Tanzania’s Stiegler’s Gorge Dam, due to be built on a UNESCO World Heritage site, will cost more than double the government’s estimates, an independent study showed last week. In December, Tanzania signed a deal with two Egyptian companies, El Sewedy Electric Co and Arab Contractors, to build the Sh300 billion ($3 billion) hydroelectric plant.
Joerg Hartmann, an independent expert, and assessor on the sustainability of hydropower projects said the dam was likely to cost Sh758 billion ($7.58 billion) once financing and other costs were taken into account, rising to Sh985 billion ($9.85 billion) on account of cost overruns associated with such projects.
His study was published by OECD Watch, a worldwide network of civil society organisations with more than 130 members in over 50 countries.
A spokesperson for Tanzania’s power utility TANESCO, which is implementing the project on behalf of the government, did not immediately respond to a request for comment on the study’s findings.
The costs of projects of a similar scale commissioned between 2010 and 2017 had risen by 31 percent on average, the study found, citing International Renewable Energy Agency. Known for its elephants, black rhinos and giraffes, the Selous Game Reserve on which the dam will be built, covers 50,000 square km and is one of the largest protected areas in Africa, according to UNESCO.
Arab Contractors
The study was released on the same day as Tanzania handed over the construction site in the south of the country to El Sewedy and Arab Contractors, ignoring concerns about its impact on wildlife.
Arab Contractors disputed the study’s higher price tag for the dam, saying the highest bid for the project was Sh320 billion ($3.2 billion) and that their bid was roughly Sh290 billion ($2.9 billion.)
“Is it reasonable that all these companies that bid – big companies and from different nationalities – all of them did not know how to value the project and study it correctly?” said Osama Ali, spokesman at Arab Contractors.
An El Sewedy Electric spokesperson could not immediately be reached for comment. The project will generate 2,115 megawatts of electricity when it is completed, energy minister Medard Kalemani said during the handover ceremony.
Hartmann, whose work experience on dams spans 24 years in 45 countries, has worked for the International Hydropower Association, the World Bank and Asian Development Bank and Zambia’s Western Power Company among others.
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