The fourth round of allocating oil and gas exploration to private companies will go ahead as planned next October despite strong opposition from the local private sector and politicians.
The Minister of Energy and Minerals, Prof. Sospeter Muhongo
Minister for Energy and Minerals, Professor Sospeter Muhongo told ‘Daily News on Saturday’ yesterday that those opposing the allocation on grounds that the country has no legal framework to regulate the sector were people seeking to confuse the public.
“Nothing has changed, the exploration blocks allocation schedule remains the same,” said Prof. Muhongo over the phone from Austria where he is on official tour. He argued that the country has a 1960s law which established Tanzania Petroleum Development Corporation (TPDC) and a 1980 Petroleum Act which governs such oil and gas investments.
“Actually what we are doing at present is to improve the laws so that they can meet modern day demand. We cannot suspend the block allocation exercise because we are competing with others like Mozambique,” argued the geologist turned politician who suspended the exercise last year soon after his appointment following opposition from lawmakers.
Mozambique has currently established that it has close to 200 trillion cubic feet of natural gas reserves while Tanzania has so far managed 43 million cubic feet. “We have to continue allocating these blocks for exploration so that we can know our full potential,” the Minister argued.
Dismissing talk by newly elected Tanzania Private Sector Foundation (TPSF) Chairman, Reginald Mengi who called for suspension of the exercise until the country gets a working regulatory regime, Prof Muhongo noted that no local investors can afford to engage in the oil and gas exploration business.
“This is a capital intensive sector which can cost up to 100 million US dollars to drill a single well offshore which many Tanzanian businesspeople cannot afford,” he argued, saying that in order to ensure that the sub-sector is not left to foreign private companies alone, TPDC is holding stakes in every project.
“But we have also allocated two blocks to TPDC for their own investment so the government is doing everything to ensure that the country benefits from this sector,” he argued.
Addressing reporters last Wednesday, Mr Mengi advised the Ministry to suspend the new round of block allocation until such time that a policy and laws are in place to ensure that there is active local participation in a field already dominated by multinationals.
“This latest block allocation exercise should temporarily be stopped until we get a policy which will stipulate how locals are going to benefit from their resources,” said Mengi who was flanked by his vice-chairman, Salum Shamte and TPSF Executive Director, Godfrey Simbeye.
The IPP chief argued that for the first time, TPSF members have discussed on how best locals can benefit to the maximum by the new resources saying if the allocation goes ahead it is clear that locals will be on the receiving end because of the hefty investment required to own a block.
A draft policy for oil and gas subsector is already at Permanent Secretaries committee level which is a step before cabinet approves it to become an official document later this year.
By FINNIGAN WA SIMBEYE, Tanzania Daily News
