(Bloomberg) -- British International Investment Plc, the UK government’s development-finance arm, is providing its first support for renewable energy in Tanzania.

The firm has agreed to lend an initial $15 million to Meridiam SAS’s Rift Valley Energy to develop 7.6 megawatts of wind and small-scale hydro projects, said Nick O’Donohoe, BII’s chief executive officer, in an interview. That amount may rise to $25 million. 

“The new installations will provide power to 170,000 consumers, with many of them not having been connected to the grid before,” O’Donohoe said.

BII’s investment plans come as a host of finance institutions jostle to provide the finance needed to boost access to electricity in Africa, meet climate change challenges and develop infrastructure. The African Development Bank, the continent’s leading multilateral lender, estimates that the region needs between $130 billion and $170 billion for infrastructure development annually.

Just 37% of Tanzania’s 66 million people have access to electricity, according to BII.

Rift Valley already operates some small hydro power projects and Tanzania’s sole wind farm, Mwenga. Meridiam acquired the company, which is developing projects that may generate 30 megawatts of power, last year and separately has invested in 100 megawatts of assets in neighboring Kenya.

BII committed $1.3 billion to African businesses last year including $355 million in East Africa.

“East Africa is very important to us,” as an investment destination, the CEO said. BII’s East Africa portfolio is valued at $1.4 billion, according to information provided by the company. 

The investment firm, which is fully-owned by the UK government, has made significant equity investments in African companies such as Liquid Telecommunications Holding Ltd., the continent’s biggest fiber company, and Globeleq Inc., a power producer. 

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