HomeRegional NewsEast AfricaTanzania concluding US$400 million loan for power project

Tanzania concluding US$400 million loan for power project

The Ubungo power
station in Tanzania
Dar es Salaam, Tanzania — ESI-AFRICA.COM — 01 March 2011 – Tanzania is close to concluding a US$400 million loan in order to finance a 200MW coal-fired power project amid chronic ongoing energy shortages and power rationing in east Africa’s second largest economy.

In a televised month-end national address, President Jakaya Kikwete confirmed that the government had extended nationwide power rationing after a prolonged drought had led to a 230 MW deficit on the national grid.

The loan was first announced in 2009, when officials said they were negotiating funding with China. The president pointed out that the processing of the loan had been delayed by the change of ownership of the Kiwira coal mine in the south of the country. “The change of ownership has now reached its conclusion, and the process of securing the loan is proceeding with optimism," Kikwete said.

The government has decided to regain full ownership of the coal mine after its 2005 privatisation.

Kikwete said Tanzania could be forced to shut down power generation at the country’s largest hydro-electric dam after a long dry spell depleted water levels. “The water level at the Mtera dam is currently just 1.25m above the minimum level required to run hydro-power turbines,” he explained.

He said Tanzania was in talks with private investors for a separate 300MW gas-fired power plant in the southern Tanzanian town of Mtwara, after initial investors had pulled out of the project due to the global financial crisis. “We have found other investors for the project and negotiations are proceeding well,” he stated.

The president went on to say that the country’s cabinet had authorised the state-run power utility, Tanzania Electric Supply Company (TANESCO), to commission independent power producers to set up emergency power-plants that could generate an additional 260 MW of power.

Tanzania produces only 470MW of electricity against a peak demand of 833MW.