NAIROBI, April 5 (Reuters) - Tanzania launched a power plant this week with a capacity of 240 megawatts (MW), part of a plan to end chronic energy shortages in East Africa’s third-biggest economy.
The natural gas-powered Kinyerezi II plant, which began operating on Tuesday, was built on the outskirts of Tanzania’s commercial capital Dar es Salaam by Japan-based Sumitomo Corp using combined-cycle technology for 798 billion shillings ($353.72 million).
Eighty-five percent of the cost was covered through a loan from a Japanese bank, a Tanzanian presidency statement said.
It did not name the bank but Tanzanian newspapers said Sumitomo Mitsui Banking Corporation had provided the loan.
“We expect to complete two more projects here in Kinyerezi, which will also employ natural gas and generate 600 megawatts,” Energy Minister Medard Kalemani said, according to a statement posted on the website of TPDC, the national oil company.
The government aims to source more of Tanzania’s electricity from natural gas above the current 50 percent, authorities say.
Tanzania boasts reserves of over 57 trillion cubic feet (tcf) of natural gas, but faces periodic power shortages as it relies on hydro-power dams in a drought-prone region for about a third of its 1,570 megawatts of installed capacity.
Last year President John Magufuli said the country needed to invest $46.2 billion over the next 20 years to revamp its ageing energy infrastructure and meet soaring electricity demand.
Investors have long complained the lack of reliable power hurts business there.
Tanzania plans to boost power generation capacity from around 1,500 MW currently to 5,000 MW over the next three years, according to the country’s energy ministry.
It is aiming to launch construction of a $2 billion hydroelectric plant at Stiegler’s Gorge in July that will produce 2,100 MW upon completion in three years time.
The government is working on two more projects in Tanzania’s south that would generate 620 MW on completion, Kalemani said.
TPDC said it plans to help unlock more natural gas both for power generation for homes and businesses and for distribution directly to industries for use as a source of energy. ($1 = 2,256.0000 Tanzanian shillings (Reporting by Omar Mohammed with additional reporting by Fumbuka Ng’wanakilala Editing by Aaron Maasho and Mark Heinrich)