Energem secures interest in Stieglers Gorge Hydro-Electric Scheme project in Tanzania
Tuesday May 2008
Energem Resources Inc. announced that it has executed a Memorandum of Understanding (MOU) with Infrastructural Development Finance Pty Ltd. (IDF). The terms, of which it has, subject to further detailed contracts, acquired a 40% interest in a proposed 900-megawatt hydroelectric scheme, the Stieglers Gorge Hydro-Electric Scheme, in Tanzania, in consideration for advancing a short-term loan, approximately $1.2 million.
The acquisition results from an undertaking to fund and assist in the updating of historic engineering and feasibility studies relating to the project, to bring these studies to bankable feasibility status and to assist in the raising of funding for the development and construction. In the early 1980’s, through a Norwegian Government initiative, the Historic Feasibility, a detailed feasibility study of the project was undertaken and completed. The Historic Feasibility has now been made available to Energem. Under the MOU, Energem will advance the Loan to IDF in order to update the historic feasibility study to bankable status.
The 1980’s project, whilst qualifying at the time in respect of all engineering and environmental considerations, was shelved due to insufficient regional electricity demand at the time to justify economic viability. This position has now changed, with demand for electricity in the region showing considerable growth, at a time when current infrastructure is unable to meet existing demand.
Energem’s principal partner in the project is IDF, who has been granted the rights by the Tanzanian Government to update the feasibility study and thereafter potentially develop and construct the scheme, which would be based on the Rufiji River at the Stieglers Gorge site in the Selous Game Reserve. IDF is a private company with expertise in hydroelectric power stations. The remaining 60% in the Project is held by IDF with 40%, a private engineering consortium with 10%, and the Rufiji Basin Development Authority (RUBADA), an arm of the Tanzanian Government with 10%.
The rights to the Project are at all times subject to Tanzanian legal regimes and regulatory process.
Energem has appointed consulting engineers Jeffares & Green to examine the historic feasibility studies relating to the Project. Jeffares & Green have to date, concluded that the historic studies were comprehensive and of a high standard, and would require limited updating to bring them up to current standards for internationally acceptable bankable level.
Based on a recent review of the information available from the Historic Feasibility, the construction of a dam has a very limited environmental impact. It is expected to use only a minor fraction of the area of the Selous Game Reserve and requires no resettlement of local communities. A substantial down stream irrigation and flood control benefit is provided to agricultural development in the area, which is approximately 200 kilometers southwest of the port of Dar Es Salaam and reasonably well served by road and rail infrastructure both inland and to the port.
The current estimated capital cost of construction, subject to updating of the studies, is in the neighborhood of $2 billion with an estimated five-year construction period.
Energem would seek to assist in the management, financing, and logistics support to the construction of the scheme.
This project represents a natural adjunct to the Company’s logistics platform and strategic involvement in other African based clean and renewable energy activities.
Source: Energem Resources