Tanzania: Dar es Salaam, Beijing Sign Two Trillion Gas Pipeline Pact

CONSTRUCTION of the 532-kilometre natural gas pipeline from Mnazi Bay in Mtwara to Dar es Salaam is expected to start soon following the signing of 1.2 billion US dollars credit agreement (about 1.92tri/) between Tanzania and Exim Bank of China.

The project aims at increasing transportation capacity of natural gas for power generation as well as industrial and domestic use.

A team of Tanzanian technocrats from the Ministry of Energy and Minerals, the Attorney General office, Ministry of Finance and the Tanzania Petroleum Development Corporation (TPDC), was in China last week for the signing of the deal.

"We expect the project to start anytime from now as we have already secured funds," the TPDC Board Chairman, Mr Michael Mwanda, told 'Daily News' recently. The signing of the multi-million project follows a series of meetings and deliberations between the two parties which were climaxed by a high-profile visit by a Chinese delegation, led by Vice-Minister for Commerce Li Jinzao, in March, this year.

The deal involves construction of a 24 to 36-inch diametre pipeline from Mnazi Bay in Mtwara which will be connected at Somanga, with Songo Songo gas field in Lindi region and then to Dar es Salaam. It is also expected to connect Kiliwani/Nyuni, Mkuranga and offshore natural gas reserves.

A 24-inch pipe would be constructed from Mnazi Bay to Somanga and the existing 16-inch pipeline between Somanga and Dar es Salaam will be expanded to 36-inch. It would thus have a capacity to transport 210 million cubic feet (MSF) of gas a day from the current 105 million cubic feet of gas a day.

The existing 16-inch natural gas pipeline owned by a private investor, from Songo Songo to Dar es Salaam, has been facing capacity constraints amid growing demand for energy for industrial and domestic use. The project would be jointly implemented by the China Petroleum and Technology Development Company (CPTDC), a unit of China National Petroleum Corp (CNPC) and state-run TPDC.

Moving the budget estimates for fiscal year 2012/13 recently, the Finance and Economic Affairs Minister, Dr William Mgimwa, also hinted that the project would be implemented during the respective financial year. Reached for comments yesterday, the Minister for Energy and Minerals, Prof Sospeter Muhongo, confirmed of the development. He added that more details on the project would be made public soon.

The TPDC had engaged Ardhi University (ARU) to survey the route of the envisaged natural gas pipeline from Mnazi Bay in Mtwara Region to Dar es Salaam via Somanga. With recent discoveries of gas in offshore and onshore wells in southern Tanzania, gas reserves are presently estimated at about 40 trillion cubic feet.

Since the country discovered natural gas in 2004, the government has saved over 2 million US dollars (over 3bn/-) from importation of fuel used to run generators. Natural gas generates 416 megawatts to the national grid, accounting for 35 per cent of all the electricity produced in the country.