US $175bn Gas Project to Benefit Tanzania

Posted on :Saturday , 28th July 2018

The US-led initiative to invest in gas-powered power plants in Africa will benefit Tanzania a lot.

Through the Roadmap, US companies will invest $175 billion in gas power projects in eight other African countries excluding Tanzania, namely Côte d’Ivoire, Kenya, Ghana, Senegal, Nigeria, Angola, Mozambique and South Africa.

The initiative is in its preliminary stages and it is not yet known which country would get how much of the planned investment.

The countries were selected because of their relatively large populations, high gross domestic product and either because they have local gas resources or are planning liquefied natural gas (LNG) import projects.

The Gas Roadmap for sub-Saharan Africa is what the initiative is known as. It was launched at the World Gas Conference in Washington, by the US Agency for International Development’s Power Africa coordinator. It plans to add some 16,000MW of gas-fired power in nine countries by 2030.

“A key ingredient in Africa’s energy mix is and will continue to be clean natural gas. LNG and Natural gas projects have the potential to generate necessary electricity quickly and at reasonable prices,” wrote Mr. Rick Perry, US Secretary of Energy, in the Power Africa Gas Roadmap to 2030, strategy report.

Gas resources have been discovered in 14 countries in sub-Saharan Africa. Tanzania is set to benefit more because, according to reports, its undeveloped gas fields together with those of Mozambique account for 62 percent of total contingent resources in Africa.

According to the country’s power master plan, Tanzania has envisaged a larger role for natural gas in the future energy mix, with gas-fired power plant capacity anticipated to grow from 1,501MW in 2015 to 4,915MW in 2040.

The government inaugurated a $345 million natural gas-powered plant at Kinyerezi, outside Dar es Salaam, which has a capacity to generate 167.82MW. Other projects at Kinyerezi are on the pipeline with a possible capacity of more than 600MW.

Tanzania’s current power generation capacity is 1,310.7MW of which hydro-generated power is 561.843 MW and thermal gas and diesel generation is 748.876MW.

The US government interventions will focus on addressing the constraints related to gas projects in sub-Saharan Africa, according to the roadmap.

These include the availability of gas, financial strength of off-takers of power and gas, lag in downstream infrastructures, such as power transmission and distribution capacity and the various markets’ ability to absorb power and gas.

The Roadmap states “By focusing on decreasing fuel costs, development costs and the cost of capital, the best possible tariffs for the end user can be realized,”

Gas is highly competitive as a source of power with studies showing that prices for gas-to-power could run as low as $0.10 per kilowatt hour (kWh) for integrated LNG projects and $0.15 per kWh for small-scale and distributed power projects.

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