Tanzania government, the African Development Bank, the French Development Agency, and the European Union have signed agreements for two development project loans totaling $300 million. The funds will finance the construction of the Kakono Hydropower Plant, a renewable energy project located in the Kagera region in northern Tanzania.
Increasing Renewable Generation Capacity
Tanzania is dependent on hydropower and thermal power plants, mainly gas-fired, for its electricity supply. However, it has untapped renewable energy potential that can meet its rapid growth while taking a low-carbon path. The Kakono Hydropower Project, a coalition of development partners, aims to increase renewable generation capacity and reduce hydrological risk via a dam located on a new watershed that is less affected by droughts.
The project received a $161.47 million African Development Bank soft loan, a €110 million soft loan from French Development Agency, and a €36 million grant from the European Union. The signing ceremony took place on March 15, 2023, in Dar es Salaam, Tanzania. The Kakono Hydropower Project is expected to have a major impact on the economic development of the rapidly growing zone, which lies at the heart of the Great Lakes region.
Boosting Industrialization and Spurring Economic Growth
The project will serve 4 million people and increase the service coverage rate by around 7% of the population. The hydropower plant will reduce greenhouse gas emissions by 216,065 metric tons per year and comply with the best international environmental and social standards. In addition to the construction of the new hydropower plant, associated infrastructure will be built, including the upgrading of the existing Kyaka substation and a new 39-kilometer 220-kilovolt transmission line. There will also be capacity building support for Tanzania’s Electric Supply Company (TANESCO).
Patricia Laverley, African Development Bank Country Manager for Tanzania, observed that the Kakono Hydropower Plant would serve approximately four million people, small-medium enterprises, and mining companies in the northwestern part of the country. She added that the construction of the new power plant would improve TANESCO’s financial sustainability arising from the decommissioning of the diesel-based power plants in the Kagera Region.
Ambassador Nabil Hajlaoui said that France was ready to be part of Tanzania’s journey to generate 5 gigawatts of electricity by 2025. He added that France was ready to invest in power generation and transmission projects to meet the rapidly growing electricity demand, while reducing the carbon intensity of its energy mix.
Celine Robert, AFD Country Director, noted that the project was fully in line with international climate objectives and AFD’s strong commitments in that regard. She added that the infrastructure would answer the power needs of 3 to 4 million people and would have a major impact on economic development and population well-being. The signing of this project represents an important milestone and confirms that the cooperation between the Government and AFD is deepening.
The Kakono Hydropower Project will increase Tanzania’s renewable energy capacity, reduce greenhouse gas emissions, and improve the economic well-being of the population.
