Monday, October 27, 2014

Minister warns to avoid over expenditure budget during gas production

The deputy minister for Energy and Minerals, Stephen Masele on Wednesday last week warned that Tanzanians should not be much proud of the gas which currently is in exploration, and become optimistic that it would reduce the individual level of poverty stricken situation in the country. According to Minister Masele, “since the government has not yet established the value of the gas once its production starts, then it was not necessary to start thinking of huge expenditures by now as it is unpredictable for how long it will last”. He noted that, huge expenditures if approved at the expense of the gas production, is likely to cause national economic recession as more money is directed to recurrent budget in things like workers’ salaries, purchase of luxurious vehicles, allowances and many others and not targeted to development projects. Masele was expressing his concern before stakeholders when contributing a debate during a Tanzania Oil and Gas conference and exhibition (TOGACE) whose theme was titled, “Development of oil and natural gas for the benefit of Tanzanians” A two day symposium brought together about 500 participants who included academicians most of whom engineers, politicians and different numbers of the public to discuss how Tanzanians would benefit from its natural resources currently available in the country. He cited countries like Greece, Italy, Argentina and Spain which he said had large quantity of gas production in some years back and unknowingly had imposed high expenses in their government recurrent budget and when their gases ended, the system could not revert to normal due to lack of money. Now, he noted that these countries are in serious economic crisis due to the fact that, have failed to get sources of money with which to cater for the social needs such as the high salaries and many others which the higher authorities had approved an aspect that have fallen victims of endless internal political standoff.  

The deputy minister for Energy and Minerals, Stephen Masele

 However, Minister Masele noted that, for Tanzania to be on the safe side, his ministry is planning to establish the investment fund known as the Sovereign Wealth Fund (SWF) which would serve as a catalyst for future national development projects. Elaborating more about the fund, deputy minister noted that it would have money derived from the major country’s natural reserves, which are set aside for investment purposes that will benefit the country's economy and citizens once their operations ceased. “The fund will help to diversify the national economy through the use of revenues attained from such natural resources such as oil and gas”, he said adding that, the major development projects to benefit from the fund includes the construction of ports, airports and big farming estates such as sugar. Besides diversifying economy, the fund would also serve as a stock or bond when the government is seeking other sources of income to promote economy. However he added that, he would introduce a bill in the coming parliamentary sessions with a view to help control expenditures of the revenue collected from natural resources for future generations. To ensure this, he has assured oil stakeholders in the country that, he would make sure the bill is approved b y parliament before end of his office term by August next year when official campaigns for general election are expected to commence. The deputy minister also took the opportunity to reassure stakeholders that the government recognizes the existence and contribution of the private sector in developing the oil and natural gas industry. He pointed out that Tanzanian companies face investment challenges in the new energy sector which requires large capital and high technology and as such, the government was forced to invite foreign companies which have the ability to meet the investment requirements. Chairman of the Parliamentary Committee on Energy and Minerals, Victor Mwambalaswa said the forum which is being conducted annually provides an arena for Tanzanians to learn and share experiences in the gas and oil sectors.

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