12 June 2013 – Japanese based company Sumitomo is to build a US$414 million 240 MW gas fired power station in Tanzania. Financing for this project is to be sourced from groups including the Japan Bank for International Cooperation, Nippon Export and Investment Insurance and Sumitomo Mitsui Banking Corporation.

The power station will be established on the outskirts of Dar es Salaam. Tanzania, which has discovered extensive gas resources, is building a 532 km long Chinese funded US$1.2 billion gas pipeline from the south of the country to Dar es Salaam.

The country’s recoverable natural gas reserves are estimated at 41.7 trillion cubic feet (tcf). Discoveries offshore of Tanzania and Mozambique waters have led to predictions the region could become the world’s third-largest exporter of natural gas.

At the same time Tanzania has estimated that it will cost US $500 million to reform the state-run power utility, Tanesco, including the offsetting its debts. The World Bank will provide US$300 million to that end in to supplement a US$200 million grant from the African Development Bank for the transformation of Tanesco.

The government has previously said it was considering splitting the loss-making Tanesco into three separate entities responsible for power generation, transmission and distribution. The power monopoly had become inefficient, with only 21% of Tanzanians having access to electricity, which is unreliable most of the time.