11 August 2014

Tanzania: NAOT to Incorporate Gas Audit

AMID huge discoveries of natural gas and ongoing exploration for oil in the country, the National Audit Office (NAOT) is currently undergoing organisational structure towards establishment of a special unit to audit revenues accrued from the lucrative sub-sector.

Tanzania has so far discovered 50.5 trillion cubic feet (tcf) of gas, out of which 42.5 tcf of gas fields are in the deep sea while the remaining eight tcf are onshore. Discoveries have so far been made in three regions of Lindi, Mtwara and Coast.

The country plans to utilise the natural resource to produce electricity and fertiliser as well as a raw material in petro chemical industries while establishment of a liquefied natural gas (LNG) plant would enable Tanzania to export the product to international markets.

Only a fraction of gas from Songo Songo in Lindi Region and Mnazi Bay in Mtwara Region is presently used to produce power and run few industries, a prison and a tourist hotel in Dar es Salaam.

Controller and Auditor General (CAG) Ludovick Utouh told the 'Daily News' in Dar es Salaam that his office is seeking support from supreme audit institutions from some developed countries to assist the country to build capacity in the area.

"Natural gas and oil industry is a new field in the country and capacity building for local experts is needed not only in auditing but other spheres of the industry as well," the CAG told this paper in a telephone interview.

Among others, the CAG noted, the special unit would audit the Sovereign Wealth Fund, which the government envisages to establish to manage funds from natural gas.

"We have already started negotiations with supreme audit institutions from Norway and Netherlands, which are among countries that have immensely benefited from gas, to build capacity of local human capital to audit revenues from the industry," Mr Utouh explained.

He added that a draft document detailing the organisational structure for establishment of the unit is in place and NAOT now awaits approval from the government."

The country's audit Czar explained, however, that capacity building is a continuous process which would thus require the country to invest in human resources from time to time to ensure it has sufficient skilled-manpower.

Officiating at the Annual Auditor's Conference in June, this year, President Jakaya Kikwete directed NAOT to acquire the necessary skills and knowledge to audit gas companies in the country.

As Tanzanians have high expectations from the natural resources, Mr Kikwete said the audit office needs to gain skills and knowledge on how to audit gas companies to ensure the country gets a fair deal from natural gas.

"Our country does not have enough lawyers to negotiate good contracts or enough human resources to work in the new sector, but these people will not wait for us to build that capacity.

"We have to run while they walk. Go seek experience from countries that have been doing such audits," Mr Kikwete directed the CAG.

President Kikwete, who also launched a book titled 'Transformation of NAOT', stressed that NAOT should not wait until the gas companies become fully operational and begin extracting the natural gas to start complaining about lack of skills and knowledge to conduct audit to the companies.

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