There were no further announcements concerning the status of Tanzania's Natural Gas Policy during the course of June with the expected publication date now passed. With attention for a short time away from exploration and production, power generation has been brought sharply into focus as U.S. President Obama visits Tanzania on 1-2 July following the launch of the Power Africa initiative in South Africa on 30 June. The visit has coincided with announcements concerning other major projects as the government looks to work with private investors to address the country's power deficit.

Power Africa

U.S. President Barack Obama will be joined in Dar es Salaam on 1-2 July by African Development Bank (AfDB) President Donald Kaberuka to discuss the Power Africa initiative which will form part of a plan to improve the distribution of electricity across the continent. President Obama announced on 30 June that the U.S. would commit $7bn to the initiative over 5 years to supplement investments in excess of $9bn made by U.S. companies including General Electric.

The initiative will be a multi-stakeholder partnership involving the U.S., the AfDB and six African countries. Kenya, Tanzania, Ethiopia, Ghana, Nigeria and Liberia have been identified as priority countries and will be the first in which the project is initiated. "The initiative will increase available electricity access, raise cross-border energy trade and promote efficient management of energy resources" an AfDB statement highlighted. The U.S. is also expected to cooperate with Uganda and Mozambique on oil and gas management issues.

The program will draw on range of U.S. government agencies to achieve its goals. For example, it has been reported that the Overseas Private Investment Corporation will commit as much as $1.5bn in finance and insurance to help U.S. companies manage the risks associated with the projects and the U.S. Export-Import Bank will make up to $5bn available to support U.S. exports to develop power projects.

Members of the East African Community have long advocated for improvements to be made to regional connectivity and it is hoped that the new initiative will enable improved generation and transmission of power across the region.

Symbion and GE sign power plant agreement

As evidence of the commitment of the private sector towards reducing Tanzania's power deficit, Symbion Power Tanzania and General Electric have signed an agreement to develop a 400MW gas powered plant in the southern region of Mtwara. The agreement builds on an earlier Memorandum of Understanding entered into between Symbion and TANESCO related to the plant.

Under the agreement, General Electric will provide technical and developmental support to the project including in relation to engineering studies, financial structuring, and support with lenders and guarantee providers. Tanzania's Minister for Energy and Minerals Prof. Sospeter Muhongo expressed his approval of the collaboration which is a major part of TANESCO's expansion plans which include construction of a 650km transmission backbone from Mtwara to Songea.

At the signing, the Minister said "Today, we mark a key milestone that will change the face of Tanzania's energy sector. At the moment, our economy is growing at 7%, and anticipation is to reach 8% growth rate in the next one or two years, and subsequently 10%, a target declared in the national development Vision 2010-25...this partnership is crucial for enhancing development of energy sector in the country as well as accelerating national growth targets". TANESCO's Managing Director, Felchesmi Mramba, also said that the involvement of the two U.S. power giants in the Mtwara project will quicken the implementation of the project.

Geothermal power: first steam generation planned for next year

Geothermal Power Tanzania (in which Tanzania's National Development Corporation and Interstate Mining & Minerals Ltd. hold a 30% stake) this month announced plans to invest as much as $350m to drill steam fields in the country's southwestern Mbeya region and build its first geothermal plants with the capacity to generate up to 140MW by 2018.

Tanzania, which currently does not produce any geothermal energy, lies in the same Rift Valley fault system as Kenya, Africa's biggest geothermal power producer with an estimated untapped resource of as much as 10,000MW.

Geothermal Power, which has six prospecting licenses in Tanzania, may initially install a wellhead generator to provide 2MW of power by the middle of next year. The company then plans to deploy generation units capable of producing 5-10MW within two years and eventually 25MW units.

Geothermal Power is exploring options to raise funds including approaching development lenders such as the World Bank and the African Development Bank.

Other news

Natural Gas Policy

With parliamentary attention focused during June on finalising the 2013/14 budget, no further progress was made in relation to the publication of Tanzania's Natural Gas Policy. While having previously indicated that the Policy would be published during June, the Ministry of Energy and Minerals is still understood to be finalising approval of the document prior to formal publication.

TPDC mulls Ophir joint venture

It has been reported that the Minister for Energy and Minerals has instructed TPDC to do some "ground work" relating to a proposed joint venture with Ophir Energy to engage directly in upstream oil and gas exploration. The statement supports proposals in the draft Natural Gas Policy for Tanzania's 'National Oil and Gas Company' to take a more direct role in exploration and production.

Increasing government involvement in the extractive industries has also been apparent in the mining sector over the course of the last month as the Minister for Finance, Dr. William Mgima, informed parliament that his ministry together with the Capital Markets and Securities Authority is in the process of drafting regulations providing for the offering of shares in mining companies to the public (as contemplated in the Mining Act 2010). The draft Natural Gas Policy also contains a statement that would require companies involved in the natural gas value chain to offer their shares to the public and the proposed mining regulations can be seen as an indication of the approach which is likely to be taken in the gas sector.

Tanzania EITI Third Reconciliation Report launched

The Tanzania Extractive Industries Transparency Initiative body has published the country's Third Reconciliation Report on material payments made by mining and oil and gas companies to government agencies and receipts from those government agencies.

Thirty companies were selected for the report (eighteen mining and twelve oil and gas companies), representing more than 99% of the total revenue collected by the Tanzania Revenue Authority, Ministry of Energy and Minerals and TPDC in those sectors during the year ended 30 June 2011.

A full copy of the report is available here.

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