A US$ 120M loan facility has been approved by the board of directors of the African Development Bank (AfDB) to fund the implementation of the Malagarasi Hydropower project in Tanzania. Adesina Akinwumi the president of the bank noted that the approval “is a reflection of the Bank’s commitment to assist the government of the East African country to accelerate its transition to more inclusive and sustainable growth through the production of clean, reliable and affordable electricity.”
The project’s overall cost is estimated at US$ 144.14M, and while the bulk of the funding will be sourced from the AfDB’s sovereign window, an additional US$ 20M will be contributed by the Africa Growing Together Fund – a co-financing fund with resources from the government of China and which is administered by the AfDB. The government of Tanzania will provide the remaining US$ 4.14M.
Components of the Malagarasi Hydropower project
The Malagarasi Hydropower project consists of the construction of a run-of-the-river hydropower facility and a 54- km-long 132-kV transmission line that will connect to Tanzania’s national grid. It also consists of the expansion of a distribution network operation which includes rural electrification and last-mile connections.
Other components include project management and contract administration support; and compensation and resettlement of affected persons.
The project is expected to create about 700 jobs during the phase of construction, cut the region’s electricity generation costs to about $0.04/kWh from the current $0.33/kWh upon completion, and reduce reliance on greenhouse gas-emitting fossil fuels.
Contribution to Tanzania’s and the AfDB initiatives
The Malagarasi Hydropower project aligns with Tanzania’s National Development Vision 2025 and its Second Five-Year Development Plan (2016/17 – 2020/21). It also complements other regional initiatives, including the North West Grid 400-kV Nyakanazi-Kigoma transmission line project, which the AfDB is financing together with the South Korea Economic Development Co-operation Fund, administered by the Export-Import Bank of Korea and the Ministry of Strategy and Finance.
Furthermore, the project will directly contribute to the AfDB’s Light Up & Power Africa High-5 development priority, which is being implemented through the institution’s New Deal on Energy for Africa strategy.