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Tanzania is seeking a $700 million loan from the Export-Import Bank of China to fund a power plant aimed at plugging a chronic power shortage in east Africa's second largest economy, a senior official said on Wednesday.

Permanent Secretary in the Ministry of Energy and Minerals, David Jairo, said the loan would help state utility Tanzania Electric Supply Company build a 300 megawatt gas-fired power plant in southern Tanzania.

"The estimated cost of the project is $682 million. Depending on the negotiations, other costs may be restructured or dropped," Jairo told Reuters in a telephone interview.