Kabwe Zuberi Zitto, MP; Shadow Minister of Finance Tanzania:
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.