Tanzania signs $70m AfDB loan to boost energy sector

Tanzania has signed a $70.5 million loan with the African Development Bank (AfDB) to finance reforms in the east African nation’s energy sector. AfDB is among a group of donors that withheld nearly $500 million in budget support to Tanzania last year over corruption allegations in the energy sector. The aid delay affected the execution of the government’s budget for the current fiscal year 2014-2015, which ends on June 30, and weakened the local currency. ‘The bank’s support will enable the government to boost efforts to implement energy sector and other related public financial management reforms,’ Servacius Likwelile, permanent secretary in Tanzania’s finance ministry, said in a statement.
The loan comes after a group of donors providing budget support to Tanzania decided to resume financial assistance to one of Africa’s biggest per capita aid recipients. AfDB said it would loan Tanzania another $70 million over the next two years as part of the same programme.Tanzania’s power sector reforms are also aimed at cutting costs and enhancing revenue collection at the state-owned electricity firm, Tanesco. Tanzania is estimated to have more than 53.2 trillion cubic feet (tcf) of gas reserves off its southern coast, but its energy sector has long been dogged by allegations of graft and other problems.
Along with neighbouring Mozambique, Tanzania is in a race with Russia, Australia, the United States and Canada to build LNG export plants, aiming to exploit a gap in global supply that is expected to open up by 2020.

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