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Tanzania’s government has signed a loan agreement for more than $1 billion with the Chinese government to construct a natural gas pipeline from Mnazi Bay in Mtwara Region and Songo Songo in Kilwa district to the capital Dar es Salaam.
Tanzania’s Minister for Energy and Minerals William Ngeleja said that the loan agreement was signed in Beijing.
The loan will be used to exploit Tanzania’s southern coastal natural gas reserves, Dar es Salaam’s The Citizen newspaper reported.
Construction of the 330 mile-long natural gas pipeline will begin in November when Chinese experts will begin evaluating the project, which has an expected completion date of March 2013.
In addition to the natural gas pipeline the loan will also finance the construction of two gas processing plants.
Along with the Mnazi Bay- Dar es Salaam natural gas pipeline, Tanzania has also concluded a second agreement with China's Sichuan Hongda Group worth $3 billion, to develop the Mchuchuma coal and Liganga iron ore projects in Rudewa district in Tanzania’s Iringa region.
According to Minister Ngekeja, the natural gas pipeline loan will paid over two decades, with first payment starting seven years after the pipeline comes online.
By. Joao Peixe, Deputy Editor OilPrice.com
Joao is a writer for Oilprice.com