Tanzania's draft Natural Gas Policy (Policy) was originally scheduled to be adopted before the end of 2012 but by the turn of the year there had been no update on the status of the Policy or the consultation that was intended to inform it. The status of the Policy remains crucial given that it is intended to precede a Utilisation Master Plan and Natural Gas Act which are eagerly anticipated by industry participants and observers.

Status of the policy and return of Parliament

At the time of writing there has still been no formal communication from MEM on the status of the Policy or the consultation which began on 1 November 2012. The lack of communication has been a source of frustration for the private sector in Tanzania while the Government now faces additional problems posed by the Mtwara-focused protests considered below.

Sessions in Tanzania's Parliament reopened on 29 January and it is anticipated that this will prompt fresh debate on the Policy and other issues facing the industry. Shadow Minister for Energy and Minerals John Mnyika has written to the Speaker of the National Assembly urging her to use constitutional powers to appoint a new Energy and Minerals Parliamentary Committee (the previous committee having been suspended last year amid allegations of corruption).

On the opening day, the Speaker announced that an ad hoc committee would be formed to address the immediate Mtwara crisis and the committee is expected to table a report within two weeks. A substantive Energy and Minerals Committee is then likely to be formed during the current session.

In general, stakeholders will hope that Parliament has the opportunity to consider opinions aired by public and private sectors during the consultation process before Cabinet adopts the Policy.

2013 Parliamentary schedule

The speed at which the Government is able to enact legislation that will give teeth to the principles set out in the Policy will be dependent amongst other things on this year's Parliamentary timetable.

Parliament is scheduled to sit only four times and given that any Bill requires three hearings in Parliament and Presidential assent before being enacted; progress will inevitably be slow.

The current 2013 Parliamentary schedule is understood to be as follows:

  • Current Session (2 weeks)
  • April (2 weeks)
  • June - August (54 days – budget session)
  • November (2 weeks)

Escalating protests in Mtwara

On 27 December 2012, the residents of Mtwara (the town closest to Tanzania's off-shore gas activity) staged a demonstration against the construction of the gas pipeline from Mtwara to Dar es Salaam. Following the demonstration the Minister of Energy and Minerals, Prof. Sospeter Muhongo, issued a press release stating that the country's natural resources have historically been developed for the benefit of the whole country and not solely for the benefit of those closest to the source of those resources. The Minister also inferred that the protest was politically motivated as it was organised in part by members of the opposition.

The protests have since escalated and over the weekend of 26-27 January the houses of local politicians were set alight and four reported deaths occurred. As of 30 January, 53 people have appeared in court on charges related to the protests. The violence has alarmed Government and the Prime Minister, together with other members of cabinet and law enforcement officials, flew directly to Mtwara following the weekend's incidents with a view to resolving the crisis.

The delegation took the opportunity to speak to the residents of Mtwara concerning development projects they had planned for the area. As stated earlier, an ad hoc committee has also been formed by Parliament to investigate the crisis and is expected to report back in two weeks.

Other news

Power

Tanzania's state-owned electricity supplier TANESCO has admitted that it is currently holding talks with the World Bank and IMF. The talks are understood to relate to a potential bailout package to alleviate TANESCO's growing arrears and the establishment of a more sustainable framework for its operations. According to a statement by the Energy and Water Utilities Regulatory Authority (EWURA), TANESCO on 14 January 2013 withdrew its request for a significant increase in its tariff which would have led to another sharp rise in the price of electricity for the Tanzanian consumer.

PPP

During a discussion at the World Economic Forum in Davos, Tanzania's President Jakaya Kikwete has called for the greater use of Public Private Partnerships (PPPs) to address issues facing Africa's energy sector. Tanzania currently has a PPP Act and a PPP Unit which would be used to implement such projects

Renewables

The International Finance Corporation has announced that it will invest in the 100MW Singida wind power project in partnership with UK-based Aldwych International and Tanzania's Six Telecoms. The three will together contribute US$ 71m in equity from a total project cost of US$ 285m, with the balance to be provided through debt finance.

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