AfDB, EU, and France invest $300m in Tanzania

The Tanzanian government, the African Development Bank, and the French Development Agency (AFD) have signed agreements for two development project loans worth $300 million. These funds will finance the construction of the Kakono Hydropower Plant, an 87.8-megawatt facility located in the Kagera region in the north of Tanzania. Additionally, the project received a grant of EURO 36 million from the European Union. The Kakono Hydropower Project aims to increase renewable generation capacity and reduce hydrological risk via a dam located on a new watershed that is less affected by droughts.

Tanzania currently depends on hydropower and thermal power plants, mainly gas-fired, for its electricity supply. However, it has considerable untapped renewable energy potential to meet its rapid growth while taking a low-carbon path. A coalition of development partners, including the African Development Bank, Agence francaise de developpement, and the European Union, is co-financing this project. The Kakono Hydropower Project, which will be implemented by Tanzania’s Electric Supply Company (TANESCO), will reduce greenhouse gas emissions by 216,065 metric tons per year and comply with the best international environmental and social standards.

The Kakono Hydropower Project is expected to have a major impact on the economic development of the rapidly growing zone, which lies at the heart of the Great Lakes region. The project will serve 4 million people and increase the service coverage rate by around 7% of the population. Alongside the construction of the new hydropower plant, there will also be associated infrastructure built, including the upgrading of the existing Kyaka substation and a new 39-kilometer 220-kilovolt transmission line, and capacity building support for TANESCO.

The African Development Bank Country Manager for Tanzania, Patricia Laverley, expressed her support for the project, stating that it would serve approximately four million people, small-medium enterprises, and mining companies in the northwestern part of the country. She added that the construction of the new power plant would 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 and contribute to building a more competitive economy in Tanzania, under the leadership of President Samia Suluhu Hassan.