US gives $45 mln funding for Tanzania power project

DAR ES SALAAM, Aug 26 (Reuters) - The United States will provide financing of $45 million for a power project in mainland Tanzania and Zanzibar, the U.S. embassy said in a statement on Thursday.

The funding is part of a $698 million grant to the east African country by the United States in 2008 under the Millennium Challenge Corp. to fund water, energy and infrastructure.

A total of $206 million has been allocated for energy projects.

"The work involves the construction and rehabilitation of 24 power substations throughout the mainland and on Unguja (the main island of the Zanzibar archipelago)," said the statement.

The financing agreement is scheduled to be signed in Tanzania's commercial capital, Dar es Salaam, on Friday.

The contract has been awarded to a joint venture between U.S. firm Symbion Power LLC and French company Areva CEPFi.PA.

The agreement will finance the manufacture and installation of a new 100 megawatt submarine power cable between mainland Tanzania and Zanzibar, according to the U.S. embassy.

In April, the United States and Zanzibar signed a $28 million package to finance a power project aimed at alleviating frequent electricity outages in the semi-autonomous islands.

Erratic power supply is hurting the economy of the Indian Ocean archipelago, which relies on tourism for more than 25 percent of its gross domestic product and 70 percent of its foreign exchange.

Electrical power was restored to Zanzibar on March 8, three months after the islands were plunged into darkness. (Reporting by Fumbuka Ng'wanakilala; Editing by Jane Baird)