February 14, 2019 / 2:53 PM / 4 months ago

Tanzania hydropower dam to cost more than double government estimate -study

NAIROBI (Reuters) - Tanzania’s Stiegler’s Gorge Dam, due to be built on a UNESCO World Heritage site, will cost more than double the government’s estimates, an independent study showed on Thursday.

In December, Tanzania signed a deal with two Egyptian companies, El Sewedy Electric Co and Arab Contractors, to build the $3 billion hydroelectric plant.

Joerg Hartmann, an independent expert and assessor on the sustainability of hydropower projects, said the dam was likely to cost $7.58 billion once financing and other costs were taken into account, rising to $9.85 billion on account of cost overruns associated with such projects.

His study was published by OECD Watch, a worldwide network of civil society organizations with more than 130 members in over 50 countries.

A spokesperson for Tanzania’s power utility TANESCO, which is implementing the project on behalf of the government, did not immediately respond to a request for comment on the study’s findings.

The costs of projects of a similar scale commissioned between 2010 and 2017 had risen by 31 percent on average, the study found, citing IRENA (International Renewable Energy Agency).

Known for its elephants, black rhinos and giraffes, the Selous Game Reserve on which the dam will be built, covers 50,000 square km and is one of the largest protected areas in Africa, according to UNESCO.

The study was released on the same day as Tanzania handed over the construction site in the south of the country to El Sewedy and Arab Contractors, ignoring concerns about its potential impact on wildlife.

Arab Contractors disputed the study’s higher price tag for the dam, saying the highest bid for the project was $3.2 billion and that their bid was roughly $2.9 billion.

“Is it reasonable that all these companies that bid – big companies and from different nationalities – all of them did not know how to value the project and study it correctly?” said Osama Ali, spokesman at Arab Contractors.

An El Sewedy Electric spokesperson could not immediately be reached for comment.

The project will generate 2,115 megawatts of electricity when it is completed, energy minister Medard Kalemani said during the handover ceremony.

Hartmann, whose work experience on dams spans 24 years in 45 countries, has worked for the International Hydropower Association, the World Bank and Asian Development Bank, Indian state-run utility NHPC and Zambia’s Western Power Company and Mekong River Commission of Laos, among other organizations.

Reporting by George Obulutsa; Additional reporting by Yousef Saba in Cairo and Fumbuka Ng'wanakilala in Dar es Salaam; Editing by Kirsten Donovan

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