Mini-hydropower projects for rural Tanzania

Saturday May 5 2012

By JEFF OTIENO

SIX MINI-HYDROPOWER projects are to be constructed in rural Tanzania under a World Bank energy programme.

The hydropower projects will be constructed in Mbeya, Iringa, Ruvuma, Arusha and Kigoma, with the help of the Global Village Energy Partnership International (GVEP International) and Tanzania’s Rural Energy Agency (REA). The projects will be isolated mini-grids, not connected to the main electricity network, and will have a combined capacity of approximately 7.5 MW. They are estimated to cost more than $25 million, and will be financed through public-private partnerships, with the project developers contributing part of the equity.

Tanzania is one of the countries in the region experiencing energy problems due to a combination of factors, mainly vagaries of weather and constant infrastructure breakdown that has for long limited the capacity hydropower generation.

In January, Tanzania Electric Supply Company Ltd (Tanesco) announced it would seek a syndicated loan of Tsh 408 billion ($257 million) from local banks for power emergency programmes.

The move came after Aggreko withdrew supply to the national grid citing non-payment of services rendered.

According to the Confederation of Tanzania Industries power interruptions cost manufacturers more than $18.4 million per annum, increasing the cost of production of goods and services.

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“Projects would be expected to apply for carbon revenues, performance based connection grants, Tanzania Energy Development Assistance Programme credit line and other private investments which would contribute to the overall project financing,” said Rehema Kahurananga of GVEP International – Africa regional office.
According to GVEP International’s regional manager for Africa James Wakaba, the common barrier to renewable energy project development is the high cost and lack of capacity to carry out feasibility studies.

“Projects also need to complete environmental impact assessments and have proper financial structuring,” added Mr Wakaba.
The project will not only give the rural folk an opportunity to access electricity, but it will also supply clean energy to the grid, providing an alternative to fossil fuel-based electricity.

The programme is supported by the Energy SME Trust Fund, financed by the Russian Federation and administered by the World Bank. The fund was established in April 2009 to support energy SME development in sub-Saharan Africa.

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