Tanzania to recover huge trillions of shillings from gas exploration activities

As the gas exploration activities of the deep sea discoveries off-shore in southern region of Mtwara is going on, the exploring company of British Gas Tanzania Ltd and its partners have spent a total of $ 2 billion (Sh.4.3 trillion) since it started exploration in 2010 up to now, a company’s official has said. According to the overall economic calculations of the percentage rate, the amount is equivalent to the 18 percent of the total country’s proposed national budget for 2015/16 fiscal year which has amounted to Sh. 22.5 trillion.  The Head of Commercial at BG Tanzania, Hugh Jones declared yesterday in Dar es Salaam when contributing to a debate at a breakfast talk organized by Policy Forum to discuss the subject titled, “Local content in Tanzania’s Gas industry, what can citizens hope for”, the forum was held at British Council. According to Jones, his company has finished major exploration activity campaign that is in the first phase exploration activity and now has embarked on the planning phase activity that would take some ten years ahead to be finished. In view of this, he said Tanzanians should not have a dream of having the gas in use by now as there are still a lot of many things to be done in between before the commercialization of the capital investment process takes off. However, he noted that still his firm is going to spend a lot of money during the planning phase as a lot of many things are going to be involved that would require huge expenditure which he is sure that would be compensated by the government as per the accord of agreement entered once the production starts effectively. “The government is expected to recover trillions of shillings as part of sharing costs on gas exploration activities and the amount might double from the already incurred figure”, he said adding that the best way is to have the LNG gas exported to recover such costs. Jones revealed his company’s strategic plans in his presentation and noted that, his firm has outlined an action plan which would involve local business people to fully participate in the gas business once the operation starts. 

He said Tanzania need to export the gas for LNG production for the attainment of foreign exchange for the sustainability of the local market. However, he also noted that, skirmishes such as those which were mobilized by the Mtwara residents in protest against construction of gas pipelines from Mtwara to Dar es Salaam need thorough education to enlighten the people on the usefulness. On the part of the company’s participation in support of local content through Corporate Social Responsibility (CSR), he noted that his firm offers scholarships for 13 masters students pursuing geology studies at the University of Dar es Salaam (UDSM). Others he mentioned as employment for locals and coordination with the local contractors in terms of development plans. During the debate, the Local content responsibility officer of the Ministry of Energy and Minerals, Neema Lugangira said that, the government is planning to prepare ‘Gas Utilization Master Plan’ policy that would guide the technical capability for the local people once the production of gas starts. She said the government is in the final stage of its preparation and within the shortest months ahead, it would be launched. However, she said that there will be a unit which would be established at the ministry headquarters whose task would directly deal with ensuring the development of the participation of the local people in the country. Tanzania’s current natural gas reserves are at about 55 trillion cubic feet (tcf) following new deep sea discoveries off its southern coast, the energy minister George Simbachawene said recently in Parliament. “As a result of ongoing exploration activity, natural gas resources discovered in the country rose from 46.5 tcf in June 2014 to 55.08 tcf in April 2015, equivalent to an increase of 18 percent,” he said. Simbachawene said a pipeline connecting offshore natural gas fields to Tanzania’s commercial capital Dar es Salaam would be commissioned in September, ahead of the energy ministry’s previous estimates of November. The 532-km (330-mile) pipeline and gas processing plants, financed by a $1.225 billion Chinese loan, were initially expected to be completed last year but were delayed from going online due to technical setbacks.