Boost for East Africa power pool project as Dar, Nairobi secure $600m

The plan for a regional power pool moved closer to realisation last week when Kenya and Tanzania secured more than $600 million in funding from international financiers.

Tanzania received $465 million from the World Bank for its power interconnector project with Zambia, while Kenya signed a $179 million loan with French development agency Agence Francaise de Developpement (AFD), breathing new life into the region’s power pool projects which, once complete, will link more than 10 countries.

The World Bank’s funding announcement under its International Development Assistance (IDA) programme came barely a month after Finance Minister Dr Philip Mpango visited Washington seeking funding for infrastructure projects in the country.

“These regional and national projects that the World Bank plans to implement with the government of Tanzania in the next financial year will ensure that they are sustainable,” Dr Mpango said then.

A $455 million loan to Dar es Salaam for the Tanzania–Zambia Transmission Interconnector Project is expected to help increase power transmission capacity in the country’s southern regions and strengthen institutional capacity.

A further $10 million grant will go towards the East Africa Power Pool for boosting regional power trade.

According to funding documents seen by The EastAfrican, Tanzania will start receiving the funds next year over a five-year period — starting with $27.55 million next year rising to $60.27 million the following year; $80.28 million in 2021; $88.77 million the year after; $97.26 in 2023 and a final disbursement of $110.88 million in 2024.

AFD is also expected to release $100 million for this project, while the European Commission will offer $30 million, of which $10 million will be a grant.

The financing from IDA, which offers grants or low-interest loans to the world’s poorest countries, is now expected to fund construction of high voltage transmission infrastructure to connect Tanzania to regional power markets, both in Southern and East Africa.

Kenya-Ethiopia line

Already there are two interconnector lines being constructed between Kenya and Ethiopia, funded by the World Bank and are expected to be complete next year; and Kenya and Tanzania, funded by Japan and AfDB, expected to be complete in 2021.

These projects are being implemented under the regional Transmission Corridor Development project that will see Tanzania link the East Africa Power Pool to the Southern Africa Power Pool (SAPP).

“The interconnection will give Tanzania access to a large competitive power market and meet energy security needs in a cost-effective manner.

“The ability to engage in short-term trade, either bilateral or through existing market mechanisms in SAPP, will further enable Tanzania to diversify its energy mix, eliminate the need for expensive emergency power during supply shocks, and improve conditions for the development of scale-efficient generation infrastructure selling to regional power markets,” the World Bank said of the project.

The project has been divided into two phases, with the first entailing a 620km 400 kV double circuit transmission line extending the Tanzanian transmission backbone from Iringa to the border with Zambia.

The second phase of the project, in Zambia will include a second circuit along the 330 kV central backbone between Pensulo and Kasama and a double circuit line from Kasama to Nakonde, near the Tanzania border and further to the border to interconnect with Tanzania.

Power grids

In 2012, countries in the region began the Eastern Africa Integration Programme whose main aim was to connect the power grids of Ethiopia, Kenya, Tanzania, Uganda, and Rwanda in three phases.

The first phase of the programme, connecting Ethiopia and Kenya, is under implementation. The (Tanzania-Zambia) TAZA project constitutes part of the second phase, with the other part — the Kenya-Tanzania transmission line under construction, enabling the connection of the EAPP power system to the SAPP.

Dr Mpango, while presenting the country’s budget, said that the country was expecting more than $1.17 billion from its development partners, of which $378.02 million would come from World Bank with a further $157.05 million from African Development Bank (AfDB), another key infrastructure financier on the continent.

The rest will come from other development financiers, including $137.5 million from the Global Fund and $26.74 million from AFD.

“We plan to raise $880 million in 2018/19 fiscal year from concessional loans and grants to finance development projects,” Dr. Mpango said.

Tanzania plans to boost power generation capacity from around 1,500 MW currently to 5,000MW over the next three years by building new gas-fired and hydroelectric plants, according to the country’s Energy Ministry.

Last year President John Magufuli said Tanzania needed to invest $46.2 billion over the next 20 years to revamp its ageing energy infrastructure and meet soaring electricity demand.

Of Kenya’s $179 million loan from AFD, $70 million will go to the 80MW wind farm project and $109 million to the Kenya Electricity Transmission Company (Ketraco), which requires a control centre, a 400/132 kV substation and the Nairobi Ring transmission project.

In April, AfD gave Uganda a $42.6 million concessional loan for the upgrade of the 130km 400KV transmission line between Mbarara and Masaka.