A residential demand for electricity in Dar es Salaam: an economic analysis

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University of Dar es Salaam
The “two pronged” energy crisis is playing havoc on the less Developed Countries’ economics. The non-oil producing countries in particular, are faced with the oil crisis and deforestation crisis simultaneously. In Tanzania, like most developing countries, this crisis is reflected in both productive and services spheres. For the domestic sector, the crisis manifests itself through shortage of oil products namely illuminating kerosene and liquefied petroleum gas, coupled with their attendant price rises on the one hand and deforestation crisis which threatens the main traditional source of domestic energy, namely charcoal and fuel wood on the other. This situation calls for a serious search for alternative domestic energy sources as a solution to the crisis. Hydropower has already been pinpointed as the best alternative so far. Several studies done, indicate that, the potentiality of hydropower sources is very high in Tanzania (in excess of 4000 MW). This study’s main objective has been to estimate the determinant factors influencing the residential demand for electricity in Dar Es Salaam City. This objective was based on the need to determine and understand the nature of the inter-relationships between the determinant factors i.e. income, population, appliance stock, time, prices of electricity, kerosene, gas and charcoal amongst others, - and the quantity demanded of electricity in residential areas. This has been deemed to be important in facilitating demand management policy formulation geared towards the consumption of electric energy as the most efficient, cheap and hence, the best alternative source of energy for the residential consumers. Several literature have been reviewed as a base for our study and a stock and adjustment log-linear model specified. Average aggregate data has been used for the econometric analysis of the problem for Dar es Salaam. The results from the regression analysis revealed that, residential electricity demand is determined mainly by income, own price of electricity, electric appliance stocks and time. The other determinants were found to be insignificant at conventional levels. Policy implications arising from the findings for the short-run include; the establishment of a co-ordinating organ under the Ministry of Water Energy and Minerals’ Energy departments which will direct energy resources utilization and develop a domestic energy sources pricing system, geared towards meeting specific objectives (e.g. encouraging the consumption of electricity) as opposed to the current isolated pricing system. This is important in matching the availability and utilization of various energy sources and also in avoiding monopolistic tendencies by supplying firms such as raising the price of domestic electricity due to the price elasticity of demand as per our findings. In the short-run also, the availability of “necessary” electric appliances should be made through importation and expansion of existing local production, a recategorization of electric appliances from the luxurious import items, would also facilitate their availability. In the long run, expanded local manufacture of electric appliances is necessary in ensuring their supply, at the same time reducing pressure of foreign exchange for their importation. Furthermore, this move is anticipated to facilitate the exploitation and utilization of our local resource base thus, develop our skills and technical know-how. Finally, electricity consumption is one of the measures of economic growth. However, the whole question of the ability to consume electricity hinges on the purchasing power of the consumers. In order to raise consumer incomes, raising efficiency for higher productivity in all spheres of the economy, together with equitable distribution of income is inevitable.
Electric power distribution, Dar es Salaam (city), Mathematical models
Kulindwa, K. A. (1985) A residential demand for electricity in Dar es Salaam: an economic analysis, Masters dissertation, University of Dar es Salaam. Available at (