The government of Tanzania, the African Development Bank (AfDB) and the French Development Agency (AFD) have signed agreements for two development project loans worth $300 million.

The soft loans will finance the construction of the 87.8-megawatt (MW) Kakono Hydropower Plant located in the north-western Kagera region of Tanzania, AfDB said in a press statement.

AfDB is providing a soft loan of $161.47 million while AFD is giving €110 million ($121 million).

The plant, which will increase Tanzania’s renewable generation capacity, also received a grant of €36 million ($40 million) from the European Union.

The statement said the hydropower project would be implemented by Tanzania Electric Supply Company (TANESCO) and include associated infrastructure including the upgrading of the existing Kyaka substation and a new 39-kilometre 220-kilovolt transmission line.

The plant would serve approximately four million people, small-medium enterprises, and mining companies in the north-western part of the country and reduce greenhouse gas emissions by 216,065 metric tonnes per year. 

The project will help to improve TANESCO’s financial sustainability arising from the decommissioning of the diesel-based power plants in the Kagera Region. 

(Writing by SA Kader; Editing by Anoop Menon)