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Tanzanian Energy Regulator Considering Two Bids for Power Plants

Tanzania’s energy regulator said it’s considering expressions of interest by two companies to each build a 200-megawatt gas-fired power plant that will help reduce an energy deficit in the East African nation.

BS Ltd. (BSTL), based in Hyderabad, India, and Kamal Steel Ltd., a closely held Tanzanian metal manufacturer, may build plants at Bagamoyo, about 60 kilometers (37 miles) northwest of the commercial capital, Dar es Salaam, Energy and Water Utilities Regulatory Authority Director-General Felix Ngamlagosi said in a Feb. 28 interview. The companies are among “several other companies that are interested in developing small power projects,” he said.

Tanzania, East Africa’s second-biggest economy, plans to more than double electricity production over the next four years by building at least four power plants including the 600-megawatt, coal-fired Mchuchuma facility, according to the regulator. Only 18 percent of Tanzanians have access to the electricity grid, which the country plans to increase to 30 percent by next year, the regulator said on its website. One megawatt is enough to power about 2,000 average European homes.

Two phone calls to BS Ltd. and Kamal Steel seeking comment weren’t answered.

Power supply in the country is monopolized by the state-run Tanzania National Electric Supply Co., which carries out generation, transmission and distribution. Independent power producers including London-based Aggreko Plc (AGK) and Washington, D.C.-based Symbion Power LLC also sell electricity to the utility.

Power Costs

The introduction of new plants will help reduce electricity costs, Ngamlagosi said. The average price of power in Tanzania is $0.17 per kilowatt hour, according to the regulator. That compares with an average of $0.14 per kilowatt hour for the African continent and $0.07 in East Asia, according to African Development Bank data.

“We are sure the price of electricity will slow down but this would depend on the economics of the pipeline project and the associated power plants,” Ngamlagosi said. Tanzania expects to complete construction of a gas pipeline to the port town of Mtwara that will feed the 240-megawatt Kinyerezi plant by the end of this year.

The government may also consider subsidizing solar-power production after its completed a policy paper on the alternative energy source, Ngamlagosi said.

Tanzania ranks as Africa’s biggest gold producer after South African and Ghana, according to the latest data on the U.S. Geological Survey’s website. The country is also the world’s only producer of tanzanite, a gem mined at the foot of Mount Kilimanjaro. Companies including London-based African Barrick Gold Plc (ABG) and Tanzanian Royalty Exploration Corp. (TNX) of Canada have operations in the country.

To contact the reporter on this story: Alawi Masare in Dar es Salaam at amasare@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

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