Zitto na Demokrasia

Zitto na Demokrasia

An Eye Opener Week-long Visit to South Tanzania 1500MW Electricity Complex

with 10 comments

Last week the Parliamentary Public Organizations Accounts Committee (POAC) that I Chair embarked on our first week-long visit in accessing the state of the 3 Mega projects in Southern Tanzania that are being carried out by National Development Corporation (NDC).

We set off from Dar-es-Salaam and slept in Njombe town (expected capital of new Njombe Region. We drove to Ludewa then to Mchuchuma on to Liganga after that we set off to Ruvuma Region where we started off from Songea then to Ngaka Coalfields and we moved on to Mbeya Region to visit our the last project which was Kiwira Coal Mine located in Ileje/Kyela districts.

On the way we encountered a number of problems that any typical Mwananchi comes across everyday. Our bus broke down (9 of us drove in one car from Iringa to Makambako), we had to contend with lack of accommodation in some places, in Ludewa for instance Hon. Deo Filikunjombe MP of parliament of the area and Vice-Chairman of POAC provided accommodation in his own house and housed MPs from other political parties which goes to show what a great country we live in. In Mbeya we stayed in a work in progress hotel; some of the highlights of a very informative, exciting and thought provoking trip on how we can move forward these projects.

These 3 Coal mining mega projects are touted as the biggest electricity projects since we attained our independence over 50 years ago and would have a combined total of 1500MW and is being dubbed as South Tanzania 1500 MW Electricity Complex that will transform the Southern Corridor and Tanzania as a whole. It should be noted that currently we have 1034 MW installed capacity in terms of electricity generation and we are only generating about half of that estimates put it at 560 MW.

Site Visit to Mchuchuma Coal Mine

Board Chairman of NDC-Dr. Chrisant Mzindakaya giving his presentation to members of POAC

 

 

 

 

 

 

 

 

 

 

Mchuchuma Coal To Electricity Project

Our first visit took us to Ludewa District in Iringa Region to Mchuchuma Coal Mine which happens to fall in the constituency of our Vice-Chairman Hon. Deo Filikunjombe, MP of Ludewa Constituency.

The Mchuchuma coal mine has yet to kick off, what has been done so far is a feasibility study to determine the amount of coal reserves that we have at Mchuchuma Coal Mine and the floating of a tender for a strategic partner to take up the project in partnership with National Development Corporation (NDC) which they have done and a Chinese company by the name Sichuan Hongda Corporation Limited has won the tender and they are currently in talks and carrying out due-diligence.

It is estimated we have a total of 536 million tons of Coal reserves that can add up to 1.2bn tons at Mchuchuma Coal Mine.

With Mchuchuma Coal Mine, NDC together with Sichuan Hongda Corporation Limited intends to mine 3 million tons of coal per annum and mine mouth thermal power station of 600 MW.  Half of the generated power will be supplied to the Liganga Iron Ore project and the rest will be feed into the national grid. At this rate, Mchuchuma can produce Tanzania all its current power for the coming 150 years! I asked Dr. Mzindakaya, the Chairman of NDC what went wrong with our elders not to exploit these resources, he said DECISION MAKING!

Sichuan Hongda Corporation Limited and China Africa Development Fund plan to invest about USD $ 3 Billion Dollars in both the Mchuchuma Coal and Liganga Iron ore project. They expect to make about USD $ 1.2 Billion dollars a year. Somebody informed me that this Chinese company is experienced in Zinc mining and has no experience in Power generation….Due diligence?

Liganga Iron Ore Project

Our second visit took us to Liganga Hills and surrounding areas which has the biggest known iron ore resources in the country estimated to contain reserves ranging from 200 million to over 200 Billion tons.

On top of that the iron ore have excellent range of magmatic associated minerals that is Vanadium and Titanium magnetite which is a major source of raw material for iron and steel industry.

POAC Committee Members at Liganga in the background

 

 

 

 

 

 

 

 

 

Clear evidence that we have Iron ore deposits

Presentation at Liganga-Sponge Iron

 

 

 

 

 

 

 

 

 

 

The Challenges so far in implementing these projects are:

Lack of sense of urgency in decision making by the government to get these projects going- A killer disease and hence a go slow culture, Corruption as everyone wants a cut from the concerned parties. This vice is very pervasive in this country of ours, Lack of Infrastructure: Road, Rail and Electricity, Lack of connection to feed into the National Grid, Lack of qualified local experts for these projects. All these challenges can be overcome by having results oriented, pragmatic Ministers, sack corrupt bureaucrats and integrate the projects for coordination. A Presidential Special appointee on South Tanzania 1500 electricity complex? Perhaps!

Ngaka Coalfields Project-400 MW Power Station

Located in Mbinga district about 250km on the Njombe-Mchuchuma-Manda road, this is one of the most advanced and exciting development projects that the POAC committee saw and a lot of work has been done and they are currently having 45 staff on the ground.

The Ngaka Coal Project is being developed through Tancoal Energy Limited (Tancoal), a joint venture company between Atomic’s 85% owned Tanzanian subsidiary, Pacific Corporation East Africa (PCEA), which owns a 70% interest in Tancoal, and the National Development Corporation (NDC) of Tanzania,  which owns 30%.

They have already completed their Bankable Feasibility Study (BFS), their goal is the development of a thermal coal mining operation at Ngaka and the development of a 400 megawatt power station, utilizing proven clean coal gasification technology, at the Ngaka mine site. Malawi has already asked for a contract to supply them with 150MW from this project (money starts to flow?).

At the moment they are waiting for their special mining license from the Ministry of Energy and Minerals to commence exploration. The estimated coal reserves are 200 million tons and it is said to have the best coal in the country.

Presentation by Tancoal

Coal Pit

 

 

 

 

 

 

 

 

 

Backward & Forward Linkages

 

 

 

 

 

 

 

 

With Tanzanian Geologists who are leading the exploration employed by Tancoal

Kiwira Coal Mine Project

Our last visit took us to Kiwira Coal Mine which is currently at the hands of Kiwira Coal and Power Limited(KCPL) which is a company jointly owned by Tanpower Resources Limited (70%) and Government of Tanzania (30%).

The Government is at present finalizing the transfer back of shares from Tanpower Resources back to the government in order to transfer ownership to National Social and Security Fund (NSSF) and STAMICO to run Kiwira Coal Mine.

The government has committed in transferring ownership to NSSF. NSSF on their part have committed to buy it out and all its debts. It’s under this guise that NSSF took it upon them to give a presentation on their future intentions and how they will revive and develop Kiwira in the next 5 years in order to produce 500MW electricity that they will sell to TANESCO.

NSSF Director of Investments-Mr. Yohana Kidula giving a presentation on NSSF and their plans for Kiwira Coal Mine

Being welcome by staff of Kiwira Coal and Power Limited

This is what Kiwira should have looked like

 

 

 

 

 

 

 

 

 

Kiwira Coal Mine as it is now

Presentation by the Production Engineer

 

 

 

 

 

 

 

 

Poor run down infrastructure of Kiwira Coal Mine

We took time to talk to the workers and hear their cries

 

 

 

 

 

 

 

 

 

 

We travelled back from Kiwira through Mbeya, slept in Iringa and then back to Dar es Salaam. We brought no electricity  from the visit but HOPE.

* It’s a mind boggling question that we import 200,000 tons of steel yearly while our own iron ore is standing bare on the hills of Liganga in Ludewa.

*Does it make sense importing 230,000 tons of coal every year from South Africa while we have the best quality coal lying idle in Ngaka, Mbinga districts. Of course one will argue with trade theories of comparative or even competitive advantage! Prices of iron would half, avoid our rails from being stolen as scrap metal(chuma chakavu) for hungry steel mills and save our forex!

*Similarly for coal, we would save us an estimated US $ 40million a year! All in all jobs! Jobs! jobs let alone the multiplier effect.

Let us make decisions and turn South Tanzania 1500MW electricity complex live! No more promises, let us deliver power to the people………

10 Responses

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  1. Nicely presented, Tanzania is so blessed, but as you said we lack urgency of action and our leaders’ greed is going to kill us! I pray that these projects go all the way asap

    Simalike

    March 15, 2011 at 1:54 AM

  2. Very interesting to see the potential. But there are still a lot of unresolved issues here. For example, the amount of iron ore in Mchuchuma is described as being between 200 million and 200 billions tonnes – that’s a lot of uncertainty. And what will stop the new mines from looking like Kiwira in ten years time? And how can we be sure that the contracts with Sichuan, PCEA, etc will be negotiated in the public interest? It’s not just about filling the shorfall in electricity supply, remember, but about getting the best possible price as well.

    Are environmental issues being considered properly? Mining and energy production can bring a lot of benefits but they can also have devastating effects on the local environment. This needs to be managed carefully, as it is usually in solving todays urgent crisis that we sow the seeds of another crisis in the future.

    Finally, it’s easy to blame “decision making”, lack of urgency, corruption,etc, but it also feels like a lazy conclusion. What about the economics – mining is expensive so maybe it didn’t make business sense until recently? Which is another reason to be concerned about the contracts.

    But all in all, very interesting. Fingers crossed.

    Mtega

    March 15, 2011 at 3:17 PM

    • Thank you very much for your observations. I have noted them. We will ensure that all these contracts are for public interests that is why the POAC has advised a profitability approach to these contracts.

      zitto

      March 16, 2011 at 6:06 PM

  3. This is good stuff. Just a couple of issues. I may be the one who questioned Sichuan Hongda’s experience in power generation. On reflection, this may not be a problem. Many mining interests generate their own power. Frankly, most shops and offices in town have to do so now. The mechanics are simple. SH may well have such experience in other operations as a support activity. The point is, it should be addressed publicly given the scale and strategic importance of the project. It seems an obvious concern to me.

    Secondly, January Makamba questioned on twitter why generation is not remaining in the hands of TANESCO. A good question. I’d be interested to know if this is a clearly stated policy (and if so,the justification) or a creeping, ad hoc development – which would be more worrisome.

    Keep the trip reports coming….

    Swahili Street

    March 15, 2011 at 4:16 PM

    • Swahili, according to the electricity act of 2008 generation and distribution are liberalised and the private sector can participate. However, transmission will remain state owned.
      There has been a discussion on unbundling tanesco into three separate companies ie one for generation, one transmission and one distribution and supply. Despecification of tanesco halted this process. I dont know the government policy now. The proposal of our committee is for tanesco not invest in generation (but retain its generation plants) and instead use its resources to invest on transmission infrastrucure (as well as distribution). Efforts shall be increased to bring in private investors into generation of energy.

      zitto

      March 16, 2011 at 6:13 PM

  4. Once again Brother Zitto, has shown his Nationalistic colors, i wish all our Leaders where the same, Pls keep up the good work.

    Mohamed Noor

    March 15, 2011 at 6:51 PM

  5. Kudos to POAC! However,we need to address the ‘efficciency’ issue.Power generation is not the only the only problem that faces our nation.Transmission and distribution has been TANESCO’s downfall for the past 25yrs,about 40% of the electricity generated in Tanzania is lost before reaching the ultimate consumer(REPOA,2009),that’s almost three times the International standards(only 13%),and the main reason being poor/old electric infrastructure brought about by lack of investment by our government(Those old structures were hardly maintained.
    The second reason for inefficiency is due to old equipments and buildings in our society,they consume a lot of watts to perform simple tasks.Public education on power saving coupled by a proper policy that will ultimately modernise or at least standardise our electricity consumption is vital.We need a new energy policy that will improve our efficiency especially when it comes to buildings and equipment used on day to day activities eg;Nowadays we have energy efficien bulbs,stoves,ac,machinery etc.
    Even with the current 560mw of electricity,we are losing about 100MW to 175MW that could be used on other things.
    We need to protect our water sources,in ten years with a good environmental policy,mtera can produce at the maximum capacity all year long.
    Lastly,all the gas and oil that IPPs are using to generate electricity,costs us a lot of forex,directly or indirectly and we should never renew those contracts when they expire..i don’t know when.
    OOh! have we ever thought on getting the human resources?We don’t have enough electicians to oversee the day to day maintanance whereas we are trying to electrify our country 100% more,I know the millenium challenge thing tries to train some more electricians but we need to motivate our youth to pursue studies in the electrical technology since that will be the future of tanzania energy sector.
    Good job my brother! AND THATS MY TWO CENTS.

    chris mzeru

    March 18, 2011 at 7:10 AM

  6. Procrastination is the enemy of development. To say that these projects are capital intensive is no excuse of not developing them otherwise the country will always be at the tail end, when it comes to economic development

    joseph mwamunyange

    July 20, 2011 at 5:36 PM

  7. […] of Tanzania both my committee and I have been keenly and actively involved in this project. In March of this year I led my committee to fact finding visits to these projects to see for ourselv…Having participated in an oversight capacity in the process towards this deal, I feel I should share […]

  8. hello, kwakweli Tanzania tumebarikiwa na resource nyingi sana, tulizoanza kuzitumia tunazitumia na kuzisimamia vibaya kwakuwa na mikataba usiyo na tija. lakin katika hali ya kawaida watu wakijituma na kufanya kazi kwa uadilifu tungekua mbali sana, na hata makisio ya ukuaji wa uchumi yangekua mara mbili kama si tatu ya haya tuliyo nayo sasa. kauli hii hapa chini inamchosha kila mpenda maendeleo, ni muda gani itawachukua kutoa leseni? au ndoi wanacheleweshwa ili wahongwe?
    “At the moment they are waiting for their special
    mining license from the Ministry of Energy and
    Minerals to commence exploration”
    what is our government good at?

    ernest

    May 21, 2012 at 11:35 AM


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