Construction work of the much awaited natural gas pipeline from Mnazi Bay, in Mtwara region, to Dar es Salaam is due to take off soon after the government hands over the construction site to the contractors in a week’s time, The Guardian on Sunday has learnt.

This paper has established that the construction site will be handed over to the contractor - China Petroleum Technology & Development Corporation (CPTDC) next Saturday.

Sources in the ministry of Energy and Minerals and the Tanzania Petroleum Development Corporation (TPDC) confirmed to this paper about the site handover scheduled to be held in Mtwara next week, adding that the contractor’s key representatives were expected to fly into the country over the weekend and early next week.

This paper has further established that, according to the agreement between the Tanzania government and the Chinese contractors, the pipeline should be operational within 18 months. This implies that construction would be completed by February 2014 at the earliest.

Ministry of Energy and Minerals permanent secretary Eliakim Maswi could not confirm the timing of the site handover yesterday on the ground that it was premature to be specific on the timing.

“We are preparing for the event. We shall issue further details on Tuesday at a press briefing at which the Chinese government will be represented. Therefore, I advise that you wait until then,” the PS said.

The 532-kilometre natural gas pipeline is to be 24-30 inches in diameter, according to its construction design. The project is being financed through a $1.22 million (Sh1.9 trn) loan from China’s Exim Bank.

Further key project specifications show the pipeline would have a capacity to transmit more that 420 million cubic feet of natural gas a day capable of generating up to 2000 megawatts of electricity.

The existing 16-inch diameter natural gas pipeline owned by Songas and operated by Pan-African Energy, has a maximum capacity to transmit 105 million cubic feet a day. The proposed expansion of the project had stalled because there were fears that investment in the project would have resulted in higher power tariffs for the national power company, Tanesco.

Late in 2011, The Guardian on Sunday reported extensively on the two firms’ (Songas and Pan-African) failed attempts to stop the project due to the supposed risk the project would pose to the gas business monopoly the duo had been enjoying since 2004.

Apart from construction of the gas pipeline, the project will also involve the construction of two processing plants - a small one at Songosongo and a bigger one at Mnazi Bay. A pipeline from Mtwara and the other from Songosongo would join at Somangafungu area in Lindi region.

Upon its completion the project is expected to rescue the nation from perennial power problems resulting in recurrent power shedding, hence hampering economic growth while the government is forced to depend on more expensive fuel-powered generators.

Finance minister Dr William Mgimwa told the National Assembly in Dodoma this week that the economy would be stimulated by the availability of gas as the production cost of electricity would be considerably lowered. Mgimwa noted that the generation of one unit (Kw/h) of electricity using fuel costs $44 cents, which is thrice higher that generation of the same unit using natural, which costs $15 cents.

The country requires around 900 megawatts of power at peak hours. There are six hydropower generation dams in Tanga, Morogoro, Iringa and Manyara regions with a combined capacity of 561 megawatts, but the capacity has gone down by almost 50 percent in recent years due to lack of reliable rainfall to fill the dams, hence depending more on fuel generators.

Tanzania has 27 trillion cubic feet of confirmed natural gas reserves, placing it among the league of top African countries with immense gas reserves. Leading countries are Nigeria, Tunisia, Algeria, Egypt and Libya.

Meanwhile, the Parliamentary Standing Committee on Energy and Minerals has ordered the government to suspend issuance of new gas exploration licences until a new gas policy is in place.

Committee chairman Seleman Zedi (CCM-Bukene) gave the order yesterday when his committee met with a team from the Centre for International Forest Research (CIFOR) in Dodoma yesterday.

The major objective of the meeting between the two parties was to get a clear picture on the development of the biofuel sector and other resources in the country.

Zedi said the order aimed at, among other things, putting pressure on the government with a view to its coming up with clear guidelines on how major actors in the gas sector should play their roles as the industry was rapidly growing in the country.

“Today each gas exploration company is entering an agreement with the government in the sector. We need guidelines to streamline activities in the sector,” Zedi said. He said the discovery of natural gas reserves currently being reported in the country was a result of exploration activities carried out by the companies granted exploration licences by the government before 2003.

According to Zedi, Tanzania Petroleum Development Corporation (TPDC) had begun issuing new gas exploration licences.

Zedi was compelled to give the order after chairman of the Parliamentary Standing Committee on Lands, Natural Resources and Environment James Lembeli expressed concern that gas reserves being struck today would in no way benefit the locals as it happened with the mining sector.

According to Lembeli, locals stood a little chance to benefit from the gas sector following reports that 90 percent of gas extracted would be ferried out of the country for sale.