Canadian energy giant, Artumas Group, inc., through the newly formed Tanzania Generation Company (TanGen), will build a 300 megawatts integrated power plant in the country.

TanGen will build, own and operate the plant at Artumas’ existing green-field site in Mtwara at a cost of $225 million. Funding for the project will be arranged by the Netherlands Development Finance Company and is secured by Artumas. The Canadian company will retain a 20 per cent stake — approximately $12 to $15 million equity interest — in the project as its managing partner and sponsor.

According to Ingrid Hagen of the Netherlands Development Finance Company, it will provide finance in — generation and transmission — approximately $225 million and $400 million, respectively.

“A second special purpose company will build, own, operate and transfer the high voltage transmission interconnection to the Tanzania national grid,” she said.

The Dutch company will allow Artumas to focus its efforts on exploration and production.

The firm, a worldwide supplier of financial services, is 51 per cent owned by the government of Netherlands, and 42 per cent by Dutch banks ING and ABN-AMRO.

Stephen Mason, president and chief executive officer of Artumas told The EastAfrican that the financing of the infrastructure component of the project will involve several international financial institutions which focus on supporting economic development initiatives.

Hesaid that the Dutch company’s experience in infrastructure investments in Africa, in syndication with other institutions, is a major boost to the project. “We are pleased to be working with the Dutch comapny, which will assist and arrange the required financing for this large integrated power project,” he said.

The estimated capital cost of the transmission interconnection, which will be owned by third party equity shareholders, is approximately $400 million.

Discussions are already at advanced stage with private equity companies among them pension funds in Tanzania and investment-banking groups in the Middle East.

It is estimated that approximately 70 per cent or $160 million of the 300 MW gas-fired power will be financed through non-recourse project debt.

Pension funds, a multi-national mining company operating in Tanzania and investment bank groups in the Middle East and Europe will each raise $65 million.

The power plant is expected to benefit more than 500,000 consumers and a large number of industries in the Mtwara region, generate 3,000 jobs and reducing government subsidies and the dependence on imported diesel and oil.

In 2004, the Dutch firm gave $1.7 million to Artumas Group Inc. in the form of a development grant to develop an integrated energy project in the Mtwara region of southern Tanzania.

The region’s power supply has now helped develop one of the most economically, socially and ecologically sustainable regions in East Africa.

Artumas Group Inc., the Canadian energy firm has secured funding for the construction of the 300 megawatts integrated power plant in Tanzania.

The power plant which will be under the newly formed Tanzania Generation Company Ltd (TanGen). The firm will build, own and operate the power plant The agreement between Artuma and TanGen will allow Artumas to focus on its core business of exploration and production in Tanzania, while still retaining a 20 per cent stake in the power project as its managing partner and sponsor.

Ms Ingrid Hagen, Public Relations and Communication Officer of the Netherlands Development Finance Company (FMO) told The EastAfrican from The Hague, the Netherlands that FMO would be an Arranger for the Agreement to facilitate the financing of firm’s planned 300 MW integrated power project in Tanzania.

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