World Bank approves credit for Tanzanian gas and electricity project

Oct 12, 2001 02:00 AM

The World Bank has approved a credit worth $ 183 mm (203 mm euros) for Tanzania to finance natural gas development and an electricity generation project, the credit institution said. "The project, expected to cost about $ 295 mm on completion, will reduce Tanzania's dependence on imported oil for electric power generation and provide an alternative, lower-cost and more reliable power source," a bank statement said.
It added that the credit facility would be issued through the bank's soft-loan arm, the International Development Association (IDA). The project involves development of a gas-gathering system on Songo Songo island, about 240 km (150 miles) south of Dar es Salaam, and the construction of a pipeline for transporting the gas to the capital, where there is an existing 112 MW thermal plant.

Under the project, Ubungo Thermal Station, owned by the Tanzania Electric Supply Company (TANESCO) -- a state firm lined up for privatisation -- would be converted into a gas-fired power generation facility. Tanzania, with one of the world's lowest annual gross domestic product (GDP) per capita at $ 250, is heavily dependent on agriculture, the main employer of its 33 mm people.
But economists here say that because industries which represent 15 % of GDP, and services -- particularly tourism -- are growing fast, the need for more reliable and sustainable sources of power is growing. Barely 7 % of Tanzanians have access to electricity at present, and half of all electricity is consumed in the capital Dar es Salaam, where most of the population still depends on wood and charcoal to meet its daily energy needs.

The bank's statement said that "a joint private sector venture between PanAfrican Energy Tanzania and Tanzania Petroleum Development will be set up under the project to be responsible for developing and marketing gas to commercial and industrial users and to exploit opportunities for exports to neighbouring countries."
The project is also expected to boost access to electricity by poor people, by developing financially viable and institutionally sustainable rural energy schemes to serve new areas along the pipeline corridor.

Source: AFP
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