Private Power Generation (Ruhudji HPP) Project

The objective is to support the Government to develop the Ruhudji hydro power project.The Government of Tanzania (GOT) intends to develop the Ruhudji Hydro Power Project (HPP), a 358 MW hydro power scheme to generate 2000 GWh of electricity per annum in the private sector. The Project Cost is estimated to be in the region of US$1 billion. GOT's energy alternatives to Ruhduji HPP include development of coal and HFO fired power plants which are both financially and environmentally costly and would extend the carbon footprint of Tanzania.The Project will be structured in form of an IPP with an international investor, Aldwych International PLC, of the UK, who intends to conclude a 25 year Power Purchase Agreement with the state owned utility TANESCO. The Project encompasses the construction and operation of the hydropower station and the implementation of an up to 200km Transmission line (final routing yet to be determined), linking the power station with the main national grid in Southern Tanzania.Financing for the Ruhudji generation project is expected to be through private sponsors' equity contributions (about 20% of project costs) and commercial/bilateral/multilateral debt facilities. GOT requested the Bank to support the financing of the project with a Partial Risk Guarantee (PRG) that would cover commercial lenders to the project and an IDA credit to finance the required transmission line.The IDA has already provided financing (under an existing energy Project) to the GOT for the engagement of a suite of legal, financial and legal advisers, which have started to assist the GOT in their negotiations with the Project Sponsors on major Project Agreements, though none of those agreements has yet been concluded.