Energy firm acquires stake in Tanzania’s 900-MW Stieglers Gorge

Africa-focused energy firm Energem Resources Inc. has agreed to provide an initial US$1.2 million loan to study the 900-MW Stieglers Gorge hydroelectric project in exchange for a stake in the proposed project on Tanzania’s Rufiji River.

Energem said May 20 it executed a memorandum of understanding with Infrastructural Development Finance (Pty) Ltd. (IDF) to take a 40 percent share of the project. The remainder of the project is held by IDF with 40 percent, a private engineering consortium with 10 percent, and the government-owned Rufiji Basin Development Authority (RUBADA) with 10 percent.

RUBADA had said in 2006 it was seeking a financing partner to develop Stieglers Gorge, which it said could have a total capacity of 2,100 MW based on historic engineering and feasibility studies. (HNN 8/31/06)

Energem said it would help fund and assist in updating the historic studies to bring them to a bankable feasibility status and to assist in raising of funds for development and construction of the project. The current estimated capital cost of the five-year construction project is about US$2 billion, subject to updating the studies, Energem said.

Energem said it also would seek to assist in management, financing, and logistics support to construction of the project. It said Stieglers Gorge is a natural adjunct to Energem’s logistics platform and strategic involvement in other African-based clean and renewable energy activities.

Norconsult of Norway completed a study in 1985 that envisioned a 134-meter-tall concrete arch dam creating a 100-kilometer-long reservoir impounding 34 billion cubic meters. Although the project qualified in terms of engineering and environmental considerations, it was shelved due to insufficient regional electricity demand at the time.

Energem named consulting engineers Jeffares &Green to examine the historic studies. The firm has initially concluded the studies are comprehensive enough and of sufficient quality that they require only limited updating.

Based on the earlier studies, Energem said the project is expected to have limited environmental effects on the project site, at Stieglers Gorge in the Selous Game Reserve. It is expected to use only a minor fraction of the reserve, with no resettlement of local communities. Energem said the project would provide substantial irrigation and flood control benefits.

Listed on the Toronto and London AIM stock exchanges, Energem is a holding company of a group of firms engaged in biofuels, oil, and related sectors including logistics and supply to the mining industry. With offices in London and Johannesburg, South Africa, Energem has interests in Africa and Latin America.

RUBADA’s original plan was to develop the hydropower project in three phases, including a 400-MW Station A, 800-MW Station B, and a 900-MW Station C. The project is expected to utilize flows of up to 2,600 cubic meters per second.


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