African Development Bank, European Union and France invest $300 million in Tanzania’s hydropower project | African Development Bank

The government of Tanzania, the African Development Bank and the French Development Agency (AFD) have signed agreements for two development project loans worth $300 million. The funds will finance the construction of the 87.8 megawatt Kakono hydroelectric power station in the Kagera region of northern Tanzania. The project also received a grant of €36 million from the European Union.

Tanzania relies on hydroelectric and thermal power plants, mainly gas-fired, for its electricity supply. However, it has significant untapped renewable energy potential to meet its rapid growth while embarking on a low-carbon path.

A coalition of development partners is funding the Kakono Hydropower Project, intended to increase renewable generation capacity and reduce hydrological risks through a dam in a new watershed that is less affected by drought. The signing ceremony took place on 15^e of March 2023 in Dar es Salaam.

The Kakono hydroelectric power plant is the result of close cooperation between the African Development Bank, Agence Française de Développement and the European Union. These institutions co-finance this project with a soft loan of USD 161.47 million from the African Development Bank, a soft loan of EUR 110 million from the French Development Agency and a grant of EUR 36 million from the European Union.

The Kakono Hydropower Project, which will be implemented by Tanzania’s Electric Supply Company (TANESCO), will reduce greenhouse gas emissions by 216,065 tonnes per year and meet the best international environmental and social standards.

The project will serve 4 million people and increase service coverage by approximately 7% of the population. It is expected to have a major impact on the economic development of this fast-growing region, which lies at the heart of the Great Lakes region. This project will boost industrialization and economic growth in Tanzania and neighboring countries and strengthen Tanzania’s leading position within the East African Community.

In addition to the construction of the new hydropower plant, associated infrastructure will also be built, including the upgrade of the existing Kyaka substation and a new 39-kilometre 220-kilovolt transmission line, as well as capacity building support for TANESCO.

Afterwards, the participants expressed their support for the project.

Patricia Laverley, country manager of the African Development Bank for Tanzania, noted that upon completion, the Kakono hydropower plant could serve about four million people, small and medium-sized enterprises and mining companies in the northwestern part of the country.

She added: “The construction of the new power plant will help to improve TANESCO’s financial sustainability as a result of the decommissioning of the diesel-based power plants in the Kagera region. The economic benefits of providing affordable energy will be immense. We can expect a marked improvement in the quality of life of people in the Kagera region and in Tanzania more broadly. These huge profits will help build a more competitive economy in Tanzania under the leadership of President Samia Suluhu Hassan.”

Ambassador Nabil Hajlaoui said: “We have heard the message from President Samia Suluhu. It aims to generate 5 gigawatts of electricity by 2025. France is ready to be part of this journey by investing in power generation and transmission projects to meet the rapidly growing demand for electricity, while reducing the carbon intensity of its energy mix.”

AFD Country Director Celine Robert commented: “We are delighted to sign this project, which is fully aligned with international climate goals and AFD’s strong commitments in that area. This investment will have a major impact on economic development and the well-being of the population, as the infrastructure will meet the power needs of 3 to 4 million people. This signing is an important milestone and confirms that the collaboration between the government and AFD is deepening.”