Africa’s second biggest economy plans to introduce a mix of power generation to reduce dependence on hydroelectric dams that are vulnerable to erratic rainfall.

The country also intends to produce power from natural gas following big discoveries offshore, according to Reuters.

African Development Bank (AfDB) senior energy officer Stella Mandago told the news agency that the bank along with other development agencies would co-fund $50m in the form of a grant and loan to Tanzania.

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

Half of the fund would be used on drilling of steam wells in the city of Mbeya, while the rest would be used for renewable energy sources development, Mandago noted.

"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."

Mandago said that the total capital requirement for the 200MW would be nearly $400m.

The first 100MW of geothermal power is likely to be available by 2016, while the second phase would begin in 2015 with probable availability by 2018.