Tanzania Upgrades Power Generation, Won't Cut Supply To Gold Mines

Tanzania's state power utility, Tanesco, has improved generation at two main hydro stations following the onset of the rainy season and has dropped plans to slash supplies to gold mines, an official said Tuesday.

Generation at the 180-megawatt Kihansi Hydro power station and at the 204MW Kidatu Hydro power station has improved following rising water levels, Tanesco spokeswoman Badara Masoud told Dow Jones Newswires.

"We won't be reducing power supplies to the mines because we now have improved generation," she said, adding improved generation has reduced the national power deficit to 104MW, from 230MW in February.

A Tanzanian parliamentary panel proposed last month that power supplies to gold mines be slashed by around 50MW in order to make power available to other sectors. This was opposed by the Chamber of Minerals.

Tanzania is Africa's fourth-largest gold producer.

According Masoud, Tanesco is now facing generation shortfall only at the 80MW Mtera Dam, but hopes to improve generation in the next few weeks with more rains.

The utility has also issued tenders for thermal generation of at least 260MW before the end of the year to help ease the shortage.

Gold mines connected to the national grid include Bulyanhulu, Buzwagi and North Mara, all operated by London-listed African Barrick Gold (ABG.LN); Resolute Mining Ltd.'s (RSG.AU) Golden Pride Mine; Tanzanite One Ltd. (TNZ.LN) and Williamson Diamonds Mine.

Barrick's Tuliwaka Gold Mine and South Africa-based Anglogold Ashanti Ltd.'s (AU) Geita Gold Mine rely on fuel-fired thermal plants and aren't connected to the grid.

Tanzania's peak power demand is estimated at 830MW.

-By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615 [e-mail]