African Development Bank, European Union, and France invest $300 million in Tanzania’s Kakono Hydropower Project

Tanzania has secured a $300 million loan from the African Development Bank (AfDB) and the French Development Agency (AFD) to fund the construction of the Kakono Hydropower Plant in the northern part of the country. The government of Tanzania and the two lenders signed the agreement for the two development project loans on March 15th, 2023, in Dar es Salaam.

The Kakono Hydropower Plant is an 87.8-megawatt facility that will be located in the Kagera region, a part of the country that is currently dependent on hydropower and thermal power plants, mainly gas-fired, for its electricity supply. The project is aimed at increasing the country’s renewable generation capacity and reducing hydrological risk through the construction of a dam located on a new watershed that is less affected by droughts.

The project is being financed by a coalition of development partners and has received a grant of €36 million from the European Union. The AfDB is providing a $161.47 million soft loan, while AFD is contributing a €110 million soft loan. The hydropower project will be implemented by Tanzania’s Electric Supply Company (TANESCO), and it is expected to reduce greenhouse gas emissions by 216,065 metric tons per year.

The Kakono Hydropower Plant will serve approximately four million people, small-medium enterprises, and mining companies in the northwestern part of Tanzania. It is also expected to increase the service coverage rate by around 7% of the population, with major impacts on the economic development of the region.

The project will also involve the upgrading of the existing Kyaka substation and the construction of a new 39-kilometer 220-kilovolt transmission line. TANESCO will receive capacity building support to ensure the successful implementation of the project.

Ambassador Nabil Hajlaoui of France noted the importance of the project for Tanzania’s economic growth, stating that “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 expressed her satisfaction with the project, saying that “This investment will have a major impact on economic development and on population well-being as the infrastructure will answer the power needs of 3 to 4 million people. This signing represents an important milestone and confirms that the cooperation between Government and AFD is deepening.”

Overall, the project is expected to contribute to the achievement of Tanzania’s goal of generating 5 gigawatts of electricity by 2025, as set out by President Samia Suluhu Hassan.