May 25, 2013 / 3:55 PM / 6 years ago

Tanzania says work on China-funded gas pipeline to continue

* Tanzania says disputed gas pipeline to be completed next year

* Parliament approves budget with pipeline proposals

* Govt says to reform state-run power utility

By Fumbuka Ng’wanakilala

DODOMA, May 25 (Reuters) - Tanzania will continue building a China-funded $1.2 billion gas pipeline from the south of the country to the commercial capital Dar es Salaam despite violent protests over the project, the energy ministry said.

Tanzania’s parliament was due to approve the 2013/14 budget proposals by the ministry of energy and minerals on Wednesday but riots against the pipeline in the gas-rich Mtwara region stopped Parliamentary proceedings.

Tanzanian lawmakers approved the budget on Saturday and said the work on the pipeline will continue until it is complete in December 2014.

“Anyone who opposes this pipeline is not one of us,” Tanzania’s energy and minerals minister, Sospeter Muhongo announced in parliament.

Tanzania estimates it has 41.7 trillion cubic feet (tcf) of recoverable natural gas reserves. Discoveries offshore of Tanzania and Mozambique waters have led to predictions the region could become the world’s third-largest exporter of natural gas.

Residents of the southern Mtwara region are opposing construction of the 532 km (330 mile) pipeline, financed by a Chinese loan, until they get a bigger share of benefits from gas development.

Mtwara police commander, Linus Sinzumwa, told Reuters three people were killed in riots on Wednesday and Thursday in the region, with 121 people arrested.

Parliament on Saturday appointed a committee to investigate the cause of the riots and come up with recommendations for curbing the recurring violence against the government’s pipeline project.

Muhongo insisted that the government would proceed with the construction of the pipeline despite the violent protests, saying the project would help to spur economic growth in Tanzania to 8 percent by 2015 from 6.9 percent in 2012.

“The only way of growing our economy is to have this pipeline in place ... the pipeline will banish poverty in our country,” he said.

Muhongo also said it would cost $500 million to reform the state-run power utility, TANESCO, which will include offsetting its debts.

“The World Bank will give us $300 million and we have received a $200 million grant from the African Development Bank for the transformation of TANESCO,” he said.

The minister said the government would study various proposals for the reform of the public utility.

The government has previously said it was considering splitting the loss-making TANESCO into three separate entities responsible for power generation, transmission and distribution.

The power monopoly had become inefficient, with only 21 percent of Tanzanians currently having access to electricity, which is also unreliable most of the time, he said. (Editing by Drazen Jorgic; editing by Ron Askew)

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