Dar es Salaam — The government today has issued an advance payment amounting to $309.645 million (Sh688 billion) to Egyptian company- Arab Contractors for the construction of the 2, 115 MW Stiegler's Gorge Hydropower project on Rufiji River.
The government and Arab Contractors in December, 2018 signed a contract worth Sh6.558 trillion fully funded by the Tanzanian government. The $309.645 million is the advance payment which is 15 per cent of the total cost of the project.
According to clause 14.2 of the signed contract the 15 per cent advancement payment has been portioned at 30 per cent local and 70 per cent foreign currency (US Dollar).
"What is being paid today is 70 per cent foreign portion of the advance payment," the Permanent Secretary-Ministry of Energy Dr Hamis Mwinyimvua elaborated during the occasion held at Finance Ministry offices.
He added: "The local portion (30 per cent) will be settled once contractual processes are finalized by the contractor."
On April 15, 2019, CRDB and UBA banks issued Advance Payment and Performance Guarantees to the Contractor-the joint venture of Arab Contractors and Elsewedy Electric S. A.E as per the project requirements.
"The issued guarantees triggered the next milestones of the project including settling of the advance payment by the client which is happening today," said Dr Mwinyimvua.
He assured the contractor that the government has set aside funds to foot costs related to the implementation of the project.
"I'm very confident that the advance payment settled today will enable the contractor now to fully mobilize and immediately begin implementation of the works as agreed," he said.
The Egyptian company has been contracted carry out the mega project in partnership with another Egyptian company Elsewedy Electric Company.
In February 2019, the government officially handed over the site to the contractor paving way for the start of construction work.
Also present was the Permanent Secretary in the Finance and Planning Ministry Dotto James thanked the Bank of Tanzania (BOT) for supervising the issuance of the advance payment to the contractor.
The project according to Mr Dotto James will offer 6, 000 direct jobs upon its completion in 36 months and will ensure reliable and affordable power supply.
"At present, our available power plants are capable of producing only 1, 602 MW in total, " revealed Mr James.
This according to analysts does not meet Tanzania's energy requirements especially at a time when the country is gearing towards an industrialized middle income economy.
The occasion of the issuance of advance payment was also attended by various top officials including the Managing Director of the Tanzania Electric Supply Company (TANESCO) Tito Mwinuka, and the Chairman- Tanesco Board of Directors Alexander Kyaruzi.