Tanzania initiated a $1.33 billion project to pipe natural gas to its commercial capital, Dar es Salaam, and help relieve chronic power shortages in the city, the president’s office aid in a statement on Sunday.

The 532 km (330 mile) Mtwara-Dar es Salaam pipeline and gas processing plants, largely financed by a Chinese loan, is part of a plan to add about 2,000 megawatts of new gas-fired electricity generating power by 2018 to increase Tanzania’s generating capacity to 10,000 MW by 2025.

Tanzania estimates it has about 55 trillion cubic feet (tcf) of recoverable natural gas reserves off its southern coastline. Discoveries in Tanzanian and Mozambican waters have led to predictions the region could become the world’s third-largest exporter of natural gas.

Most new plants will be gas-fired but Tanzania also wants to use coal reserves and renewable resources such as wind and geothermal.

“Tanzanian president Jakaya Kikwete inaugurated the pipeline and gas processing plants … ensuring availability of gas for electricity generation to power factories and for domestic use,” the presidency said in a statement.

The expanding capacity will help meet domestic demand as the government connects more people to the national grid beyond the 40 percent who are connected now, and offer the opportunity to export to neighbours.

The government said it hopes by switching to gas-fired power plants to save around $1 billion a year in oil imports for electricity generation after the completion of the pipeline.

Kikwete also confirmed a project to build a new cement plant owned by Nigerian businessman Aliko Dangote in southern Tanzania close to its natural gas fields.

Kikwete said the factory would produce 3 million metric tonnes of cement a year, and cost $600 million to construct.

Strory Credit: Reuters