Kenya’s existing natural
gas pipeline which
cannot handle the
demand
 
Dar es Salaam, Tanzania — ESI-AFRICA.COM — 21 September 2011 – China and Tanzania are expected to sign a US$1.06 billion loan deal for the construction of a natural gas pipeline from the southern part of the East African country to its commercial capital, a Tanzanian newspaper has quoted the country’s energy minister as saying.

Last month, energy and minerals minister William Ngeleja said in a presentation to parliament that the government was seeking loans from China to finance construction of the pipeline from Mtwara to Dar es Salaam.

Now The Guardian newspaper has reported that US$300 million of the loan will be used to construct processing plants at Mnazi Bay, and that finance minister Mustafa Mkulo and Ngeleja were expected to fly to Beijing to sign the loan agreement.

“This is a must project for the future of this country “’ we have secured financing from the Chinese and the agreement will be signed next week,” Ngeleja was quoted as saying.

“Some people have been misleading the public by saying the Chinese own this project, but the truth is that it is government owned. The Chinese are financiers and the project will boost gas supply as well as reducing or ending the power supply problem in the country," he added.

Tanzania’s chronic energy shortages have resulted in rolling power outages, undermining economic growth in the country.

The Tanzanian government said it planned to shift its focus to investment in thermal plants fuelled by natural gas and coal in attempts at weaning itself off weather-dependent hydropower, which accounts for 55% of the country’s energy sources.

The paper reported the project would be carried out by the China Petroleum and Technology Development Company (CPTDC) “’ a unit of China National Petroleum Corporation (CNPC) “’ and state-run Tanzania Petroleum Development Corporation.

The project is expected to start in December 2012. An existing natural gas pipeline owned by private investors faces capacity constraints amid growing energy demand in east Africa’s second-largest economy.