DAR ES SALAAM (Reuters) - Tanzania made an advance payment on Wednesday of $309.65 million to a joint venture of Egyptian companies for the construction of a hydropower dam on a UNESCO World Heritage site, despite strong opposition to the project from conservationists.
In December, Tanzania signed a deal with two Egyptian companies, Arab Contractors and El Sewedy Electric Co, to build the $3 billion Rufiji hydroelectric project at Stiegler’s gorge inside the Selous Game Reserve.
The Permanent Secretary of Tanzania’s Finance and Planning Ministry, Doto James, who is also the government’s paymaster general, issued the advance payment to a representative of the Egyptian companies on Wednesday.
“The $309.65 million payment is part of an advance payment equivalent to 15 percent of the total project cost,” Tanzania’s finance ministry said in a statement.
“This project is scheduled to be completed within three years at a cost of more than 6.6 trillion Tanzanian shillings ($2.9 billion).”
The government said it was financing construction of the 2,115-megawatt dam with internal resources, mostly through tax revenues.
Covering 50,000 square km, the Selous Game Reserve is one of the largest protected areas in Africa, according to UNESCO. It is known for its elephants, black rhinos and giraffes, among many other species.
The World Wildlife Fund conservation group said in a report in July last year the proposed large-scale hydropower dam “puts protected areas of global importance, as well as the livelihoods of over 200,000 people who depend upon the environment, at risk.”
Tanzania has rejected the environmental concerns, saying the dam would actually conserve water and sustain wildlife populations at the world heritage site.
An independent study said in January that the dam would likely cost more than double the government’s estimates.
Joerg Hartmann, an independent expert and assessor on the sustainability of hydropower projects, said the dam was likely to cost $7.58 billion once financing and other costs were taken into account, rising to $9.85 billion on account of cost overruns associated with such projects.
Editing by Hereward Holland