In the credited funds, about 100m euro will be used to support the National Rural Electrification Program, while 30m euros goes to sanitation services. Another 100m euros chunk is slated for the Tanzania-Zambia Power Interconnection Project.
On electrification it is expected that the loan will finance densification projects in 10 regions, connecting up to 90,000 households.
It will also enable installation of about 3MW of solar production capacity in remote centers operated by TANESCO, for years using diesel generators.
Treasury Permanent Secretary Dotto James said the funding will go a long way into supporting earmarked priority projects.
“Power interconnectivity was aimed initially at ensuring power supply security for the zone and, in the medium term, pooling of the region’s energy resources,” he said.
The funding entails installation of a 400 kV transmission line and substations from Iringa to Sumbawanga via Mbeya and Tunduma, and an interconnection line in Tunduma for the border stretch with Zambia.
The project complements plans of the Tanzania Rural Energy Agency (REA) tied to grid extension and densification projects where the national grid is accessible as well as power supply for off-grid projects.
In rural areas, the historically low electricity access rate has rapidly improved in the past few years with the Rural Electrification Program. A quarter of rural households are today connected to electricity, from 17percent in 2017.
The Tanzania-Zambia Interconnection Project is also supported by the World Bank and the European Union.
The water and sanitation sector has historically been one of AFD’s primary sectors of intervention in Tanzania with 258m euros over the past 10 years.
Stéphanie Mouen, the AFD country director, reaffirmed France’s commitment to support Tanzania in its endeavor to attain middle income economy status by 2025.
“2019 was a record year with 170m euros for projects approved by AFD. 2020 is already another record year with 300m euros of financing signed and ready for implementation,” she said, highlighting that 2021will see more of project implementation.
Diversification of AFD financing activities towards other important sectors for the country is also on the cards, the director noted.
The energy sector is now the first sector in terms of AFD commitments in Tanzania with close to 427m euros approved during the past 10 years, she added.