DAR ES SALAAM (Reuters) - Tanzania is planning with Brazil to build a power plant estimated to cost $2 billion that could transform east Africa's second largest economy into a net exporter of electricity, a senior official said on Wednesday.
Foreign Affairs Minister Bernard Membe and other officials held talks with their Brazilian counterparts in Sao Paolo in September on the construction of the proposed 2,100 megawatt (MW) Stiegler's Gorge hydro-power station.
"The power plant to be constructed using Brazilian technology would generate excess power that could be exported to the east African and southern African power pools," Aloyce Masanja, director general of Tanzania's state-run Rufiji Basin Development Authority, told Reutes.
Masanja said the plant would be a source of cheap, abundant energy at a cost of around 2 U..S cents per kilowatt hour. It would help control flooding in the Rufiji area and create a reservoir with a total capacity of 34 billion cubic metres to supply the commercial capital Dar es Salaam and other regions.
Tanzania's chronic energy shortages have resulted in rolling power outages, undermining economic growth in the country.
The government is considering funding options for the project, including concessional loans, private investment or state financing,
Brazil will provide the technology to build the plant, and a government delegation from Brazil is expected in Dar es Salaam next month for further discussions on the project.
"The project would involve the installation of three giant underground turbines, each with the capacity of producing 700 megawatts of electricity," Masanja said in an interview.
Masanja said energy companies from Canada, the United States and Russia had also expressed interest to invest in a power plant at Stiegler's Gorge, located some 200 km southwest of Tanzania's commercial capital, Dar es Salaam.
The proposed site of the power plant is located inside The Selous, Africa's largest game reserve. An environmental impact assessment showed the project would not affect the wildlife at the area, he said.
A detailed feasibility on the project funded by the Norwegian government was carried out in the early 1980s, but the project has been on the back-burner since then due to government bureaucracy and lack of funds.
"If we start implementing it immediately, the feasibility study can be updated in 2011 and we can start installing the first turbine in 2012. By 2015, the project should be fully completed and we can start enjoying 2,100 megawatts of electricity," said Masanja.
Tanzania has energy demand close to 900 MW capacity, but produces less than 800 MW.
Only 14 percent of its 40 million people are hooked to the grid, while demand grows by 10 to 15 percent annually.
The state-run Tanzania Electric Supply Company (TANESCO) has for the past 10 days been carrying out emergency power rationing countrywide following a drought and breakdowns at gas turbines that have eroded electricity supplies.