27 January 2013

Tanzania: Gas Policy Hearings - 'Create New Regulator'

Photo: Capital FM
A natural gas plant: Mtwara residents in Tanzania are protesting the governments plans to pump natural gas to Dar es Salaam through their town.

PROPOSALS in the draft natural gas policy to have a National Oil company in place have been praised but questions rose on how the new regulator would be structured.

Business leaders and analysts in Dar es Salaam, at a Policy Forum discussion on whether the Natural Gas Policy addresses the needs of citizens said the proposal to have a National company in place to handle commercial interests on behalf of the government was welcome but that it should explicitly show how the new regulator would be structured.

In his paper, the Executive Director for HakiMadini, Mr Amani Mhinda, said the importance of having a national oil company is that there would be learning of business from within, helping industrializing the country on the basis of its indigenous petroleum resources, promote the development of local content and eventually become a regional and global player.

"The gas policy has decided on Tanzania Petroleum Development Company being National Oil Company and creating another entity to be the regulator. This means that TPDC is proposed to handle commercial interests on behalf of the government," he said. But he questioned what would happen to past contracts in which TPDC was both the regulator and benefactor.

He said the policy should start with contract transparency, reduce capital flight and maximize retention in the local economy. He said the proposed draft gas policy 'avoids' the upstream matters, while focusing on mid and downstream issues. "There are fundamental questions regarding monitoring and regulatory capacity of the sector.

There is no way that the gas policy can unilaterally change the functions of TPDC, for example, without undermining petroleum law. This contravenes the spirit of petroleum sector reforms," he said.

Mhinda observed that the policy should not create monopoly rather than energy balance as it presupposes to give over 3000 Megawatts by 2015, way above the overall electricity requirement, shutting out hydro and renewable, adding that it should not turn the country back from pushing for renewable energy.

The Gas Infrastructure Manager at Songas, Mr Malcolm Taylor said the policy addresses the citizen's needs through facilitating informed democratic debate and setting realistic timescales for development. He said the policy should address issues as to where the investment would come from and what it needs, review TPDC's many conflicting roles, balance between domestic use and export and how to go about putting in place an LNG plant.

Malcolm said it was also important to 'seriously think' about how the Sovereign Wealth Fund would be structured. Mzumbe University don, Dr Prosper Ngowi said the policy should be looking forward to establishing local competence in policy, regulatory and commercial areas and technical through local content.

The Head of Communications at Statoil, one of the giant players in the country's gas sector, Ms Genevieve Kasanga said there is need for awareness on the gas sector and capacity building so that local human resources are trained to run the sector effectively.

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