230 M€ financing from AFD to Electricity and Water projects [fr]
Mr. Doto M. James, Permanent Secretary, Ministry of Finance and Planning of the Government of Tanzania and Mrs. Stéphanie Mouen, French Development Agency (AFD) country Director, signed today three financing agreements for a total amount of 230M€ (approximately 600 Bn TZS), in the presence of the French Ambassador. These funds are concessional loans aiming at improving electricity access in rural areas, enhancing the security and supply of electricity in Southern Tanzania and supporting water supply and sanitation services in Lake Victoria area.
A 100 M€ concessional loan aims at supporting the National Rural Electrification Program. The funds will finance Densification projects in 10 regions in order to connect up to 90,000 households and installation of about 3 MW of solar production capacity in remote centers operated by TANESCO. They have been until now supplied by diesel generators.
This goes in line with Tanzania’s Rural Energy Agency (REA) strategy, which is based on grid extension projects, densification projects where the grid exists and off-grid projects. In rural areas, the electricity access rate, historically low, has been improving since 10 years thanks to the National Rural Electrification Program. Almost a quarter of the households in rural areas are today connected to electricity compared to 17% in 2017.
Together with World Bank and European Union, AFD is also supporting the Tanzania-Zambia Interconnection Project with a 100 M€ concessional loan. This will enable the installation of a 400 kV transmission line and substations from Iringa to Sumbawanga via Mbeya and Tunduma and the interconnection line from Tunduma until the border with Zambia.
The electricity interconnections between Tanzania and its neighboring countries are aimed initially at ensuring energy security for the region’s countries and, in the medium term, at enabling the pooling of the region’s energy resources. The Kenya-Tanzania connection is currently under construction, making the connection between Tanzania and Zambia the last link towards interconnection between East African Power Pool and Southern Africa Power Pool.
An additional financing of 30M€ from AFD through concessional loan will foster the access and extension to water services and ensure improving sanitation services in Mwanza (areas of Usagara, Buhongwa, Kisesa, Buswelu and neighboring areas) as well as proper provision of sanitation facilities in schools and public places of Mwanza city. This project is the continuation of the ongoing Lake Victoria Water and Sanitation Project co-financed by AFD, EIB, the European Union and Tanzanian Government.
Mwanza Municipality is the second city in Tanzania located in the large watershed area of Lake Victoria. The fast-growing population results in increase of demand for water services and sanitation, and growing socio-economics activities threaten the quality and aquatic life of the lake.
This event represents an important step forward in AFD’s cooperation with the government of Tanzania, which started more than 20 years ago and has significantly increased since then. The water and sanitation sector has historically been one of AFD’s primary sector of intervention in Tanzania with 258 M€ (655 Bn TZS) committed over the last 10 years. The Energy sector is now the first sector in terms of commitments in Tanzania with almost 427 M€ approved by our Board of Directors during the last 10 years. AFD is involved along with TANESCO and REA to support access to electricity, transportation and generation.
Speaking during the signing ceremony, Mrs. Stéphanie Mouen, Country Director of AFD in Tanzania, reaffirmed France’s commitment to support the Government of Tanzania: “2019 was a record year with 170 M€ of projects approved by AFD Board of Directors for Tanzania. 2020 is already another record year with 300 M€ of financing signed and ready to implement. I hope that 2021, with all the projects we are considering with the government, will be a year of implementation of projects and of diversification of our financing activities towards other important sectors for the country, such as agriculture and environment/biodiversity.”
Mr. Doto M. James, Permanent Secretary, Ministry of Finance and Planning, pointed out that “the good relationship between the United Republic of Tanzania and French Government contributes to a successful implementation of development projects in various sectors including water and energy”.