12 June 2014

Tanzania: Forum Demands for More Local Content in Gas Industry

DELEGATES to the 7th Gilman Rutihinda Memorial Lecture at Bank of Tanzania (BoT) have urged that the country integrate local firms into gas multinational supply chains.

At an annual lecture aimed at discussing "Gains from the Natural Gas: Local content and Tanzania's Industrial Development," participants including financial experts, diplomats and players in the oil and gas industry agreed that there was need to build capabilities of local industries to be able to serve the multi-trillion shillings LNG expected in the industry.

Giving the main lecture in Dar es salaam on Tuesday, Prof John Sutton, the Sir John Hicks Professor of Economics at the London School of Economics, said that two factors have to be linked to include oil and gas and the domestic industry.

"In Tanzania, things in the economy have been going on well for the past decade, if this is sustained, the country can become a middle income country in a decade or so," he noted.

He said there was need to bring local industrial companies into the supply chain of global multinationals. He said the gas industry should be used to create sustainable jobs for the growing generations in the country.

This , he said, should be done through taking advantage of the supply chain, integrating local firms into international supply chain. "Global companies should source their needs locally and provide institutional support to local firms to help them grow, he noted.

He said there was need to build local capabilities using global practices. He added that focus should be on generating maximum number of good jobs by integrating local firms into the supply chain of the gas multinationals.

He said some of these can be done by a highly professional team to liaise with multinational firms in a cooperative manner and with deep understanding of both local capabilities and the feasible modes of engagement of local firms.

"You need free, equal access to opportunities. Local companies should not be displaced in the conversation," he said. Mr Beatus Rwechungura from BG, attempted to elaborate some measures his company had already taken to strengthen local content.

He explained some as taking local students on scholarships abroad and having trained 450 students thus far in conjunction with VSO in preparation for the LNG.

He said that of the $45m spent in Mtwara by BG thus far, 80 per cent of the contracts have gone to companies registered in Tanzania. In his contribution, the Executive Director of Research for Poverty Alleviation (REPOA) Prof Sammuel Wangwe said local companies should find a way of managing the interim period as they build credibility to compete.

He also wanted to know the role of research institutions like Small Industries Development Organization (SIDO).

The Chairman of Tanzania Bankers Association, Dr Charles Kimei, said that if the current policy direction is maintained, they in the Banking sector are optimistic they would maintain growth of over 7 percent.

"Avoid strict rules on local content, but coordination that is transparent among the government,local firms and multinationals," he said.

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