Friday, October 25, 2013
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 4th
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.
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.
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