CALGARYTransCanada PipeLines Ltd. has entered into an agreement to sell its 49 percent interest in the Songo Songo gas-to-electricity project to AES Tanzania Holdings Ltd. (AES), a subsidiary of The AES Corp., for US$40 million. The agreement also specifies an additional contingent payment to be paid to TransCanada once the project reaches financial closure. The sale is expected to close by the end of this month, pending necessary consents and approvals.
AES and the other project sponsor, PanAfrican Energy Corp. Ltd. (formerly Ocelot International), are working closely with the Government of Tanzania, The World Bank, the European Investment Bank, and the CDC Group plc to reach financial closure of the project by the end of this year.
“Proceeds from the sale of Songo Songo are in line with our expectations and are an excellent example of the steady progress TransCanada continues to make on reaching its $3 billion divestiture target,” said Doug Baldwin, TransCanada president and CEO. “We are confident we will divest of most assets not associated with our core businesses in Canada and the northern tier of the United States by the end of this year.” Since last December, TransCanada has sold or has agreements to sell approximately $1.2 billion of non-core assets.
Planned components of the Songo Songo project include:
- two onshore and three offshore natural gas wells and associated topsides and flowlines in and around Songo Songo Island (located in the Indian Ocean approximately 25 kilometers off the Tanzanian mainland);
- a 70 million cubic feet per day natural gas processing plant on Songo Songo Island;
- a 232-kilometer, 12-inch pipeline (25 kilometers marine, 207 kilometers on land) from Songo Songo Island to Dar es Salaam, Tanzania; and
- a 112 MW power plant located at Ubungo, Dar es Salaam, which includes a 75 MW emergency power plant.
TransCanada managed both the construction of the emergency power plant in 1995 and the acquisition of the pipeline right-of-way from Songo Songo Island to Dar es Salaam in 1997 and 1998.