Tanzania Infrastructure Report Q4 2011

BMI View: We see the government’s major infrastructure expansion program - which will involve the construction of new ports, railways and power infrastructure - as not only positive for overall economic development, but also as presenting new opportunities for sponsors and engineering, procurement and construction (EPC) contractors with the expertise to undertake the major projects. Nascent oil and gas upstream activity will drive new ventures in auxiliary infrastructure industry, including gas pipelines, and facilitate the economic viability of gas power plants. However, regulatory risks and the prohibitive cost of the projects remain the greatest obstacles. Opposition to projects on environmental grounds will also delay implementation. Browse All: Infrastructure Market Research Reports Recent key developments include:rnReinforcing our view that infrastructure will be a priority public policy area, the government’s budget for 2011/2012 places strong emphasis on development expenditure, with part of the TZS13.52trn (US$8.6bn) budget earmarked for infrastructure investment. However, BMI’s Africa Country Risk team highlights that the budget remains reliant on loans and grants from foreign entities, thus limiting the scope for full implementation. Tanzania and Uganda have revealed plans for a US$2.7bn joint venture (JV) to develop a railway line and ports on Lake Victoria. The new 800km railway will link a deep water port at Mwambani Bay in Tanga with Musoma Port at Lake Victoria. In parallel, Tanzania, Rwanda and Burundi are planning to invest US$3.5bn to upgrade an existing rail line in Tanzania between Dar es Salaam and Isaka. Work will also include the construction of a new 1,651km railway from Isaka to Kigali, in Rwanda, and Keza to Gitega and Musongati in Burundi.rnThe Tanzanian Government and Export-Import Bank of China are currently negotiating the financing of the US$700mn Mnazi Bay gas-for-electricity project in southern Tanzania. The realisation of the Mnazi Bay project is of strategic importance to the country, which is suffering from acute power shortages. Related Reports: Kuwait Infrastructure Report Q4 2011African Fixed-line and Fibre Telecoms Markets and Infrastructure