Songas Project / Ubungo Power Plant
The Songas Project is helping Tanzania to meet a growing electrical demand by developing the country’s domestic energy resources.
CDC Globeleq, an emerging markets power company, has the controlling interest in the Songas Project Limited ("Songas"). The other partners are Tanzanian Development Finance Limited, the Tanzanian Petroleum Development Corporation ("TPDC") and TANESCO.
Songas Limited owns the infrastructure (gas processing plant and pipelines) and the Ubungo Power Plant. Songas has entered into a power purchase agreement with the electricity utility, TANESCO until 31 July 2024. In return, TANESCO pays a monthly capacity charge to Songas that covers the cost of the infrastructure. They separately pay an energy charge for the Protected Gas that is used in the facilities. The Protected Gas is owned by TPDC and they receive US$0.55/mmbtu for the gas.
Songas has also entered a contract with the Wazo Hill cement plant to supply Protected Gas. All funds from this sale less the cost of the Protected Gas, goes to TANESCO.
Under a Production Sharing agreement with TPDC, gas production that is surplus to what is committed to the Ubungo Power Plant and Wazo Hill is known as “Additional Gas” and is made available to Orca Exploration, on an exclusive basis, to be marketed and sold. Orca Exploration commenced the sale of Additional Gas to new industrial customers in the Dar es Salaam area in September 2004.
Orca Exploration operates the gas plant and wells at Songo Songo Island on contract to the project. Orca Exploration markets surplus Songo Songo natural gas production. Capacity to handle volumes in addition to those required by Songas has been built into the pipeline system.
The costs of exploring, developing and marketing Additional Gas are all recoverable out of revenues of Additional Gas sales and Orca Exploration’s share of profit from Additional Gas sales is expected to increase as sales volumes increase. Orca Exploration operates the Songo Songo gas processing facilities and wells on a “no gain/no loss” basis.