Tanzania demands revenue share from Orca unit

* Lawmakers demand termination of contract
* Govt says won't rush into making decision
* Orders special audit and review of contract
Tanzania is demanding US$20.1 million from Toronto-listed Orca Exploration's local unit, PanAfrican Energy Tanzania (PAT), and has ordered a review of the natural gas supplier's contract.

A Tanzanian parliamentary investigation found last year that PAT had denied the state-run Tanzania Petroleum Development Corporation (TPDC) its rightful share of gas revenues, a claim strongly rejected by Orca in November.

Gas well in Songo Songo
"It has been found that PanAfrican Energy ... denied the government its share of $20.1 million. Tanzanians want this money back," Energy and Minerals Minister William Ngeleja said in a presentation to parliament seen by Reuters on Wednesday.

Ngeleja said, however, the government would not rush to implement some recommendations of the parliamentary committee, which called for the termination of PAT's contract in Tanzania.

"The government will thoroughly assess the possible effects of declaring a contract dispute, which may halt gas production, development and drilling of new wells and talks between the government and other investors for new projects," he said.

PAT officials were not immediately available for comment.

PAT, which signed a production sharing agreement with TPDC in 2001, supplies gas to 38 industrial customers and for power generation for the national grid by Songas and state-run Tanzania Electric Supply Company (TANESCO).

Tanzania, east Africa's second largest economy, suffers from chronic power shortages and is keen to expand thermal power generation to wean it off hydro power, which has been prone to shortfalls due to dry weather.

The minister said he had ordered a review of PAT's contract and a special audit to establish the company's actual investment and service delivery costs, which are a basis for calculating its share of revenues from the sale of natural gas.

He said the government's negotiating team would submit a report on talks with PanAfrican Energy in March.

Tanzania's natural gas reserves are seen at more than 10 trillion cubic feet (tcf) from a previous estimate of 7.5 tcf following major gas discoveries offshore.

PAT said in November it plans to invest $130 million to double natural gas output in Tanzania to over 250 million standard cubic feet per day following a surge in demand in east Africa's second-largest economy.

Sources: Reuters,af.reuters.com, reported by Fumbuka Ng'wanakilala in Dar es Salaam

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