HomeRegional NewsEast AfricaTanzania seeks US$700 million Chinese loan for power plant

Tanzania seeks US$700 million Chinese loan for power plant

The Ubungo power
plant in Tanzania
Dar es Salaam, Tanzania — ESI-AFRICA.COM — 30 June 2011 – The government of Tanzania is seeking a US$700 million loan from the Export-Import Bank of China to fund a power plant aimed at plugging a chronic power shortage in East Africa’s second largest economy.

Permanent secretary in the Ministry of Energy and Minerals David Jairo said the loan would help state utility Tanzania Electric Supply Company to build a 300MW gas-fired power plant in the southern part of the country.

“The estimated cost of the project is US$682 million. Depending on the negotiations, other costs may be restructured or dropped,” Jairo told Reuters in a telephone interview from here.

“If all goes according to plan, we expect to start implementation of the project in the 2011/12 financial year.” Jairo said that once completed, the project was expected to ease ongoing power shortages considerably.

“The technical details of the project have been worked out and the cost already done. We are making good progress in securing the loan from China’s Exim Bank,” he stated.

Jairo said the plant would be fuelled by natural gas from the Mnazi Bay fields in the Mtwara region. Tanzania has proven natural gas reserves of 7.5 trillion cubic feet.

The Tanzania Electric Supply Company (TANESCO) this month announced daily 12-hour power cuts for an unspecified period due to low water levels at hydropower dams and a shortage of fuel for thermal power generation. Tanzania depends heavily on hydropower for energy and experiences frequent power shortages during dry seasons.

The International Monetary Fund cut its 2011 growth forecast for Tanzania from 7.2 to 6% in March, saying frequent power outages would hurt output while food and fuel prices could push inflation higher.

Tanzania has energy demand close to 900MW capacity, but produces less than 800MW. Some 55% of the country’s electricity is generated from hydro-power stations.