The signing ceremony for the scheme, observed by the presidents of Tanzania and Sumitomo (Sumitomo)

Japan begins work on Tanzania’s biggest power plant

22 March 2016 | By GCR Staff 0 Comments

Japan’s Sumitomo Corporation has begun work on a $300m gas-fired power station in Tanzania that will increase the country’s generating capacity by 15%.

The 240MW Kinyerezi combined cycle plant will be the largest in the country, and the first to use natural gas.

The Japanese project team, which also includes Mitsubishi Hitachi Power Systems and Toshiba Plant Systems and Services, will build the plant for the Tanzania Electric Supply Company (Tanesco) on a turnkey contract.

Sumitomo Corporation will act as main contractor will coordinate all commercial affairs, Mitsubishi will provide six H-25 gas turbines and generators and Toshiba will supply heat recovery boilers, steam turbines and undertake civil and installation works.

Sumitomo commented on its website that the power plant “will feature high-efficiency gas power generation that will help alleviate Tanzania’s power shortages”.

“Coal generation is the next big area that we should be moving into as the potential is substantial, and can be a good base load resource, which also can stabilise the cost of generation in Tanzania”– Felix Ngamlagosi, Tanzania’s Energy & Water Utilities Regulatory Authority

It added that the project would also be part of the Partnership for Quality Infrastructure being promoted by the Japanese government, which is presently engaged on an overseas sales drive for the country’s construction industry.

The construction site is about 30km southwest of Dar es Salaam. Work is scheduled to begin partial operations at the beginning of 2018 and to be handed over to Tanesco in September 2018.

According to Sumitomo, most of the cost of the scheme will be met by the Japan Bank for International Cooperation and the Sumitomo Mitsui Banking Corporation. The loan will be insured by the Nippon Export and Investment Insurance.

Sumitomo is a group of companies arranged around the banking corporation, known as a keiretsu. Is turnover is about $32bn, which is about the same as the GDP of Tanzania.

Although Tanzania’s economy has been growing at around 7% for the past decade, it has done so despite a grossly inadequate generating capacity of about 1.6GW and a distribution system that misses 80% of the rural population.

It is also over-reliant on drought-prone hydropower. Dams usually provide about 560MW of the country’s power, but in December that fell to 110MW owing to a lack of water to turn the turbines.

Although the country is interested in developing its renewable resources, the national plan is to exploit the recent discoveries of 47 trillion cubic feet of natural gas to build up the fossil fuel sector.

Tanzania’s government last year launched an electricity supply “roadmap” that set the target of increasing the present installed capacity of 1.6GW to 10.8GW by 2025, largely by building more gas and coal plants.

The government of Tanzania is hoping to attract private investors from around the world to help build the country’s basic power infrastructure.

Felix Ngamlagosi, director general of Tanzania’s Energy & Water Utilities Regulatory Authority, gave an interview to the TanzaniaInvest website this week in which he outlined how the country is hoping to attract interest.

He said: “The government alone cannot afford to meet the growing energy demand, so private participation is vital. For the private sector to decide to invest in Tanzania, there must be an attractive environment for them to choose Tanzania as their destination.”

The authority has set out model Power Purchase Agreements, downloadable from its website, to reduce the time spent negotiating deals between generators and Tanesco.

It is also developing standard tariffs for developers who might consider installing mini-hydro, solar and biomass plants in rural locations “where it will take many years before a Tanesco power grid becomes available”.

Ngamlagosi added that according to the government’s Gas Master Plan, its reserves would mostly be liquefied for export, and the money earned used for investment, partly in coal plants.

He said: “Coal generation is the next big area that we should be moving into as the potential is substantial, and can be a good base load resource, which also can stabilise the cost of generation in Tanzania.”

Photograph: The signing ceremony for the scheme, observed by the presidents of Tanzania and Sumitomo (Sumitomo)