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14 Jul 2006 10:54
The World Bank is preparing funding for Tanzania and Uganda to help the East African countries cope with a power crisis triggered by a three-year drought, bank officials said on Thursday.
They were responding to an appeal for help from Juma Volter Mwapachu—secretary general of the East African Community, which groups Uganda, Tanzania and Kenya—during a meeting with visiting World Bank President Paul Wolfowitz.
Tanzania and Uganda have been worst hit by the power crisis and are currently enforcing rolling blackouts that are hurting their economies and stretching financial resources.
“In the short term we need a quick intervention,” Mwapachu told Wolfowitz. He said the EAC was working on developing an East African power grid in which all three countries could share resources and storage capacity.
Mark Tomlinson, the World Bank’s country director for regional integration, said power shortages facing the governments over the next few years would hurt the region’s competitiveness unless the situation was addressed.
An estimated $1,3-billion in new investment for additional power generation and an extra $1-billion for transmission would be needed in the EAC region over the next five years, he said.
Speaking on the sidelines of the meeting, bank officials said they were preparing a loan of around $100-million for thermal power generation in Uganda, which is using water from Lake Victoria, already at its lowest levels.
A decision on the funding is likely after the August recess of the World Bank board of member countries, they said.
In Tanzania, the bank is considering using $80-million left over from a loan for the Songo Songo gas pipeline for power transmission and generation.
The Tanzanian government is considering using savings from International Monetary Fund debt cancellation to address the power shortage, the officials said.
Tanzania was among 18 impoverished countries whose debts to international financial institutions was written off in an agreement by the Group of Eight industrialised countries last year.
The drought, the worst in decades, is costing the Tanzanian economy about $1,7-million per day, or $330-million for the year, the bank estimated.
It said the government will likely lose revenues through value added tax on electricity consumption amounting to about $3-million this year.
The impact of the power crisis was again raised with Wolfowitz during a meeting in Dodoma with Cabinet ministers.
Prime Minister Edward Lowassa said Tanzania needed to diversify its power sources following an over-dependence on low-cost hydroelectric power.
He said the government was considering tapping the country’s coal reserves for power.
Wolfowitz raised the possibility of the government increasing electricity tariffs, which are among the lowest in Africa.
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