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| Oil and Gas Industry : Picture Courtesy of : Cypressfmg |
Tanzania
is on the precipice of an economic evolution with the recent discoveries of
gas. We have now confirmed reserves of 43 Trillion Cubic feet (TCF), roughly
valued at USD 430bn[i].
Plans for LNG production are moving ahead of schedule. As a result there will
be considerable new gas resources available for power generation and other
needs for our economy and people including domestic use, petrochemical
industries and fertilizer plants.
Our
nascent oil and gas industry is set to expand greatly with the upcoming Fourth
Licencing Round, which, according to Minister Sospeter Muhongo, is scheduled to
be launched in Houston, Texas on September 13. We are now informed that the
licencing round has been delayed. This is not enough and more work needs to be
done.
The
Fourth Licencing Round should be put on hold – postponed for ten years. In this, we echo
the demand of Parliament’s Energy and Minerals Committee earlier this year
(April 2012, Annual Report of the Committee) and the concerns of other informed
citizens. It is very unfortunate that the recommendation to postpone the
licensing round, supported by a Parliamentary Committee on Public Investments
(POAC) and approved by a Parliamentary resolution, was largely ignored by the
Ministry and TPDC. A moratorium will not only allow us to manage our new
resources effectively it will also ensure the welfare of future generations.
This is something the Government must take seriously.
We,
as responsible leaders, have a duty to safeguard this country’s resources for
future generations. This will require effective and sustainable management of
our oil and gas reserves. The licencing round for the oil and gas offshore
blocks announced by the Ministry through TPDC undermines our mandate to the
Tanzanian people. If all exploration blocks are being licenced, what will our
grand-children and great-grandchildren, who will be more educated and well
prepared, do? It is critical that we approach these issues not in a short-term
strategic thinking but long-term. We may not be here tomorrow but Tanzania will
be.
We
are not prepared for an expansion of exploration activity. Current legislation
is out-dated and does not mirror the current political and economic status quo.
We have no overarching Gas Policy, however progress has been made as both the
Gas Act and Policy are currently being crafted. Nevertheless to continue on
with a new round of licensing before these policies are complete is
irresponsible. More importantly, we do not have legislation that will manage
revenues from the sector. We need more time for the policies and legislative
acts to be implemented. We will also need more time for institutions to be in
place.
A
ten-year moratorium will give us the space to develop our capacity in key
areas. TPDC can be overhauled to become an active exploration and production
company, modelled on Malaysia’s Petronas. Currently, TPDC does not have the
capacity or resources to be an effective and strong partner in developing our
reserves. These capacity deficits include the ability to conduct basic
geological surveys, contract negotiations and management as well as production
and processing. A moratorium will allow us to support TPDC to become a strong
and reliable trustee and gatekeeper of the country’s resources.
A
ten-year moratorium will allow us to build the necessary institutions that we
will need to effectively benefit from these resources. These include
establishing and supporting a Sovereign Development Fund , to
manage revenues; coordinating with our educational institutions to train and
foster young Tanzanians so they can confidently work and engage in this
industry; and an oversight committee that would include parliamentarians, civil
society organizations and local communities. These stakeholders would be
mandated to ensure that our resources are used effectively and fairly.
A
ten-year moratorium on offshore exploration will ensure that our increasingly
young population will enjoy the benefits of our natural resources for
generations to come. We kindly request the Government to stop any new licencing
of exploration blocks and refocus all efforts into building the capacity to
manage the discovered resources, make wise decisions and prepare the nation for
a Natural Gas Economy in a timely manner.
Our
past mistakes in the mining sector should guide us, as we comprehend the
challenges and opportunities presented by the oil and gas sector. The country
must first build strong accountability measures, ensure transparency, develop
critical human capital and learn from case studies of other gas economies
before licencing any new blocks. We need to think strategically and understand
the long-game rather than thinking about short-term gains. As a result, we
think 10 years will be enough to implement the necessary interventions and
build a strong and sustainable oil and gas economy for all Tanzanians.
Kabwe
Zuberi Zitto, MP
Shadow
Minister of Finance.
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