Tanzania's Bagamoyo sugar factory construction to start soon

Bagamoyo EcoEnergy is now set to start construction of its sugar factory in 2016 after years of delay due to outstanding issues that had to be resolved with the government.
The company’s Executive Chairman, Mr Per Carstedt, says the company was expecting to sort out outstanding key issues with the government that had stalled the project contrary to recent media reports in UK.

He said the company was now confident with the successful completion of the election process and outstanding issues will be finalised as soon as possible, preferable before end of December 2015 leading to commencement of investments.

“With these milestones achieved the aim is to start building the project in the third quarter of 2016 after the rainy season in 2018 onwards, albeit, all further delays are frustrating for all parties,” he said.

EcoEnergy denied claims by the report that the project had been stalled for years because of a row over the relocation and compensation of farmers living on the earmarked project land.

Mr Carstedt said the project has been delayed because critical issues with government that needs to be in place for such a large pioneering project to be bankable and able to take off had not been sorted out in time.

“That is the reason why the project has been delayed, which naturally has created frustration among the people that have been waiting to be resettled and compensated according to international best practices,” he said.

The article titled Tanzania sugar project leaves bitter taste for farmers caught up in land disputes further claims that the delays led to a dropout of the project’s key investor the Swedish International Development Agency, a claim Mr Carstedt denies.

He says, Sida has never been or has never intended to be an investor in the project. Mr Carstedt, however, noted that Sida stopped its support with a loan guarantee during the project development phase because of the requirements of the agency’s internal regulations, particularly not as the project has been severally delayed and therefore surpassed the expected time the loan guarantee was assigned for.

Instead, he says, Sida has repeatedly informed that they are still supportive of the project and remains interested in supporting the project with a loan guarantee towards the lending banks when it is about to take off, if the project remains with its high development profile.

The company’s chairman further denies claims by the report that the main difficulty the company faces at the moment seems to lie in determining the ownership of the land it wants to use.

He says the company was granted a Certificate of Title to the project land in May 2013 after the former government owned land was divided into two parts. The land was formerly owned by Zanzibar government but later acquired by the Union Government for purposes of operating a ranch.

Once the project is fully operational around 2022 it will produce about 150 000 tonnes of sugar per year for the domestic market which represents approximately 50 per cent of current imports.

At full capacity it will further deliver yearly approximately 100.000 MWh renewable power into the national grid, which is of the magnitude to supply 100,000 rural households.

Furthermore it will produce up to 12 million litres/year of ethanol which when using energy efficient ethanol stoves can replace the usage of charcoal for cooking in 80,000 households.

At full capacity around 2,300 full time jobs will be provided and another 1,500-2,000 full time out grower jobs will be created, further generating a large number of indirect jobs. In total 16,000- 24,000 new jobs are expected to be created.

Revenues for the local out growers by selling sugar cane to EcoEnergy is estimated to have grown to 50bn/-(USD 25 million) a year in 2022 when the project is at full capacity.

By replacing imports of sugar and fossil energy an estimated 200bn/- (USD 100 million) per year of hard currency will, when at full capacity, be saved for the national economy in import substitution (applying a 5 year average of import prices).
Source: Daily News, reported from Dar es Salaam, Tanzania
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