NAIROBI, Sept 3 (Reuters) - Tanzania aims to double its power production to 3,000 megawatts by 2016 at a cost of around $1.21 billion to meet rising demand by using its vast natural gas supplies, an official at the state-run utility said on Wednesday.
Businesses say frequent power outages now are hurting productivity and are a barrier to economic growth.
Decklan Mhaiki, deputy managing director for investments at Tanzania Electric Supply Company (TANESCO), said the country's installed capacity stood at 1,500 megawatts (MW), against a peak power demand of 900 MW. The full installed capacity is however rarely available due to power plant outages and drought.
Mhaiki said demand for electricity was growing at a rate of 8 to 10 percent per year.
A gas-powered plant located near the commercial capital Dar es Salaam would start producing 150 MW by the end of this year, he said, adding that the total cost of the additional power supply would be funded by private investors and public funds.
"So it's also a challenge for us to make sure we increase generation capacity," Mhaiki told Reuters on the sidelines of an east African power conference.
"We are taking advantage of gas to be able to bring more affordable power in the short term, and gas plants are quick to build. So all of the 1,500 megawatts will be gas-fired, except for only 50 megawatts that will come from wind."
At present 24 percent of the 45 million population in East Africa's second-largest economy is connected to the power grid, and this would rise to 30 percent by 2016, Mhaiki said.
Tanzania has made big natural gas discoveries off its southern coast and hopes to use its deposits to end chronic energy shortages. As of April, the government said Tanzania's natural gas discoveries stood at 46.7 trillion cubic feet.
The government has said the economy, which depends on agriculture, tourism and mining, is expected to grow at 7.2 percent in 2014, up from 7.1 percent last year.
(Editing by James Macharia and David Evans)
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