The World Bank has approved a $455 million loan to Tanzania under its International Development Assistance (IDA) program to support financing of power projects in the East African nation.
The financing from IDA, which gives grants or low-interest loans to the world’s poorest countries, will also fund construction of high voltage transmission infrastructure to connect Tanzania to regional power markets in southern and eastern Africa.
“The $455 million credit will finance construction of critical high voltage transmission infrastructure that will support the electrification of the southern and northwestern regions of Tanzania,” the World Bank said in a statement on Thursday.
The government said it plans to raise 2 trillion Tanzanian shillings ($880 million) in its budget for fiscal year 2018/19 (July-June) from concessional loans and grants to finance development projects.
Tanzania boasts reserves of over 57 trillion cubic feet (tcf) of natural gas, but faces periodic power shortages as it relies on hydro-power dams in a drought-prone region.
Last year President John Magufuli said the country needed to invest $46.2 billion over the next 20 years to revamp its ageing energy infrastructure and meet soaring electricity demand.
Investors have long complained that the lack of reliable power hurts business there.
Tanzania plans to boost power generation capacity from around 1,500 MW currently to 5,000 MW over the next three years by building new gas-fired and hydroelectric plants, according to the country’s energy ministry.