The government of Tanzania has secured a loan for the construction of a hydropower project in Kageran, the northern part of the country.
A deal that was inked on March 15, 2023, in the Capital, Dar es Salaam, will see the country receive $300 million from both the African Development Bank (AfDB) and the French Development Agency (AFD).
AfDB will give $161.47 million as a soft loan, whereas the French Development Agency will loan $138.53 million for the project which will be implemented by Tanzania’s Electric Supply Company (TANESCO).
The remaining $39.5 million will be provided by the European Union as a grant for the construction of the 87.8-megawatt Kakono Hydropower Plant.
“This investment will have a major impact on economic development and population well-being as the infrastructure will answer the power needs of 3 to 4 million people. This signing represents an important milestone and confirms that the cooperation between Government and AFD is deepening,” said AFD Country Director Celine Robert
Kakono Hydropower Plant is the result of close collaboration between the African Development Bank, Agence Francaise de Developpement, and the European Union.
Tanzania is dependent 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 are financing the Kakono Hydropower Project, intended to increase renewable generation capacity and reduce hydrological risk via a dam located on a new watershed that is less affected by droughts,” said AfDB in a statement.
It will reduce greenhouse gas emissions by 216,065 metric tons per year, and comply with the best international environmental and social standards.
The project will serve 4 million people and increase the service coverage rate by around 7 percent of the population.
It is expected to have a major impact on the economic development of this rapidly growing zone, which lies at the heart of the Great Lakes region.
“We can expect to see a marked improvement in the quality of life for people in the Kagera region and Tanzania more broadly. These tremendous gains will contribute to building a more competitive economy in Tanzania, under the leadership of President Samia Suluhu Hassan,” said AfDB Country Manager for Tanzania Patricia Laverley.
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.