WASHINGTON, August 26, 2010 - The World Bank’s Board of Executive Directors approved a US$150 million credit to support the implementation of a new electricity transmission project in Tanzania.
The Backbone Transmission Investment Project is expected to increase availability, reliability and quality of grid-based power supply to northern regions of Tanzania. It will finance the first phase of a new 667 km high voltage alternating current transmission line from Iringa to Shinyanga linking existing and future generating sources in southern Tanzania to the load centres in the Mwanza and Arusha regions in northern Tanzania.
In the medium to long term, the project will also facilitate power trade in the region in the context of multi-purpose water and energy resources development by providing the critical link between the Eastern Africa Power Pool (EAPP) and the Southern Africa Power Pool (SAPP), linking Tanzania with Kenya in the north and Zambia in the south.
“By increasing the availability and reliability of electricity in the northern part of the country, this investment will not only support the government’s growth and poverty alleviation efforts that access to electricity brings in terms of social and economic benefits but also facilitate the conditions for private sector development in the country,” stated John Murray McIntire, World Bank Country Director for Tanzania, Uganda, and Burundi.
Despite the significant potential of domestic energy resources and tangible increase in access to electricity from 7.5 percent in 2000 to 14 percent of the population in 2009, the electrification rate in Tanzania remains low and users face severe and prolonged power outages. Where electricity is available, the quality of supply is poor; and blackouts and other service interruptions are common.
The recent Africa Infrastructure Diagnostic study (AICD) estimates that load shedding and emergency generation costs Tanzania over 5 percent of GDP annually. The AICD report has also shown the importance of adequate generation planning, taking into account a well-diversified mix of generation resources and timely investments in the transmission and distribution subsectors to maintain the overall reliability of the system. This project is the next major milestone in efforts made by the Tanzania Electric Supply Company (TANESCO) to improve electricity service and coverage through much-needed upgrade of its existing network.
“The project is intended to have positive impacts for the overall development and growth of the country,” said Pankaj Gupta, the World Bank Task Team Leader for the project. “In particular it will alleviate the increased demands for electricity in northern parts of Tanzania due to increased mining and other economic activities in this area. The significance to Tanzania is also reflected in the interest that our donor partners have shown in this project. It is anticipated that the project will become a model for financing large public sector projects in the country,” he added.
The African Development Bank (AfDB), European Investment Bank (EIB), Japan International Cooperation Agency (JICA) and Korean Economic Development Cooperation Fund (EDCF) are expected to be parallel financiers to the project. AfDB and JICA are planning to co-finance the Dodoma to Singida segment of the transmission line (US$129.7 million) while the EIB is expected to finance the Singida to Shinyanga segment of the transmission line (US$134.5 million). Korea EDCF is expected to finance the expansion of four substations (US$36.06 million).
This is the first operation to be approved by the International Development Aassociation for Tanzania during fiscal year 2010/2011. In total, the World Bank’s currently active country portfolio includes 25 operations with a net commitment of US$2.85 billion. In addition, Tanzania benefits from 11 regional projects, in which country-specific financing amounts to over US$230 million.