Dar es Salaam, Tanzania --- ESI-AFRICA.COM --- 20 January 2012 - Tanzania’s state-owned power utility says it is in talks with a group of lenders including Citigroup Incorporated’s domestic unit for a US$257 million loan for the funding of electricity generation.
“The discussions may conclude this week,” said Tanzania Electric Supply Company managing director William Muhando in an interview here.
“The money is needed to fund emergency power projects that we undertook last year to meet demand,” Muhando explained. “We expect to conclude negotiations with a group of financiers led by Citibank today or tomorrow.”
Tanzania, East Africa’s second-biggest economy, had an electricity deficit of 264 megawatts (MW) last February following a drop in hydropower generation after a drought. The resulting power outages caused a slowdown in economic growth to 6.4% in the third quarter of 2011 from 6.7% a year earlier, the National Bureau of Statistics said.
Tanesco, as the utility is known, is also pursuing financing for new generation projects to be commissioned this year, Muhando said. The government is expected to complete an agreement with HSBC Holdings plc to fund a 100MW gas- fired plant in Dar es Salaam, estimated to cost US$165 million, he added.
“This and another 70MW plant fired by heavy fuel oil in Mwanza have been contracted to Jacobsen Elektro AS,” the Norwegian power-plant builder, Muhando said. In addition, the utility is seeking US$107 million for a 70MW plant in the northern region of Tanga, he said.
Tanesco expects to report an annual loss of US$125 million for the 2011 financial year and the same amount for this year because of the drought, Muhando concluded.