The World Bank’s board of executive directors approved the credits.
Specifically, the funds would be utilised for power sector reforms, forging public-private partnerships, and strengthening national capacity for the optimal use of the country’s natural gas reserves.
Minister of Energy and Minerals, Prof Sospeter Muhongo, who disclosed this, said the government was committed to reducing the cost of power supply by expanding the use of domestic natural gas in electricity generation and promoting private sector participation in both the power and gas sectors.
“We are taking concrete steps to strengthen power sector governance and to improve planning and implementation capacities for bringing more electricity to homes and
businesses across Tanzania,” Prof Muhongo said.
The Tanzanian power sector is facing major challenges due to below average rainfall that have reduced hydropower generation and due to inadequate past investment in power generation capacity.
As a result, the state-owned electricity utility, TANESCO, has increased the use of expensive emergency generation plants that have placed the sector in financial difficulties.
The energy sector’s financial woes are expected to peak in 2014, bringing the cumulative deficit over the period 2011-2014 anywhere between $760m to $1bn.
Less than 19 per cent of Tanzania’s 46 million citizens have access to electricity. “With these two new operations, the World Bank will help to place the power sector on a more sustainable path, and will help create foundations to maximize benefits of natural gas reserves for all Tanzanians,” the World Bank’s Country Director for Tanzania, Mr Philippe Dongier said.
The two projects consist, the development policy operation of $100 million (the first of series of three) that will support the government of Tanzania) to address the financial gap in the power sector, especially in TANESCO.
This will also help expand power generation using natural gas through public-private partnership, reform sector institutions, and strengthen policy and institutional foundations for maximizing the benefits of natural gas reserves.
Another project consist, the complementary technical assistance project of $21.46 million that will help build critical capacity for the power and gas sectors. “This project is expected to be co-financed by the Canadian International Development Agency, CIDA”.
The projects involve collaboration across the World Bank Group, with Jacques Morisset, Lead Economist based in Dar es Salaam serving as team leader for the Development Policy operation, and Robert Schlotterer, Senior Infrastructure Finance Specialist and Alexander Huurdeman, Senior Gas Specialist, serving as co-team leaders for the capacity building project.