Hydropower Project in Tanzania to Receive $300M

Tanzania, the African Development Bank, and the French Development Agency (AFD) have all signed agreements for loans totaling $300 million for two development projects.

AFD Country Director Celine Robert noted: “We are delighted with the signing of this project, which is fully in line with international climate objectives and AFD’s strong commitments in that regard. This investment will have major impact on economic development and on population well-being as the infrastructure will answer the power needs of 3 to 4 million people. This signing represents an important milestone and confirms that the cooperation between Government and AFD is deepening.”

The 87.8-megawatt Kakono Hydropower Plant will be built in the Kagera region of northern Tanzania with the money. The European Union donated EUR 36 million to the project as well.

To generate electricity, Tanzania relies on both hydropower and thermal power plants, the latter of which is primarily gas-fired. However, it has significant untapped renewable energy potential to meet its rapid growth while staying on a low-carbon course.

A group of development partners is funding the Kakono Hydropower Project to increase renewable generation capacity and decrease hydrological risk by building a dam on a new watershed less prone to droughts. A formal signing ceremony took place on March 15, 2023, in Dar es Salaam.

African Development Bank, Agence Francaise de Developpement, and European Union worked closely to build the Kakono Hydropower Plant. The African Development Bank is providing a soft loan of $161,470,000; the French Development Agency is providing a soft loan of €110,000,000, and the European Union is providing a grant of €36,000,000 to co-finance this project.

The Kakono Hydropower Project, to be carried out by Tanzania’s Electric Supply Company (TANESCO), will comply with the highest international environmental and social standards and result in an annual reduction of greenhouse gas emissions by 216,065 metric tons.

The project will benefit four million people, increasing service coverage by about 7 percent. This expanding region, located near the center of the Great Lakes, is poised to benefit significantly. The project will strengthen Tanzania’s leadership position within the East African Community, fostering industrialization and economic growth in Tanzania and the surrounding countries.

It is planned to upgrade the current Kyaka substation, construct a new 39-kilometer 220-kilovolt transmission line, and provide capacity-building support for TANESCO as part of the new hydropower plant’s construction.

Participants at the ceremony later voiced their approval of the endeavor.

Tanzania’s Deputy Country Manager at the African Development Bank, Patricia Laverley, said that four million people, small and medium businesses, and mining companies would benefit from the Kakono Hydropower Plant once it was completed.

She added: “The construction of the new power plant will help to improve TANESCO’s financial sustainability arising from the decommissioning of the diesel-based power plants in the Kagera Region.  The economic benefits derived from the supply of affordable power will be immense. We can expect to see marked improvement in the quality of life for people in the Kagera region and in Tanzania more broadly. These tremendous gains will contribute to building a more competitive economy in Tanzania, under the leadership of President Samia Suluhu Hassan.”

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