Tanzania’s China-Funded Gas Pipeline to Be Started This Year

Tanzania will borrow the money it needs so that it can start construction in the next year on a natural gas pipeline, for which China has already offered a $1.2 billion loan, Finance Minister William Mgimwa said.

Tanzania will use part of 1.2 trillion shillings ($757.1 million) in non-concessional loans it expects to take in 2012-13 to pay its portion of the construction cost, Mgimwa said in his annual budget presentation today in parliament in Dodoma, the capital. He didn’t give further details.

“The government will implement the gas pipeline construction project from Mtwara to Dar es Salaam,” he said, referring to the southern coastal town where the facility will start and its terminus in Tanzania’s commercial capital.

Statoil ASA (STL), Norway’s biggest energy company, today said it found an estimated 3 trillion cubic feet of gas off Tanzania’s Indian Ocean coast. Some of the world’s largest explorers have been lured to East Africa, where companies including BG Group (BG/) and Eni SpA (ENI) have found more than 100 trillion cubic feet of gas.

The Export-Import Bank of China last year agreed to finance most of the construction, according to Tanzania’s government. The loan is being given at a non-concessional rate, Mgimwa said.

To contact the reporter on this story: David Malingha Doya in Dodoma at dmalingha@bloomberg.net

To contact the editor responsible for this story: Bryson Hull at bhull5@bloomberg.net

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