laws for Tanzania Mainland and Tanzania Zanzibar

 Backlog of cases in the court system – largely tax and employment

Institutions – general

 BRELA is the Tanzanian Companies Registry

 TIC offers incentives to foreign investors bringing over USD 500,000 in investment

 MOL administers land on behalf of President, who is vested with all land in Tanzania

 BOT controls capital flows (e.g. foreign loan registration)

3
 1B. Legal framework – solar sector
Framework – solar sector

 Electricity Act 2008 and regulations thereunder are the main pieces of legislation

 Producing/distributing solar energy in excess of 1 MW – done through a competitive

bidding framework monitored by EWURA

 Selling solar energy products (e.g. lanterns) – import taxes and TBS standards

Institutions – solar sector

 MEM sets overarching policy, EWURA regulates the sector and NEMC is the
environmental watchdog

 REA offers finance to eligible rural energy projects

 TANESCO is the main off-taker with a right to first refusal – currently being unbundled
into generation, transmission and distribution companies

4
 1C. Terms and conditions in a PPA
Model PPA for solar projects

 Published by regulators in 2013 to be used “as a starting point in the procurement of

energy from a Solar Generating Plant”

 Relevant to solar projects larger than 10 MW which involve a public institution (i.e.
TANESCO)

Standardized PPA for solar projects

 Provided for under the Electricity (Development of Small Power Projects) Rules 2016

 Relevant to solar projects less than 10 MW

 Must be for a 25-year term

5
 1C. Terms and conditions in a PPA (cont.)
Noteworthy terms and conditions in the model PPA

 Conditions precedent
– Determined on a case-by-case basis
– Likely to include proof of entry into guarantee agreements

 Indemnities
– Fines for non-compliance with Tanzanian laws borne by non-complying party

 Dispute resolution
– Option of ICSID, ICC or LCIA arbitration
– In practice, preference for local arbitration

 Assignment
– Fair competition clearance issues to consider prior to assignment
– Liabilities under the PPA remain after assignment

6
 2. About Clyde & Co
 Clyde & Co is a global law firm with a pioneering heritage and a resolute focus on its
core sectors of energy, infrastructure, trade, marine, insurance and aviation

 2,000 legal professionals operating from 47 offices, including in Dusseldorf

 Extensive experience in sub-Saharan Africa through our offices in Cape Town,

Johannesburg and Dar es Salaam, which includes:

– Advising on the process of setting up off-grid solar and wind projects Tanzania

– Advising on a multi-million USD sugar bio-fuels project in Tanzania

– Advising a banking syndicate in relation to the financing of a 40 MW solar project in

Kenya

– Advising on a 100 MW solar power project in Niger

– Advising an international solar technology company on a joint venture with a South

African energy company
7
 3. Contacts
Clyde & Co Tanzania
Peter Kasanda, Partner
 T: +255 768 983 003
 E: peter.kasanda@clydeco.com
Kankiza Tibaijuka, Associate
 T: +255 768 983 023
 E: kankiza.tibaijuka@clydeco.com
8
Useful links
Energy and Water Utilities Regulatory Authority
(EWURA)
 http://www.ewura.go.tz/
Rural Energy Agency (REA)
 http://www.rea.go.tz/
Tanzania Electric Supply Company Limited
(TANESCO)
 http://www.tanesco.co.tz/
Tanzania Investment Centre (TIC)
 http://www.tic.co.tz/
Mini-Grids Information Portal
 http://www.minigrids.go.tz/en
375 2000 3300 47
Partners Legal professionals Total Staff Offices and associated
offices in 18 countries

Clyde & Co Tanzania accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced,
stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Clyde & Co Tanzania. © Clyde & Co Tanzania 2017