4 September 2014

Tanzania: Agitating for More Transparency in Mining

SIX years ago, in 2008, President Jakaya Kikwete, on a visit to a European country, expressed Tanzania's willingness to join the global coalition of governments, companies and civil society working together to improve openness and accountable management of revenues from natural resources, Extractive Industries Transparency Initiative (EITI).

Six years later, Tanzania had not only joined EITI, but had also formed its local chapter, Tanzania Extractive Industries Transparency Initiative Multi-Stakeholder Group (TEITI-MSG).

The initiative attained a complaint status and published its fourth Reconciliation report with the number of reporting companies rising from 9 mining companies and 3 gas companies in the first report in February 2011 to a total of 47 companies, of which 24 were in oil and gas industry.

The move has been hailed by a number of people, including the EITI Chair, Clare Short who commended the country for an attempt to be transparent and have an open dialogue about how the country manages its potentially significant new resources.

The Northern Zone Coalition of Civil Society Organisations involved in the Oil for Development Project has however, said there is need for a law making reporting to EITI legally binding.

Reacting after a presentation made by Joseph Ogana, at the first training workshop for members of the Steering Committee of the Northern Zone Coalition conducted in Same, Kilimanjaro Region, the members were surprised that reporting to the body is voluntary.

It has been reported that TEITI-MSG has already finalized a review of the draft EITI legislation and submitted it to the Government. The Northern Zone Coalition thinks it was about time this legislation was sent to the Parliament for approval so that transparency could be enforced among the extractive industry companies and the government.

"In the absence of a legislation to legally bind companies to report and comply to internationally accepted principle of transparency and utilization of natural resources, TEITI seems powerless," said a participant, Hassan Kalombo, who is also the Tanga Regional Fisheries Officer.

Narrating from experience of a company that operates in Tanga, he said that the company has set aside US$ 400,000 for executing public projects under the Corporate Social Responsibility (CSR) policy. "We do not know however, how much they have invested so we do not know how much we should share," He said.

Another participant, Yohana Tesua of FIDE, from Korogwe suggested that all companies that would be licensed to operate in the oil and gas sector be forced to register themselves with the Stock Exchange.

Frank Luvanda, the Executive Secretary of the Morogoro- based Mazingira Network (MANET), agrees that transparency is still a sensitive issue, saying that MANET has been in the forefront of efforts to make international companies comply to international guidelines on such issues as transparency initiatives such as EITI, Publish What You Pay (PWYP), environmental standards, particularly Environmental Impact Assessment (EIA) reports and Corporate Responsibility Policy.

A WWF-Tanzania report released recently said trends in the reconciliation reports show an indication of increased transparency in the natural gas sector.

The report prepared by three Dar es Salaam University, Dr. Alex Hepelwa, Dr. Masoud Dauda and Mr. Stephen shows, for instance that the amount of money reported by TEITI-MSG increased from 23 bn/- in the first reconciliation report to 92 /-bn in the third report.

The report pointed out some discrepancies, including companies, which have started production, not reporting the amount of payment in terms of royalties and license fee.

The experts further observed decreased amount of money with respect to the Production Sharing Agreements (PSA) from 16 billion to only 5 billion in 2008/09 and 2010/11 respectively, while the number of companies have increased (from 8 to 12). Production Sharing Agreement (PSA) currently manages the production of gas in Tanzania.

The Model PSA serves as the basis for negotiations with the government and the TPDC and is updated regularly with versions published in 2004, 2008 and 2013. As regards other issues the report said that EITI was silent on how environmental related issues are addressed and it was also not clear how information is passed over to citizens.

"Questions also remain on how to address the unresolved discrepancies between amounts reported by the government but not reported by taxpayers or paid by taxpayers and not reported by the government," the report said, adding that it appears the trend of unresolved differences have been increasing on various tax items over the range of years since EITI first report.

Dr. Hepelwa said that it was found that PSAs were silent on whether the indigenous population or natives have the right of ownership to their land where oil and gas resources are explored or exploited.

PSAs are silent on whether the natives have rights of the sharing revenues derived from the sales of resources after the extraction of those resources. He also said that in the PSA, the relevant authority tasked to oversee the environmental management is not mentioned.

This may affect the effectiveness of the monitoring and evaluation of the natural gas projects, the report pointed out. Despite such shortfalls, Buberwa Kaiza, of Publish What You Pay (PWYP), the National Coordinator and a member of the Board of TEITI - MSG, said this was definitely Tanzania's significant milestone achievement and commended the government for taking such an important step.

He said, however, the country should not be complacent but rather consider the milestone achievement as a challenge and motivation to practically do more on extractive industries value chain transparency. "A lot more is required for Tanzania to be really seen as compliant with EITI standards," he said.


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