The bulk of the funding ($120m) will be sourced from the Bank Group’s sovereign window, with an additional $20m contributed by the Africa Growing Together Fund, a co-financing fund with resources from China that is administered by AfDB.
Emmanuel Tutuba, the Treasury Permanent Secretary, said at the signing ceremony that the loan agreements will increase the amount of funds committed by the bank ongoing energy sector projects from $325.19m to $465.19m (1.07trn/-).
The Malagarasi project is a green field investment to build a 49.5 MW grid-connected power generation facility with an average annual energy production of 181 GWh, he stated.
The hydropower project will improve power supply in western Tanzania and provide clean, reliable and affordable source of supply to address the energy deficit.
It will lessen dependence on fossil-based generation and reduce losses associated with long transmission lines, and in turn contribute to improving Tanesco’s financial sustainability,” the Treasury chieftain underlined.
The project is expected to take five years, for the construction of the hydropower station involving, civil works such as the powerhouse, gravity dam and water diversion works, among others.
The government believes the Malagarasi Hydropower project together with the ongoing construction of the 280km North-West Grid 400kV Nyakanazi-Kigoma transmission line and its smaller version, the 98km Rusumo-Nyakanazi 132kV line will improve access to reliable and affordable electricity supply in the region, he said.
Nnenna Nwabufo, AfDB’s Director General for Eastern Africa, said in her remarks that the the project is one of the flagship physical infrastructure investments in the country’s Development Vision 2025 and in the current Five-Year Development Plan. It will increase the share of renewable energy in Tanzania’s energy mix, she stated.
The loan is a reflection of the bank’s commitment to assist Tanzania to accelerate its transition to more inclusive and sustainable growth through the production of clean, reliable and affordable electricity, she added.