The International Finance Corporation has agreed to finance the expansion of the Songo Songo Gas-to-Power Project at a cost of $120 million to help ease the power crunch in Tanzania.

The Songo Songo natural gas development project, expected to commence later this year, will involve additional infrastructure to expand natural gas production from the current level of 92 million standard cubic feet per day (MMscfd) to approximately 102 MMscfd.

IFC said the expansion will help maximise gas production, to support additional electricity generation and gas sales, between now and the year 2026.

The additional power from the Songo Songo Gas-to-Power project will be a boon to both households and manufacturers in the country, who continue to experiencing power problems. Unreliable power supply has been cited as one of the factors that have increased the cost of doing business in Tanzania.

According to the Tanzania Electricity Supply Company (Tanesco), the country’s current energy demand is estimated at 900-1,000 Megawatts and is expected to grow at a rate of eight per cent per year for the next three years.

Though the country’s total installed capacity is 1,580MW, electricity supply has remained erratic, especially the 562MW generated from hydropower.

Vagaries of weather have in many cases reduced supply to the national grid, at times plunging the country into darkness.

As a result, the country has in the past been forced to ration power has adversely affecting the growth of the manufacturing sector, which heavily relies on affordable electricity.

Of the estimated 900-1000 MW energy demand, about 600MW is needed in Dar es Salaam alone where most of the industries that form the backbone of the country’s manufacturing sector are found. Other towns that need more power supplies due to their rapid expansion are Arusha, Tanga and Mwanza.

The Songo Songo gas field is located both onshore and offshore Songo Songo Island, approximately 20km off the main coast of Tanzania and 200km south of Dar es Salaam.

The project was originally established in 2001 as a public-private partnership with the support of the World Bank.

According to Songas Ltd, by utilising the country’s own natural gas resources, the facility has substantially reduced operating costs for Tanesco and other industries in Tanzania. The company said $1.8 billion has been saved since commercial operations commenced in 2004.