SONGAS Limited in Tanzania

=Overview= SONGAS Limited commenced its operations in July 2004. The company generates electricity using gas from the SongoSongo Island gas fields, off the coast of southern Tanzania. SONGAS conducts gas processing, transportation and power generation. The gas is processed on SongoSongo Island and is transported from there through a 225km pipeline to Dar es Salaam where it is used in the SONGAS Ubungo Power Plant. The 190 MW natural gas-fired plant at Ubungo consists of six open-cycle gas turbines. The plant supplies electricity to the national electricity grid. The electricity gets distributed to the end users by the Tanzania Electric Supply Company (TANESCO). In addition, SONGAS supplies gas from the SongoSongo Island directly to 30 industrial consumers for electricity generation. One of them is the Twiga Cement Plant at Wazo Hill in Dar es Salaam. According to the company’s website, SONGAS is currently generating approximately 30 percent of Tanzania’s electricity needs and sells it to TANESCO at USD 5.5 cents per kWh.

=History= Tanzania developed two main independent power projects: SONGAS and Independent Power Tanzania Limited (IPTL). Initially conceived within the broader context of power sector reforms in the late 1980s and early 1990s, independent power projects were intended to relieve state utilities of the burden of financing new plants, bring quick, quality power and reduce costs for end-users. In the early 1990s, SONGAS preceded IPTL in the planning process but due to delays in the SONGAS project IPTL emerged. In consequence, the World Bank, the largest lender to SONGAS, was instrumental in postponing the SONGAS project as IPTL appeared to render SONGAS redundant. At that time, Tanzania could not absorb the capacity of both plants. The SONGAS project was revived in 2001 after a protracted arbitration process, a reduction in the IPTL capacity charges and ascertainment of the demand for both plants. In 2004, SONGAS finally joined the industry’s operation. The SONGAS plant size has evolved extensively from the project’s inception. Initially, an existing 115 MW power station (Ubungo) was converted from jet fuel to natural gas using the World Bank credit for SongoSongo Gas Development and Power Generation Project. The provision of an additional 75 MW was financed entirely by the private sector.

=Corporate Social Responsibility= According to the company’s website, SONGAS has completed different corporate social responsibility projects on SongoSongo Island and along the 225km pipeline route. On SongoSongo these projects include the provision of fresh water supplies, access to electricity, erection of a new dispensary and provision of education services. Along the route of the pipeline, SONGAS has supported the Mohoro Secondary School by building dormitories and a water supply system. The company has also supplied books and equipment to different primary schools. Moreover, SONGAS is working with the NGOs such as Habitat for Humanity Tanzania and the Tanzania Forest Conservation Group.

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