AfDB, AFD extend $300m in funding to Tanzania’s Kakono hydroelectric plant

17th April 2023 By: Donna Slater - Features Deputy Editor and Chief Photographer

The government of Tanzania, the African Development Bank (AfDB) and the French Development Agency (AFD) have signed agreements for two development project loans worth $300-million to finance the construction of the 87.8 MW Kakono hydropower plant in Tanzania.

Located in the Kagera region, in the northern part of Tanzania, the hydroelectric project also received a grant of €36-million from the European Union (EU).

A coalition of development partners is financing the Kakono project, which is intended to increase renewable generation capacity and reduce hydrological risk through a dam located on a new watershed that is less affected by droughts.

Tanzania is dependent on hydropower and thermal power plants (mainly gas-fired) for its electricity supply; however, it has considerable untapped renewable energy potential to meet the demands of its rapid growth while taking a low-carbon path.

The Kakono project, which will be implemented by Tanzania’s Electric Supply Company (Tanesco), will reduce greenhouse-gas emissions by 216 065 t/y, and comply with the best international environmental and social standards.

AfDB Tanzania country manager Patricia Laverley observes that, when completed, the Kakono plant will serve about four-million people, small and medium-sized enterprises and mining companies in the northwestern part of the country.

The Kakono plant is the result of close collaboration between the AfDB, AFD and the EU. These institutions are co-financing this project, with a $161.47-million AfDB soft loan, a €110-million soft loan from AFD and the €36-million grant from the EU.

The project will increase the service coverage rate by about 7% of the population and is expected to have a major impact on the economic development of this rapidly growing zone, which lies at the heart of the Great Lakes region.

This project will boost industrialisation and spur economic growth in Tanzania and its neighbouring countries and will strengthen Tanzania’s position within the East African community.

Alongside construction of the new hydropower plant, associated infrastructure, including the upgrading of the existing Kyaka substation and a new 39-km-long 220 kV transmission line, will also be built, while Tanesco will receive capacity building support.

“The construction of the new power plant will help to improve Tanesco’s financial sustainability arising from the decommissioning of the diesel-based power plants in the Kagera region,” Laverley says.

In addition, she says the economic benefits derived from the supply of affordable power will be “immense”.

“We can expect to see marked improvement in the quality of life for people in the Kagera region and in Tanzania more broadly. These tremendous gains will contribute to building a more competitive economy in Tanzania, under the leadership of President Samia Suluhu Hassan,” she adds.

France Ambassador to Tanzania Nabil Hajlaoui says Suluhu has revealed plans for the country to generate 5 GW 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 electricity demand, while reducing the carbon intensity of its energy mix.”

AFD country director Celine Robert says the project is fully in line with international climate objectives and AFD’s strong commitments in that regard.

“This investment will have major impact on economic development and on population well-being as the infrastructure will answer the power needs of three to four-million people,” she says.