1 February 2013

Tanzania: Natural Gas Brightens Outlook

RECENT significant offshore discovery of natural gas fields will support Tanzania's economic growth in 2013 and over the medium term, an economist with the Standard Chartered Bank said in Dar es Salaam.

"The discovery of offshore gas in the Ruvuma basin in quantities large enough to support liquefaction facilities will be a key driver in the (economic) outlook," said Ms Razia Khan, Head of Standard Chartered Africa Regional research. She said it is estimated that Tanzania has 15 - 28.9 trillion cubic feet (TCF) of recoverable natural gas.

The World bank suggests that the gas could boost the country's exports by as much as 3 billion US dollars a year, once the gas comes on stream.

"Availability of cheap gas could bring additional economic benefits such as boosting power generation and addressing the long-time deficit," Ms Khan explained.

She said Tanzania has started putting up the infrastructure for commercial distribution of natural gas, including signing of US$1.2 billion loan agreement with China for construction of a 532km pipeline from Mtwara to Dar es Salaam. Ms Khan said, however, that further reforms were needed in the energy sector to ensure sustainable supplies.

The economist also underscored the importance of enhancing agricultural production, especially for some crops such as cotton to support the country economic outlook with growth around and above 7.0 per cent.

She said receipt from tourism, gold and manufactured goods are all expected to rise. However, she noted, high imports of capital goods which are required to sustain strong investment will keep the current account in double digits as a percentage of GDP.

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