Tanzania Daily News (Dar es Salaam)

20 July 2014

Tanzania: Gas Boom to Transform Mtwara Port

COME 2030 and the Mtwara Port would be handling some 28 million tonnes of traffic, thanks largely to the gas boom in Mtwara and Lindi regions.

Our Staff Writer CHABY BARASA reports.A HUGE leap indeed for the Port located 580 kilometres Southward of Dar es Salaam whose current capacity stands at a mere 400,000 metric tonnes per annum.

To reach the said target, the port will see four more berths constructed and a free port established as Tanzania Ports Authority sets out to fully exploit on the massive discoveries of the resource estimated at over 50trillion cubic feet.

Mtwara Port Master Absalom Bohella says once the port attains its full potential in the wake of gas discoveries, the economic benefits to the region would be there for all to see and tap. Mr Bohella observes that the port has been a sleeping giant that is now about to rise to prominence as a result of the expected gas boom.

"Mtwara has the potential to overtake Tanga and rival Dar es Salaam ports in the near future," says Bohella, brimming with confidence. The Port, built by the colonial government in the 1950s is mainly designed to handle conventional cargo. However, it can deal with up to 750,000 metric tonnes if additional equipment is put in place for handling containerized traffic, says Bohella.

Currently the port mainly handles break-bulk imports namely cement, food stuffs and miscellaneous general cargo while general exports are unprocessed cashewnuts to India and other Asian countries.

"It therefore goes without saying that the facility has not realized its full potential as attested by the average annual cargo figures at the port, which indicate that for the past five years, it handled 136,500 metric tons, which is 34 per cent of its capacity of 400,000 metric tons," says the Port Master.

However, discovery of gas and ongoing offshore exploration of oil and gas in the southern regions undertaken by various multinational companies that include BG Group, Ophir Energy, Statoil and Petrobas, is set to transform the port in a big way. Mr Bohella says the oil and gas exploration companies operating offshore are currently using Mtwara Port as a supply base, which has translated to an increase in revenue of the port even before the fully fledged gas economy takes off.

On the other hand, for 24-year old Bakari Mselem the turnaround in the port's fortunes mean nothing unless it translates into tangible results-employment and a good salary. Mselem, one of the many boda boda (motorcycle) operators in Mtwara town, says he is tired of hearing all stories about gas discovery and how it would transform lives of people in the region.

"I'm desperate, I want a job, even if it is not highly paying but at least an employment that would guarantee me something at the end of the month," says Mselem, noting that the motorcycle taxi business, that he currently engages in, is too unpredictable and risky. The fact that he is a form two drop out and without any formal qualification or training could mean that Mselem misses out on employment opportunities generated by the sector.

He would probably have to settle for other indirect opportunities to be provided by the gas sector. Indeed Mselem is not alone. There are uneducated and unemployed youth in Mtwara and Lindi regions who face the same scenario but still have high hopes that the gas 'manna' would transform their lives overnight.

However, it is not all doom and gloom for Mselem and other youth, thanks to introduction of the EEVT project (Enhancing Employability through Vocational Training), which aims at improving the employability of young people in the regions of Mtwara and Lindi, with a focus on the growing demand for skilled labour in the gas industry and related services.

The EEVT Project Manager Mawazo Mataje notes that over three years (2012-2015), VETA (Vocational Education Training Authority) teachers and their students will be trained by tutors from Volunteer Service Overseas and City & Guilds International College. "In the long run, VETA will be capable of producing a steady stream of qualified craftsmen and teachers in response to the demand of gas sector's skilled labour, " says Mr Mataje, noting that doors are open for Mselem and others to join.

The project focuses on fields like welding and fabrication, plumbing and pipe fitting, carpentry and joinery, electrical installation (industrial and domestic), motor vehicle mechanics and food production.

He says major progress has been made including training teachers to improve teaching methodology, quality assurance procedures, one on one transfer of skills between VETA teachers and VSO advisors, rehabilitation and purchase of equipment and tools, creating industry links between VETA and gas related industries (both national and international companies) and of the most important is compliance to health, safety and environment within VETA centres in Mtwara and Lindi.

"Feedback from industries where students have been placed for internship shows that there is a good progress on their skills and knowledge though the trainees need more practice to become competent and skilled people," he observes. According to him, although VETA covers the whole of the country in terms of enrollment for students, the focus is on Lindi and Mtwara.

"Still there are students from other regions because that is a national policy in education where you cannot enrol only Mtwara and Lindi. However, we have more trainees from the two regions due to geographical location of the centres," he notes.

He adds that observing Health, Safety and Environment (HSE) is among the challenges faced by the trainees especially on their attitudes towards full compliance to the issues.

"Good progress has been made but still it is not enough to the international level required in the gas industries. The gas industry is very much strict on the HSE and some of the gas companies like BG have been supporting VETA to provide their staff for technical advice.

"However, health, safety and environment in VETA workshop cannot be the same as working in the real industry environment. Therefore, students need more exposure and change of attitudes towards HSE compliance. "The gas industries make HSE as number one qualification no matter how good welder or plumber you might be, if you do not comply to it then you cannot work in the gas industries," observes the Project Manager.

He explains that to address the challenges, the EEVT has developed the HSE committee for both Lindi and Mtwara, through support from British Gas (BG) and other companies within Mtwara. The project also works with Occupational Health and Safety Authority (OSHA) for legal compliance to HSE.

Mtwara Regional Commissioner Joseph Simbakalia remains optimistic that opportunities would be many and not necessary coming as direct employment to individuals.

"There is no reason to despair. Discovery of gas would stimulate various sectors of the economy, hence the need for people to be ready to capitalize on these opportunities," he says. Focusing ahead, the RC challenges residents to prepare for the envisaged sweeping economic changes by investing in their children's education.

"Education is the only sure w a y to ensure our children are well equipped to fully exploit opportunities and enjoy the fruits of the resources," says Mr Simbakalia, a retired army officer. A recent report on Mtwara Port performance says expansion of the facility will translate into more employment opportunities for the residents in the region.

Currently the port employs 180 workers, a number which is expected to rise to 320 in five year's time, with indirect employment estimated to reach over 8000. On the other hand, the oil and gas companies conducting activities offshore who employ 200 workers currently would have doubled the workforce in ten years' time, according to experts' estimates.

To maximize benefits to the local communities, the First Draft of the Local Content Policy of Tanzania for Oil and Gas Industry 2014 seeks, to facilitate local community business development, contribute to human capability development and stimulate productivity in the local community economy.

The scope, according to the draft policy, will be to as far as possible to procure materials and contracting of services locally; hiring and development of the local community personnel; improving the capacity and capability for sustainable commercial benefits for the communities in which the oil and gas projects operate.

According to the 2012/13 unaudited reports of the Port, revenue collected during that period amounted to 13.197bn/- against expenditure of 11.413bn/-, hence 1.784bn/- was recorded as profit.

In 2011/12 financial year, the Port's profit was only 0.449/bn. "The port covers an area of 2, 694.24 hectares of which 70.67 ha are currently under utilisation, while the remaining ha were bought in 2004 from N'gwale and Msemo villages for Port expansion purposes," Mr Bohella says.

Tanzania Port Authority Acting Director of Planning and Investment, Mr Gladson Urioh notes that plans are underway for expansion of Mtwara Port to ensure it realizes its full potential and services the envisaged social and economic booms brought about by the discovery of gas in Lindi and Mtwara.

Mr Urioh says the feasibility study for the development of the port and economic zone at Mtwara Port envisages expansion of the quay wall westwards by constructing four additional berths so as to cater for the anticipated increase in demand.

"TPA plans to increase the capacity of the Port to cater for the expected increase in traffic following development of the Mtwara Corridor and the ongoing exploration activities for oil and gas in the Indian Ocean," he says.

He concedes that there has been tremendous growth of exploration activities in the shallow to deep waters of the Indian Ocean in the country. "The drilling activities in the deep sea have required sourcing of materials and equipment from multiple places around the globe in order to manage the drilling operations of the wells.

"Timely availability of materials and equipment is a key factor in managing exploration costs of these projects. The industry requires the presence of a local supply chain and service companies."

He notes that while tremendous efforts have been made to create a conducive, business environment for Mtwara Port to support the drilling operations, "the lack of an Oil and Gas Supply Service Hub is still an impediment."

This is due to the fact that the operations of oil and gas companies require huge costs to ensure that there are no disruptions in the drilling operations and hence would not allow stock outs, whose maintenance is inefficient and quite costly to the exploration companies.

The Export Processing Zones Authority (EPZA) Director General, Dr Adelhelm Meru, underscores the urgent need for the country to offer the necessary support infrastructure and enabling environment for trouble free operations to boost and support the oil and gas industry.

"That is why introduction and development of the oil and gas free zone within Mtwara port as a distribution centre for Tanzania and eastern and southern Africa has been crucial," Dr Meru says.

The free zone is intended to support global procurement policies and logistics coordination beyond national boundaries. A total area of 110 hectares has been earmarked as a Free Port Zone. The area would be developed in two phases.

The first phase would involve development of 10 hectares and phase two will include developing the remaining 100 hectares. The 10 hectares would be dedicated to the oil and gas service companies while 100 hectares will be established as a General Free Port Zone to cater to not only the oil and gas service companies but also other companies.

According to the EPZA boss the objective of the project is to create "a good business and working environment for oil and gas service companies by providing them with an area that has all the necessary, infrastructure for them to perform their operations efficiently and swiftly."

The infrastructure would include a tarmac heavy duty road network, utilities (water, electricity), administration building, check point building and a boundary wall.

A number of oil service companies currently providing support to oil and gas exploration companies in the deep sea have shown interest to locate at the envisaged Mtwara Free Port. The EPZA boss is optimistic that in the event the free port is established, it is likely that more companies would relocate to Tanzania and more space would be required. The initial space requirement for interested companies is 18 hectares.

According to the Report of the Feasibility Study for the Development of Port and Economic Zone at Mtwara Port, the Offshore Supply Base Cargo is forecast to reach 240,000 tonnes per annum by 2030.

The Report notes that development of a free port at Mtwara would bring economic benefits to Tanzania and its establishment is a prerequisite for the country's future progress of the petroleum industry and other development projects.

"The free port would not only be a catalyst for industrial growth and service provision, but would also make it more economically feasible and dynamically active in facilitating exports and imports of goods in Tanzania and the entire Eastern African region," says the Report.

The Natural Gas Policy 2013 however, cautions that high expectations among residents where natural gas discoveries have been made need to be moderated with realism as discoveries may not necessarily yield immediate results.

The Policy underlines the need to manage expectations for the various stakeholders such as NGOs, activists, media and general public to understand that such high hopes may take time to be realized and that reality should not be a source of public discontent and disagreements.

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