Tanzania Electric Supply Company (TANESCO) and US-based energy firm Symbion Power are to embark on the construction a 400 MW gas-fired power generation plant for Tanzania’s southern regions.
Top officials of the two firms told reporters yesterday in Dar es Salaam that the joint venture project, is to be constructed in Mtwara,.
The two partners yesterday signed a Memorandum of Understanding (MoU) for implementation of the project under public-private partnership. The MoU was signed by Tanesco Acting Managing Director, Felchesmi Mramba and Symbion Chief Executive Officer, Paul Hinks.
Although the project may look like an “alternative strategy” to calm down Mtwara residents who recently staged violent protests against a government-backed gas pipeline from Mtwara to Dar es Salaam, both Tanesco and Symbion officials made clear that “their project has no connection with the Chinese-financed gas pipeline.”
“This project should not be seen as a replacement of the rejected government gas pipeline…these are completely separate and unrelated projects,” Tanesco Board Chairman, retired army chief, Robert Mboma clarified, shortly after signing of the MoU at Tanesco’s head office.
The two partners will set up a joint company to oversee the project, which include construction of a 650-kilometre transmission backbone from Mtwara to Songea where it will be connected to the national power grid through a line that will be built from Makambako to Songea.
Implementation of the project will be phased, according to Mramba, noting: “It will take three years from financial closure to completion.”
The first phase will involve increasing the existing capacity in Mtwara to meet the growing demand in the southern regions of Lindi and Mtwara itself. Engineering study is expected to start in March, after which construction works would commence this year, according to Hinks.
Speaking on the positive elements of the project, Hinks said: “The South of Tanzania has been starved of energy for decades and this has severely stunned its development. However, this project will succeed because it includes transmission lines that will feed the grid system…the transmission lines will be owned exclusively by Tanesco but they will be built as part of the project.”
He explained that Symbion and Tanesco will be working with a number of international funding agencies, banks and private equity firms this year in order to put project’s financial package together, noting: “Many partners have already expressed great interest in the project. We are hopeful that US government agencies such as the US Exim Bank and the US Overseas Private Investment Corporation will show keen interest in the investment too.”
Symbion predicts bright future for Tanzania in terms of energy resources, saying the country has abundant gas and “could become self sufficient and even a regional exporter to countries that are not blessed with fuel resources.”
Mramba said southern regions have experienced poor power reliability for many years due to lack of connection to the national grid and expressed optimism that through the planned Tanesco and Symbion partnership project, Lindi, Mtwara and Ruvuma will be connected to the national grid.
“Connecting southern regions to the national grid will significantly improve reliability of the entire electricity network. This is one of the best ways Tanesco can benefit from the PPP arrangement whereby the public and private sector join hands to undertake projects that would otherwise be difficult to implement.”
Besides power supply, according to Tanesco and Symbion officials, the project would create jobs and incomes for millions of residents in the southern regions.
Discussions (between the two partners) on the project started in September, last year when Symbion presented the proposal to Tanesco and the Ministry of Energy and Minerals.
Yesterday’s signing of board-approved MoU allows the companies to form a public private partnership and develop the project. It will take around 12 months to put the necessary financing in place before the three-year clock begins to tick, according to Symbion chief executive officer.
Details on the total cost of the entire project were not disclosed yesterday, with Tanesco and Symbion top officials only saying: “The cost will be known and publicly announced after completion of the engineering study and other ground works.”