East African Business Week

DAR ES SALAAM, TANZANIA - Following the aftermath of the most serious energy crisis in the country, the World Bank's Board of Executive Directors has approved an additional International Development Association (IDA) credit of $78.88 million to support Tanzania's Energy Development and Access Expansion Project (TEDAP).
The money will support cost overruns related to adding, replacing or upgrading transmission and distribution lines and substations and medium and low voltage equipment, meters, spare parts and tools.
According to the Bank, the additional financing will also finance an additional capacity-building measure under the project, which relates to TANESCO's environmental unit and foresees strengthening of the utility's capacity for environmental management.
The bank says that this capacity building measure will support continuing activities related to the environmental management aspects in the context of the Lower Kihansi Environmental Management Project (LKEMP), which closes on June 30,
2011.
Mr. John Murray McIntire, the World Bank's Country Director for Tanzania, Uganda, and Burundi said "despite advances, access to electricity in Tanzania remains a serious infrastructural shortcoming, which hurts economic growth and industrial development,"
He said, "we are confident that the additional resources provided by the World Bank will be used to enhance the operational efficiency of the electricity distribution system and increase access to electricity in the country."
According to a statement released by the World Bank's Board of Executive Directors, the additional funds for the energy project in Tanzania adds to an original IDA credit of $105 million and a Global Environment Facility grant of $6.5 million approved for this project in December 2007.
It also follows a previous additional financing of $25 million approved last year primarily to support the project's small renewable energy component.
TEDAP, the World Bank said, became effective in March 2008 in the aftermath of the most serious energy crisis in the country and aims at improving the quality and efficiency of electricity service provision in the three main growth centers of Dar es Salaam, Arusha, and Kilimanjaro.
It will also help to establish a sustainable basis for energy access expansion and renewable energy development in Tanzania.
The project also contributed to the global environmental objective to abate greenhouse gas emissions through the use of renewable energy in rural areas to provide electricity.
Since it started, TEDAP has created a favourable regulatory and institutional environment for the development of small renewable energy projects.
The project has supported the newly established Rural Energy Agency to provide pre-investment support to local renewable/rural energy developers. As a result, a number of rural renewable energy projects have been initiated by the local private sector.According to the report by the World Bank's Board of Executive Directors, eighty potential projects have been identified, of which 22 are considered priority with confirmed sponsors and detailed design studies completed or underway with a cumulative total size of 78 MW.
The Government has reiterated the importance of the TEDAP project for the energy sector in Tanzania, which suffers from a chronic shortage of power supply during the dry season that is aggravated by high transmission and distribution losses.
The World Bank's Africa Infrastructure Diagnostic study estimates that load shedding and emergency generation cost Tanzania over five percent of the GDP annually.