25 April 2019

Tanzania: Govt to Acquire All Songas Shares At U.S.$1

Dar es Salaam — The public-private partnership power company Songas has said the government will automatically own 100 per cent of the company by 2035, if the government will consider an extension of the Power Production Agreement (PPA) after 2024 when the current one expires.

The company which is currently owned by Globelec and three government entities including Tanesco, TPDC and Tanzania Finance Development Corporation is planning to increase production from the current 178 MW of electricity or 21 per cent of all electricity produced to 245 MW by 2020.

The company CEO Nigel Whittaker told The Citizen in an exclusive interview that should government accept the extension of the contract, the transfer fees will be only $1.

"As we are going forward, Songas will replace the smaller, old units 1 and 2, with larger units, concluding an expansion of capacity from the previously committed 178.114 MW to approximately 245 MW depending on the selected turbine manufacturer technology," he said.

If the Songas expansion project negotiations are concluded by June this year, the project construction will be completed by September 2020.

"The existing contracts could be amended to accommodate the upgraded deal structure. Subject to the costs of gas, Songas proposes that the tariff per kWh remain the same. The Power Purchasing Agreement (PPA) with Tanesco and other key agreement, as necessary, will be extended from 2024 to 2034," he said.

He said the PPA will be converted to Build Operate Own (BOO) to a Build Own Operate and Transfer (BOOT) model and Tanzania will immediately vest 100 per cent of the plant by 2034 following normal transfer fees of $1.

Read the interview on Business Week


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