By George Obulutsa DAR ES SALAAM (Reuters) - Tanzania's state-run electricity utility said on Thursday it will spend $33.4 million on a 134 km (83 mile) high voltage line to add 25,000 new customers to its network. The Tanzania Electric Supply Company (TANESCO) said it had signed an agreement with India's Associated Transrail Structures Limited and Italy's SAE Power Lines. It said in a statement that the project would boost access to electricity for businesses and households. In addition to the new 132-kilovolt line, TANESCO said it planned to build 13 new distribution stations and rehabilitate five substations in three regions of the country. It will also improve its existing network and replace 60,000 credit meters with prepaid ones. Most of the work will take place in the commercial capital Dar es Salaam, as well as the northern city of Arusha and Mount Kilimanjaro area. Local consumers suffer frequent power cuts and low quality electricity, which TANESCO blames on poor infrastructure. "Network voltages remain excessively low, and energy losses are quite high. In most regions, demand of new customers cannot be met because the existing substations and feeders are overloaded," TANESCO said. Peak time demand in the nation of some 40 million people is about 787 MW, versus 595 MW available on the grid. TANESCO sees demand rising to 1,331 MW against 1,445 MW capacity by 2014 Last month the government said Tanzania had no surplus power and that any breakdown in generation could lead to rationing. In late February, TANESCO said it needed to add 105 MW to its grid each year to meet rising demand, but faced delays in building the new plants required to meet the target. Tanzania produces most of its power from hydro dams, while it generates close to 300 MW from offshore natural gas. It endured serious power cuts in 2006 after a drought slashed hydro-power production.