Big boost for Stiegler’s project

CRDB Bank managing director, Abdulmajid Nsekela

What you need to know:

  • Two months since the government officially handed over the site for the construction of the $2.95 billion (about Sh6.6 trillion) Stiegler’s Gorge hydroelectric dam to a Joint Venture (JV) of Egyptian firms, the contractor yesterday received a vital financial boost that paves the way for actual dam erection to start.
  • CRDB Bank Plc and United Bank for Africa (Tanzania) have teamed up to issue counter guarantees in a financial syndication to provide $737.5 million guarantees to the JV between Arab Contractors and Elsewedy Eletric of Egypt for the execution of the Stiegler’s Gorge project, famously known as Rufiji Hydroelectric Power Project.

Dar es Salaam. The contractor undertaking the $2.95 billion (Sh6.6 trillion) Stiegler’s Gorge hydroelectric dam project yesterday received a crucial financial boost ahead of the giant station’s construction.

CRDB Bank Plc and United Bank for Africa (Tanzania) have provided $737.5 million in guarantees to the joint venture comprising Egyptian firms Arab Contractors and Elsewedy Electric for the execution of the project.

The development came two months after the government officially handed over the site for the proposed dam to the joint venture.

The two banks joined Africa Export-Import Bank (Afreximbank) and a number of Egyptian lenders in providing bank guarantees to Tanzania Electric Supply Company (Tanesco).

Yesterday’s ceremony was witnessed by Egyptian ambassador Mohamed El Shawaf, Energy permanent secretary Hamisi Mwinyimvua, Finance and Planning deputy permanent secretary (Public Finance Management) Amina Shaabani and Bank of Tanzania deputy governor (Financial Stability and Deepening) Bernard Kibesse, among other dignitaries.

The Egyptian contractors have six months (from the day contract was signed in December 2018) to mobilise the required resources and set up the relevant infrastructure.

Under the contract signed between the government and the Egyptian joint venture, the firms were required to provide foreign and local bank assurances to the tune of $737.5 million (about Sh1.7 trillion) in the form of performance and advance payment guarantee for the project.

“I congratulate the contractor on meeting its contractual obligation. We will now see a lot of changes at the project site,” said Tanesco managing director Tito Mwinuka.

CRDB Bank managing director Abdulmajid Nsekela described the arrangement as historic, adding that the bank was looking forward to financing other aspects of the project.

“The country has waited for this project for a long time. We are happy to see that it is finally taking shape,” he said, adding that electricity would play a key role in Tanzania’s industrialisation goal.

His UBA Tanzania counterpart, Mr Usman Isiaka, exuded confidence that the project would be implemented within the agreed time lines.

According to Dr Mwinyimvua, the guarantee assures the government that the project was on track and that the actual construction work was ready to commence.

With the construction of the standard gauge railway (SGR) well on track, Dr Kibesse said, it was only a question of time before the country saw the importance of reliable and affordable electricity.

“The SGR cannot operate without cheap and reliable electricity. You cannot achieve industrialisation without cheap and reliable electricity,” he said.

According to Ms Shaabani, apart from creating jobs during the construction stage, reliable electricity would assure investors of Tanzania’s readiness to host mega industrial projects in line with the country’s goal of building a middle-income economy by 2025.

The head of human resources at Elsewedy Electric, Mr Gabriel Mwita, said between 6,000 and 8,000 Tanzanians would be employed during the construction phase.

“With these guarantees, we have mobilised almost all the required resources, and actual construction should start by mid-next month,” he said.

UBA board chairman Tuvako Manongi said it was possible for Tanzania to have cheap and reliable electricity, and that the Stiegler’s Gorge project was a step in the right direction.