Aggreko plc, the world leader in the provision of temporary power and temperature control services, has signed a contract with the Tanzania Electric Supply Company (TANESCO) to supply 100 MW of emergency power for twelve months. The contract involves providing two 50 MW diesel-powered plants at Ubungo and Tegeta, as well as managing the fuel supply associated with the power generation. The estimated value of the power contract is $37 million; the pass-through fuel contract is similar to that currently operated by Aggreko in Uganda and in previous years in Sri Lanka, and involves managing the fuel supply to the power plants. The value of the fuel contract will depend on the monthly price of diesel, and the amount of power generated; Aggreko will charge a small fee for managing the fuel supply. The contract will become effective following the completion of a number of conditions precedent, including the delivery of bonds and guarantees customary for a contract of this type.
More than two-thirds of Tanzania's electricity is hydro-powered; the prolonged drought currently besetting East Africa has resulted in a significant reduction in the amount of electricity being generated by hydro plants. The reduced supply of electricity, combined with the rapid growth of the Tanzanian economy and consequent increase in demand for power, means that power rationing has become a regular event.
The addition of 100 MW of power will help stabilise the Tanzanian power supply and reduce load-shedding, and thereby support continued economic growth while TANESCO works to implement long-term solutions to improve power generation and distribution.
Rupert Soames, Chief Executive of Aggreko, said: "Having successfully delivered 40MW of emergency power between 2006 and 2008, we are delighted that, following a competitive tender process, we have once again been selected to be of service to Tanzania." The award of this contract will take Aggreko's order intake in the first six months of 2011 to at least 630MW.