22 January 2014

Tanzania: Special Gas Fund in Pipeline

A SOVEREIGN wealth fund in which all revenue from natural gas will be deposited in a bid to safeguard the interests of future generations is in the pipeline.

A bill to establish the fund will be tabled in Parliament in October, President Jakaya Kikwete said while opening the two-day consultative meeting between religious leaders and the Ministry of Energy and Minerals in Dar es Salaam on Tuesday.

"This fund will be governed by a law that will clearly stipulate how much money will go to the government budget and how much will be saved for the future generations " Mr Kikwete said.

Participants to the meeting include various religious groups and officials from the National Muslim Council, Bakwata, and the Christian Council of Tanzania (CCT).

The president dismissed fears that the natural gas sector, which is dominated by multinational corporations, will end up being a curse like it has happened to the mining sector where locals and the government have been on the receiving end.

He said because gas is a perishable resource, it's important that the sovereign fund is established so that the future generations, which will likely not find the resource, get their fair share through the fund.

Mr Kikwete observed that many countries with similar perishable resources have established sovereign wealth funds, which have not only keptsome money for future generations but also helped them to fund development projects.

He dismissed people who are seeking special treatment as locals in the allocation of oil and gas exploration blocks, saying doing so will benefit individual families and not the whole country.

"We as a nation have our interests taken care of by TPDC, which has a stake in all projects that are going on," he asserted, while noting that the state-owned corporation will grow like its peers in Norway, Malaysia and Brazil.

"Statoil, which has discovered over 16 trillion cubic feet of natural gas in Lindi an Mtwara waters, is a government company, in Brazil, Petrobas is a state company in Malaysia, Petronas is also a state company, so why not TPDC?"

President Kikwete wondered while urging religious leaders to inform their congregations well on the subject because some people have begun to spread distorted information.

The Minister for Energy and Minerals, Professor Sospeter Muhongo, told religious leaders that the country will tame poverty once it successfully becomes a gas economy.

"Natural gas will enable this country fight poverty and become a middle income economy by 2025," Prof Muhongo said while urging faith leaders to denounce individuals who want to hijack the gas resource for the benefit of their families.

"At my ministry, we are well organised and we don't take any bribe from anyone," he pointed out, noting that within that period, the country's gross domestic product will increase from the current less-than 40 billion US dollars to not less than 200 billion US dollars.

Inviting President Kikwete to inaugurate the meeting, the conference's Chairman, Bishop Ndimi Mhegela of the Anglican Church in Dodoma, commended the government for making significant changes in the mining sector and expressed hope that mistakes done in the past will not be replicated in the oil and gas subsector.

Bishop Mhegela said faith leaders want to be part of the gas economy bandwagon and have hence made consultations with various ministry officials, including Prof Muhongo, who is a custodian of the sub-sector.

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