The Tanzanian government had promised to sign a memorandum of understanding for Kibo Mining’s Mbeya coal-to-power project within 10-12 working days, Kibo said on Monday.
Kibo has been waiting for two years to sign a power-purchase agreement, needed for the project to reach financial close. But it has had to wait until the Tanzanian government completed its review of public private partnerships and restructured the state-owned electricity supply company, Tanesco.
Kibo CEO Louis Coetzee said a meeting was held with Tanzania’s deputy energy minister last week at which General Electric, a strategic partner in the project, was present. A timeline was agreed upon. After the memorandum, Kibo expects to finalise the power purchase deal in the first quarter of 2018.
The Mbeya project consists of a 1.5-million tonnes a year coal mine in southwestern Tanzania that will supply a 250MW-300MW power plant.
Coetzee said it was one of the most advanced projects in Tanzania’s generation plans.
Mbeya’s first phase would contribute to the short-term goal and its later phases to the country’s longer-term goals. The project could ultimately scale up to one gigawatt.
After the announcement Kibo’s shares rose 6% to 4.37p in London, where they are more actively traded than in Johannesburg.
The Tanzanian government intends to deliver five gigawatts of installed generation by 2020 and another seven gigawatts in the following five years.
It now generates less than one gigawatt and power outages occur frequently.
At the end of November, the country was plunged into a blackout when there was a technical fault on the grid.
One of Tanzania’s biggest power plans is to generate more than two gigawatts of hydropower from the Stiegler’s Gorge project in the Selous Game Reserve, a World Heritage Site, which has alarmed conservationists.