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Govt, Kiwira sign 200MW power generation pact
2006-08-31 08:01:16
By Austin Beyadi and Celestine Linus, SAUT
In a bid to diversify sources of power generation and reduce dependency on hydro electricity, the government has signed an agreement with Kiwira Coal Power Limited (KCP) in a $271m/- venture expected to supply the national grid with 200 megawatts.
Energy and Minerals Minister Dr Ibrahim Msabaha said the project would enable the country produce surplus power to sell to neighbouring countries.
Unveiling the venture to the press in Dar es Salaam yesterday, Dr Msabaha was optimistic the project would spur economic growth and stabilize power supply in the country.
According to the contract, the minister said KCP would sell electricity to TANESCO at a rate not exceeding USD 5.6 Cents per unit for a period of 20 years.
Considering the financial position of TANESCO, the government will open a special account (Escrow Account) worth US$ 13.2m/- sufficient to enable the utility firm settle electricity bills for two months, the minister said.
However, the minister clarified that the funds would only be used if TANESCO fails to settle bills for power consumed.
He said among other agreements signed during the ceremony include the implementation, power purchase, transitions line and facilities transfer and Escrow Account.
Phase one of the project would entail energy generating and transmission line, and facility transfer.
He said the energy generating project is expected to cost approximately USD250m/- and the transmission line will cost USD 21.8m/-.
The minister also said the 200MW-project would be implemented in three phases, adding that the first phase would entail 50 MW power generation.
It will start in July next year. The second phase is a 100MW project slated to commence in November next year while the last 50MW phase is expected to take off end of 2008.
Another 200MW project could be implemented, depending on the performance of the initial one and the capacity of TANESCO to procure more power.
Currently, KCP generates 6 MW of electricity of which 4MW is sold to TANESCO and the remaining 2MW is used at the Kiwira coal mine.
The minister disclosed that the signing was a culmination of negotiations with KCP which began in February this year.
On March 27, this year, the Ministry of Energy and Minerals and TANESCO on one side signed an agreement of Intent with KCP.
KCP is 70 per cent owned by private investors with the government having a 30 per cent stake in the firm.
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