In efforts to end perennial power crisis, the Ministry of Energy and Minerals has announced that Tanzania and China has concluded a financial deal for the construction of a gas pipeline from Mtwara to Dar es Salaam.
The minister, Professor Sospeter Muhongo, made the announcement yesterday in Parliament, saying: "Let me give you 'breaking news' that on June 20, we signed an agreement on financing the construction of the gas pipeline from Mtwara to Dar es Salaam at a cost of $1.225 billion through a loan."
The minister was responding to various issues raised by legislators during debate on the state of the country's economy for year 2011/12 and the national development plan for the year 2012/13.
"Those who do not understand the importance of loans should learn more on this one," added Prof Muhongo without providing detailed information.
The natural gas pipeline is expected to be constructed from Mnazi Bay, Mtwara via Somangafungu in Lindi, where it would connect to another pipeline from Songosongo.
On other matters related to energy Prof Muhongo said if there is any power connection applicant who remains unconnected to power by June 30 this year, they should inform his (minister) office to find a workable solution.
The minister has been in office for less than two months since his appointment following cabinet reshuffle by President Jakaya Kikwete on May 4 this year.
He said preparation of a national policy on gas would be ready for public hearing by October this year, explaining that this is in response to public outcry over the country's lack of experts in the gas sector and the need to avoid errors as in the mining sectors. He said there would also be gas for alternative energy such as geo thermo.
Prof Muhongo said he has arranged a meeting with mining sector stakeholders on June 25, 2012.
Towards the end of year 2011 The Guardian reported exclusively that alarmed by the recent cartel by fuel dealers and a monopoly in gas business, the government had finally decided to construct the $1.01 billion gas pipeline from Mtwara to Dar es Salaam.
Then decision was reported to have caused panic in the boardrooms of Pan African Energy and Songas companies, big players in the gas business in the country.
This paper reported then that the lucrative deal that involves the construction of processing plants at a cost of $300 million at Mnazi Bay would be financed by a loan from the Chinese government.
Completion of the project is expected to lower gas delivery price by up to 200 per cent as it would enable more suppliers, including Ndovu Resources to compete with Songas, which is currently dominating the market.
This paper reported also that the proposed gas pipeline would constitute a 24-30-inch pipe compared to the 12-16-inch existing one,(owned by Songas) for increasing the quantity of gas transported. This would eventually contribute to easing the power crisis, costly to the national economy.
The proposed gas pipeline will have the capacity to transmit 420 standard cubic feet of gas a day. The amount is enough to generate up to 2,000 megawatts of electricity including the 300 megawatts plant at Mnazi Bay, according to details then gathered by The Guardian.
The government's move is expected to reduce the cost of producing thermo electricity from the current $0.34 cents to $0.12 cents per megawatts according to cost analysts from power generating companies.