Regional bank to help Tanzania fund SGR, gas plant

Tanzania has secured more than $400 million from the Trade and Development Bank (TDB) to fund part of its standard gauge railway and a 318MW gas plant.

This will be the first time President John Magufuli’s administration has turned to a financier for a railway project, having said this year that his government has enough funds to finance the construction of the $2.5 billion line.

The development also comes barely three months after the country turned to the African Development Bank to finance two of its major infrastructure projects — the 2,100MW Stieglers Gorge hydroelectric plant and the modernisation of the Dodoma Airport.

On Tuesday, TDB President Admassu Tadesse said the bank, formerly known as Eastern and Southern African Trade and Development Bank, had allocated the funds to help Dar es Salaam push forward with its railway and energy infrastructure projects.

“So far our bank has allocated $200 million for the SGR Central Corridor project and another $200 million that will go towards the gas power plant,” said Mr Admassu.

The regional development bank chief had a meeting with Tanzania’s Finance Minister Dr Philip Mpango and his energy counterpart Dr Melard Kalemani, which centred on the financing and implementation of the two projects.

“We are ready and willing to support Tanzania in its execution of development projects in the country. As at March this year, we had implemented more than 10 projects worth $285 million in Tanzania’s banking, agriculture, manufacturing and infrastructure sectors,” said Mr Admassu.

Documents seen by The EastAfrican show that Dar es Salaam received $191.67 million as at December last year from the regional development bank for an array of projects, attracting an interest of $1.85 million.

By that time, the bank had offered more than $2.62 billion in project development lending to its member countries.

The Bujumbura headquartered TDB with a $4 billion asset base, also said that it has $160 million worth of projects approved for Tanzania, with a further $660 million having been allocated to Dar es Salaam to boost its trade, energy, agriculture and infrastructure sectors.

“We are happy that TDB has offered us these soft loans to support our development projects. We will ensure that we complete negotiations by the end of September so that the funds can be released,” said Dr Mpango.

According to funding documents seen by The EastAfrican, Tanzania will start receiving the funds next year, with $27.55 million over a five year period rising to $60.27 million the following year, $80.28 million in 2021, $88.77 million the year after, $97.26 in 2023 and a final disbursement of $110.88 million in 2024.

The financing documents show that the French Development Agency is also expected to offer $100 million for this project, while the European Commission will offer $30 million, of which $10 million will be a grant.

Tanzania has been seeking funds to modernise its transport and energy projects as it seeks to meet its industrialisation vision in the next seven years.

Early this year, Dar es Salaam said it had set aside more than $610 million in the 2018/19 budget for the construction of the 300km SGR between Dar es Salaam and Morogoro; and the 336km Morogoro and Makutopora line.

This would have been significantly higher than the $392.23 million set aside in the current financial year. However in the budget presented last month, Dar es Salaam failed to allocate funds for the SGR project.

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