By Mkinga Mkinga
The Citizen Reporter
Dar es Salaam. Tanzania is set to borrow $700 million (about Sh1.05 billion) from the Export-Import Bank of China to fund a power plant for boosting the national grid and connecting the southern regions.
In an interview with this paper, the permanent secretary of the Ministry of Energy and Minerals, Mr David Jairo, said the loan would help the Tanzania Electric Supply Company (Tanesco) build a 300MW gas-fired power plant in Mtwara.“The estimated cost of the project is $682 million (about Sh1.02 billion). Depending on negotiations, other costs may be restructured,” Mr Jairo said on Thursday.
He said Exim Bank was ready to provide the amount and had get permission from the Ministry of Finance and Economic Development before borrowing the amount.
“Technical details and costs of the project have already been worked out. We are making progress in securing the loan from China's Exim Bank,” Mr Jairo assured.Contacted for comment, Finance and Economic Affairs minister Mustafa Mkulo said he was aware of the plan, but could not delve into more details on the phone.
According to plans, implementation of the project would start within this fiscal year (2011/2012). He said the plant would be fuelled by natural gas from Mnazi Bay fields in Mtwara.
The Mtwara project was initially to be rolled out by Canadian firm Artumas that was involved in the Mnazi Bay gas drilling activities in conjunction with Barrick Gold company. However, it ran aground following the 2009 financial crisis.The PS said the ministry, which has lately come under fire over the electricity shortage crisis, had three other power projects requiring huge funding.
He said priority in power projects would be given to Kagera, Kigoma and Rukwa regions.
In June the Tanzania Electric Supply Company (Tanesco) announced daily 12-hour power cuts for an unspecified period due to low water levels at the hydropower dam at Mtera.
The country 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 to six per cent from 7.2 per cent in March. It said frequent power outages would hurt output while food and fuel prices could push inflation higher.
Tanzania’s energy demand is close to 1000 MW, but it produces less than 800 MW. Some 55 per cent of the country's electricity is generated from hydro-power stations.