AfDB Approves $120m Loan To Build Hydropower Project In Tanzania

(AFRICAN EXAMINER) – The African Development Bank (AfDB) has approved a $120 million loan to fund the construction of a 50 megawatt hydropower plant in Tanzania.

The project which is located in Western Tanzania will provide reliable renewable energy to households, schools, clinics and small and medium-sized enterprises in the Kigoma Region of the country.

The AfDB is Africa’s premier development finance institution. It comprises three distinct entities which include the AfDB, the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).

On the ground in 37 African countries with an external office in Japan, the bank contributes to the economic development and the social progress of its 54 regional member states.

According to a statement distributed on behalf of AfDB, the Malagarasi Hydropower project has several components which include a run-of-the-river hydropower plant facility; a 54- km, 132 kV transmission line that will connect to Tanzania’s national grid.

In addition, it also has a distribution network expansion operation that includes rural electrification and last-mile connections; project management and contract administration support; and compensation and resettlement of affected persons.

Moreover, its overall project cost is estimated at $144.14 million. The bulk of the funding ($120 million) will be sourced from the bank group’s sovereign window, with an additional $20 million contributed by the Africa Growing Together Fund – a co-financing fund with resources from the government of the People’s Republic of China that is administered by the bank. The Government of Tanzania will provide the remaining $4.14 million.

The hydropower plant’s expected average annual output of 181 GWh will meet the electricity needs of as many as 133,649 Kigoma households, bringing the region’s electrification rate more closely in line with the rest of the country.

The project is expected to create about 700 jobs during construction, cut the region’s electricity generation costs to approximately $0.04/kWh from the current $0.33/kWh, and also reduce reliance on greenhouse gas-emitting fossil fuels. The cost of doing business will also fall because industry will no longer need to maintain costly back-up generators.

President of AfDB, Dr. Adesina Akinwumi noted that the approval of the project “is a reflection of the Bank’s commitment to assist the Government of the United Republic of Tanzania to accelerate its transition to more inclusive and sustainable growth through the production of clean, reliable and affordable electricity”.

The project aligns with Tanzania’s national Development Vision 2025 and its Second Five-Year Development Plan (2016/17 – 2020/21) and complements other regional initiatives, including the North West Grid 400 kV Nyakanazi-Kigoma transmission line project, which the AfDB is financing in parallel with the South Korea Economic Development Co-operation Fund.

“The Malagarasi project will also directly contribute to the bank’s Light UP and Power Africa High 5 development priority, which is being implemented through the institution’s New Deal on Energy for Africa strategy”, the statement added.

While commenting on the approval of the loan by the Board of Directors of the bank, the Director of the AfDB’s Power Systems Development Department, Henry Batchi Baldeh, said the project is “one of the flagship physical infrastructure investments in the Government of the Tanzania’s Development Vision 2025 and Tanzania’s current Five-Year Development Plan, and that it will increase the share of renewable energy in Tanzania’s energy mix”.