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INTRODUCTION Tanzania is in East Africa and has an area of about 883,749 km2 and a population of about 36 million with average annual growth rate of 2.9%. About 70% of the population resides in rural areas being engaged mostly in agricultural and livestock production activities. Main sectors of economy in Tanzania include agriculture which account for 45 percent of the Gross National Products (GDP) and about 60% of export earnings; natural resources including forestry and fishing (5.7 % of GDP); and Tourism (12 % of GDP). Other key sectors encompass industry, mining and infrastructure that include roads, water, energy, and telecommunications. Since 1996 the country’s GDP growth rate has been consistently rising and reached 6.2 percent in 2002. However, the average per capita income is still very low (US$270 per annum). Recognising the poverty situation in Tanzania, the Government developed the National Strategy for Growth and Reduction of Poverty (NSGRP) in 2005, which is a second national organizing framework for putting the focus on poverty reduction high on the country’s development agenda. The NSGRP keeps in focus the aspirations of Tanzania Development Vision 2025 for high and shared growth, high quality livelihood, peace, stability and unity, good governance, good education and international competitiveness. The NSGRP recognises the constructive roles of all sector and other major policy processes and counts on inter-sector collaboration. It maintains commitment to the regional and international initiatives for social and economic development. The targets of NSGRP are in line with those of the Millennium Development Goals (MDGs). Among other sectors that have a crucial role in stimulating economic and social development, energy and tourism are given a high profile in the NSGRP. Therefore, NSGRP highlights intervention areas in various sectors including energy and tourism. Though very important in the development process, energy’s procurement has a number of