Tanzania gets $1.6 bln World Bank package to fund economic revival

DAR ES SALAAM (Capital Markets in Africa) – Tanzania has secured $1.6 billion in loans and grants from the World Bank which it said it will use to help end chronic power shortages, rebuild its railways and develop its farming.

East Africa’s second-biggest economy is revamping its power generation and hopes to use some of its estimated 57 trillion cubic feet of natural gas reserves to cut its reliance on oil-fired and hydro power plants.

Tanzania’s finance ministry said in a statement on Thursday that it had secured the loans ahead of the annual meetings of the IMF and the World Bank in Washington, D.C. this week.

“The financial package will help the government to improve various infrastructure and speed up the development of the manufacturing sector, while at the same time improving the business environment for the private sector,” central bank governor Benno Ndulu said in the statement.

The World Bank funding will also include a $200 million loan for Tanzania’s state-run power utility, Tanzania Electric Supply Company (TANESCO), to help it clear its arrears of about $250 million which it has said it plans to pay off by the end of 2016 by switching to cheaper, domestic gas-fired plants.

TANESCO’s debts are with private power and fuel suppliers, and have climbed over the years after dry spells hurt hydropower output and the government filled the gap by building fuel oil or diesel plants.

Source: Reuters Africa News