China and Tanzania are expected to sign a $1.06 billion loan deal to build a natural gas pipeline from the southern part of the east African country to its commercial capital, a Tanzanian newspaper quoted its energy minister as saying.
Last month, Energy and Minerals Minister William Ngeleja said in a presentation to parliament that the government was seeking loans from China to finance construction of the pipeline from Mtwara to Dar es Salaam. The Guardian on Sunday newspaper reported $300 million of the loan will be used to construct processing plants at Mnazi Bay, and that Finance Minister Mustafa Mkulo and Ngeleja were expected to fly to Beijing next week to sign the loan agreement. "This is a must project for the future of this country ... we have secured financing from the Chinese and the agreement will be signed next week," Ngeleja was quoted saying.
"Some people have been misleading the public by saying the Chinese own this project, but the truth is it's government owned ... The Chinese are financiers and the project will boost gas supply as well as reducing or ending the power supply problem in the country."
Tanzania's chronic energy shortages have resulted in rolling power outages, undermining economic growth in the country. The Tanzanian government said it plans to shift its focus to investment in thermal plants fuelled by natural gas and coal in attempts at weaning itself off weather-dependent hydropower, which accounts for 55 percent of the country's energy sources.
The paper reported the project will be carried out by the China Petroleum and Technology Development Company (CPTDC) a unit of China National Petroleum Corp (CNPC) , and state-run Tanzania Petroleum Development Corporation. The project is expected to start in December 2012. An existing natural gas pipeline owned by private investors faces capacity constraints amid growing energy demand in east Africa's second-largest economy. The government puts Mnazi Bay to have a proven deposit -- gas in place - of 2.5 trillion cubic feet. It also puts total proven gas reserves at 7.5 trillion cubic feet.