The power station will be located in close proximity to Intra’s Tancoal mine in the Ngaka coalfields.

Tancoal will supply about 400,000 tonnes per annum to the power station.

Tanzania, like other countries in Africa, has been constrained by its electricity generation capacity and the lack of any baseload power.

The development of the 120 MW coal-fired power station is expected to deliver base load generation of more than 15% of Tanzania's currently operating electricity supply.

Power generated from the station will be supplied into the main grid by a Tanesco sponsored transmission system to the town of Songea.

This will result in the replacement of diesel power generation at Songea and provide regional villages in Tanzania that are currently without electricity, with power.

A special purpose vehicle will be established to finance, build, own and operate the power station.

The development of the power station will be split into stages, with scope to increase the generating capacity to 450MW, which would open up potential export opportunities to neighbouring countries.

Intra Energy said this agreement was a major step forward in its bid to become a major force in the domestic African coal supply sector.

Intra Energy has a 70% stake in the Tancoal mine, which has been in production since August 2011.

The National Development Corporation of Tanzania holds the remaining 30% interest.

The Tancoal operation produced 80,710 tonnes of thermal coal from the open cut Mbalawala mine in the second half of 2011.