Tanzania Daily News (Dar es Salaam)

8 November 2013

Tanzania: Bunge to Decide On Gas Revenues, Says Minister

Dodoma — PARLIAMENT would decide how the country uses gas revenues through a Sovereign Wealth Fund, Deputy Minister for Energy and Minerals, Mr George Simbachawene has said.

He said in Parliament that the august House would prioritise where the fund should concentrate in terms of development projects.

He also said the government has plans to give Tanzania Petroleum Development Corporation (TPDC) two wells in the Indian Ocean so that it also fully gets involved in exploration for gas and oil.

Tanzania eyes the exploration and production of natural gas reserves estimated to be 43 trillion cubic feet (TCF) valued at 430 billion US dollars.

The deputy minister was responding to a question from Special Seats Member of Parliament (MP), Mrs Rita Mlaki (CCM). Mrs Mlaki wanted to know the amount of gas that is ready to be drilled and how investors and the government would share revenues and if there are plans to buy some shares from the international companies involved in the exploration.

In his response, Mr Simbachawene said it was already estimated that 43.1 trillion cubic feet at Songo Songo and Mnazi Bay has an estimated 8 trillion cubic feet and other blocks in the Indian Ocean have 35.1 trillion cubic feet.

He said the arrangement in the production sharing agreements is that the government retains 65 per cent and the investor remains with 35 per cent.

He said the production sharing agreements that the government, through TPDC, entered with the investors provide for the government to get involved by a 20 per cent investment in developing of the projects when gas is reached.

The Deputy Minister said the projects which the government would get involved to use the gas resource is in production of power, fertilizers and cement.

He said there is also a Piped Natural Gas project with a pilot one in Dar es Salaam expected to serve 800 vehicles and 200 houses. Tanzania drew international attention this year by almost trebling appraisal of its natural gas reserves, with multinational firms now eyeing investing in the lucrative natural gas sector.

According to the US Geological Survey, East Africa's coastal waters are expected to hold up to 441 trillion cubic feet of natural gas, with Tanzania and Mozambique taking the lead in terms of provable reserves.

UK based British Gas announced early this year that it would invest about 15 billion US dollars in Tanzania within the next ten years, more than half the country's current annual Gross Domestic Product (GDP).

The government is preparing what it calls 'gas economy' strategy that will ensure it gains the most from extracting of huge gas deposits.

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