2010-04-30
DAR ES SALAAM (Reuters) - The United States and Zanzibar signed a $28.1 million aid package on Friday for financing a power project aimed at alleviating frequent electricity outages in the semi-autonomous islands.

The agreement will finance the manufacture and installation of a new 100 megawatt submarine power cable between mainland Tanzania and Zanzibar, the U.S. embassy said in a statement.

"This new cable will more than double the capacity of the existing cable that recently broke down," said the statement.

Erratic power supply is hurting the economy of the Indian Ocean archipelago that relies on tourism for more than 25 percent of its gross domestic product and 70 percent of its foreign exchange.

Electrical power was restored to Zanzibar on March 8, three months after the islands were plunged into darkness.

"Adequate and reliable power supply is absolutely vital for this island. It is not only an essential foundation for economic growth and prosperity -- it is fundamental to the very health and well-being of every resident of this island," U.S. Ambassador Alfonso Lenhardt said at the signing ceremony.

He urged the Tanzanian and Zanzibar governments to push forward with policy reforms in the energy sector.

Zanzibar President Amani Abeid Karume announced in March that his government would invest more than $150 million over the next two years in power projects.