Tanzania plans massive wind project

SINGIDA, TANZANIA - Tanzania will begin construction of a $120 million wind power project early next year to curb chronic energy shortages in east Africa's second-biggest economy, a senior government official said.

Prolonged drought at hydropower stations and rising fuel prices have resulted in acute energy shortfalls, forcing the state-run power utility to introduce rolling blackouts.

Construction of the first-ever wind power station in the country, in the central town of Singida, will add some 50 megawatts of electricity to the national power grid.

"The financiers of the project have already given the go-ahead after looking at all the relevant studies. We expect the construction work to start at the earliest in February," Tanzania's deputy minister for Industry and Trade, Lazaro Nyalandu, told Reuters.

The state-run National Development Corporation NDC holds a 51 percent stake in the project and a privately owned company, Power Pool East Africa Limited, retains the rest. The details of the financing were not immediately available.

"It's a 15-month project, so we expect the first 50 megawatts of electricity to start being generated by the year 2012," Nyalandu said.

The country produces most of its electricity from hydro dams and generates close to 300 MW using natural gas from a deposit on Songosongo island off the coast.

Its energy demand is close to 900 MW while it produces less than 800 MW.

"The project will start generating an initial 50 megawatts of electricity at a cost of around 120 million U.S. dollars but has the capacity of expanding to 300 megawatts in future," said Nyalandu.

"The financing facilities for the project will comprise both equity and debt financing. Shareholders in the joint venture have already agreed on the structure of the financing," he added.

He said studies had shown that wind resources in the Singida region along the national power grid could support wind farms with installed capacity of up to 500 MW.

"Wind power can be a source of cheap electricity in the country and thus help to considerably lower the current cost of power," said Nyalandu.

The state-run Tanzania Electric Supply Company TANESCO has announced it will raise tariffs by 18.5 percent from January 1.