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Mid-Term Review of the Swedish Financing Support to the Rural Energy Fund (REF), Tanzania

Provision of efficient energy services to rural areas in Tanzania, where the vast majority of the population live, is seen as an important means by the Government to improve living conditions, stimulate economic growth and reduce poverty. As part of a restructuring of the energy sector and the implementation of the 2003 National Energy Policy, a Rural Energy Agency (REA) and a Rural Energy Fund (REF) were established in 2007 with the primary function to promote increased access to modern energy services by subsidising investment costs for project developers in rural areas.

In 2010, a Specific Agreement between Sweden and the United Republic of Tanzania on Financing Support to the Rural Energy Fund (REF) was signed, covering Swedish support for the implementation of a rural energy programme during the period 2010-2013, with an amount of SEK 200 million. The Specific Agreement stipulates that an independent Mid-Term Review were to be performed during 2012. Partly in parallel to this support, Sweden is financing Capacity Development of the REA during the period 2009-2013, at an amount of SEK 14 million. A Mid-Term Review of this support was carried out in 2011.

REF is the mechanism by which the Rural Energy Board (REB) (through REA) fulfils its mandate of providing grants to subsidise the capital cost of projects that are developed by public and private entities, cooperatives and local community organisations. In addition, the fund provides resources for technical assistance, training and other forms of capacity building to qualified developers by qualified experts related to the planning and preparation a project prior to an application for a grant. REF can also channel special-purpose funds for financial assistance and co-financing of investments in innovative pilot and demonstration projects.

Sweden has for over a decade supported the restructuring of the energy sector in Tanzania through financing of technical assistance to formulate the new National Energy Policy, to develop the institutional and legal framework for the establishment of REA and REF, as well as the currently on-going capacity development of REA. In addition, Sweden is financing a Trust Fund with the World Bank for technical assistance, primarily to support the implementation of the Tanzania Energy Development and Access Programme (TEDAP), of which the off-grid component is channelled through REA.

Prior to the decision to finance Capacity Development of REA and Financial Support to the REF, a Systems-Based Audit was carried out. The Specific Agreement for the Swedish financing support to the REF was signed in December 2010. The objective of the support is increased access to electricity in rural areas from 2.5% in 2010 to 5% in 2012 and 16% by 2017. Specific objectives and outputs are found in the LFA matrix attached to REA’s Proposal Document. A monitoring consultant has been assigned by the Embassy to assist in the follow-up of the support and the preparations for the review meetings that are held between REA and the Embassy annually.

The objective of the Mid-Term Review (MTR) was to assess progress and advise if there was any need for adjustment in the ongoing cooperation between Sweden and Tanzania in the area of rural electrification. The MTR summarised obtained and expected results in relation to REA’s Monitoring and Evaluation Framework, and contained an analysis of any deviations, taking into account rules and regulations as agreed to in the Specific Agreement.
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