A power shortfall the IMF said was a problem to the economic growth of Tanzania is about to be stopped.

East Africa’s second biggest economy, planned to bore its first geothermal power plant next year and increase renewable energy, it was announced mid-week.

The first 100 MW of geothermal power is likely to be obtainable four years from now (2016). Drilling for the second phase is due to start in in the next two years and would become available by 2018.

Reuters reports that Tanzania is racing to introduce a mix of power generation to cut reliance on hydroelectric dams that are vulnerable to erratic rainfall, and also aims to produce power from natural gas following big discoveries offshore.

Stella Mandago, a senior energy officer at African Development Bank (AfDB), said the bank would co-fund $50 million in the form of a grant and loan to Tanzania.

About $25 million would be used on drilling of steam shafts in Mbeya, south of Tanzania, while the remainder would be used to develop renewable energy sources including solar and wind.

“The country will receive $50 million which will be disbursed right after the approval in February 2013,” Mandago said.

“There is a potential of 650 megawatts (geothermal), but we are going to focus on 200 MW first, in two phases, starting with 100 MW,” Reuters quoted Mandago as saying. The total capital requirement for the 200 MW would be $400 million.

Boring down to retrieve energy from the earth is costly initially. But the later supply of inexpensive geothermal power would aid the country’s economic growth, it has emerged.

The IMF cautioned in October this year that Tanzania had to reduce power outages if it wanted to achieve upbeat economic development this year and next.

Tanzania produces about 800 MW. This hardly meets its power demand which is projected to produce to 1,583 MW by 2015.

Neighbouring Kenya is the first African country to drill geothermal power, tapping steam energy in the Rift Valley region, to complement hydro and thermal or fuel-based power.