JK: Gas and oil exploration is too expensive for locals to afford

PRESIDENT Dr. Jakaya Kikwete yesterday told owners of the local business companies of the highly expensive charges incurred of the gas and oil exploration currently going on in the country, saying that, the deal is too much expensive for the local people and their companies to afford. Instead the president has assured them that, the government is trying by all means to make sure that, local business companies would be part of the operational system when the production of the natural reserve starts. The call by the President comes amid widespread claims that, the government favours foreign companies for the investment undertakings of the gas and oil exploration currently going on in the country. He said, the already licensed foreign companies spends approximately $ 100 million (Sh. 160 bn/-) to explore gas and oil rich reserve from a single bloc sitting in water depth of about 2 km by using highly sophisticated technology and modern equipment which an ordinary local firm cannot manage. The President said during the launch of the 4^th Tanzania deep offshore and Lake Tanganyika North Licensing Round 2013. This is an event which signifies the invitation of companies to compete in the biding process of the gas and oil exploration in the country.  The occasion being the first to be held in the country was organized by the Ministry of Minerals and Energy in collaboration with the Tanzania Petroleum Development Corporation (TPDC) was attended by both local and foreign oil and gas companies doing businesses in the country. Others in attendance were some invited few diplomats Regional Commissioners for Lindi, Mtwara, Ruvuma, Katavi and Mbeya including civil society groups of the people of the once troubled region of Mtwara and Lindi where natural gas has been discovered.  In his speech, Dr. Kikwete dismissed the facts that, his government does not care the welfare of Tanzanians who are in dire need to engage in exploration activities noting that is not true, giving hopes to the audience that the government is underway to create conducive environment for investors and once the production starts, the local companies would be fully involved. Earlier Dr. Kikwerte explained how the exploration is done by the companies which he noted that have to incur huge expense in the activities prior to the start of the production, the money spent he clarified would be refunded to the investing company before signing an agreement on sale whereby he said the government would either get 65 percent and investors remain with 35. 

Tanzania's President Jakaya Kikwete

He also said that, the percent rate on share on the production share might vary and be 75 for the government and 25 for the investors, adding that, this would be after the deductions are made on the expenses incurred during the exploration activities. He said the TPDC would hold all the shares on behalf oil the government and Tanzanians as a whole including local companies who later on would be required to buy shares. However, Dr. Kikwete queried people’s claims over the ownership of these shares incase it could be more appropriate if left for the Private Sector to run the business on behalf of the government and local people to clear such doubts, or otherwise have to do their own exploration and incur such expenses. He has also called upon oil and gas exploration companies to abide by the safety rules and standards to adhere to the hygienic situation around the areas whereby they engage in exploration activities. Meanwhile, hopes by individual Tanzanians to own gas blocks slated for auction were dashed off on Wednesday this week in Dar es Salaam after the Energy and Minerals ministry decided that Tanzania Petroleum Development Corporation (TPDC) would stand in on their behalf. In an interview with journalists in Dar es Salaam on Wednesday this week, Energy and Minerals minister Prof Sospeter Muhongo said there will be no opportunity for individual Tanzanians to own the eight gas blocks due for sale because they will be represented by TPDC. According to the minister, TPDC has the mandate to represent Tanzanians in their entirety in the gas exploration process up to a later stage. He said the government will assist TPDC to run its services commercially, he said and explained that, shares will be apportioned between investors and TPDC whereby the latter will play the major role in regulating all matters pertaining to the gas sector. Meanwhile, the Tanzania Private Sector Foundation (TPSF) is greatly dismayed at the sidelining of locals in the auction of natural gas blocks and has proposed a framework that would ensure Tanzanians benefit from the resources.