Gas firms must be insured locally, govt advised

The government has been advised to ensure the energy policy being formulated contains a clause that demands oil and gas businesses to be insured by firms registered in Tanzania.

The Commissioner of Insurance, Mr Israel Kamuzora, told the 'Daily News' in Dar es Salaam yesterday that the strategic clause was crucial to ensure national interests were vigilantly protected.

The government is currently formulating the national energy policy following recent discoveries of new on-shore and off-shore natural gas fields. Tanzania is estimated to have about 42 trillion cubic feet (tcf) of recoverable natural gas reserves.

The draft policy is reportedly proposing gas companies to list on the Dar es Salaam Stock Exchange (DSE), creation of a gas revenue fund and a national oil and gas company, as well as locating plants onshore to liquefy the gas from the offshore fields.

The 2013 draft natural gas policy also plans to 'ensure that the domestic market is given first priority over the export market in gas supply. "The government should see to it that the benefits of the natural gas boom are channelled to the people. This should be maximized," Mr Kamuzora said.

"We missed the opportunity in the mining sector. Many companies came in during the exploration phase and later others made huge investments and were not insured locally," he added.

Tanzania's insurance annual gross premium market is estimated at around 400bn/-, but with massive natural gas discoveries that figure could reach 2tri/- within a decade, according to industry sources.

"We may also witness world-class insurance firms like Lloyds of London, Aon, Munich Re coming for registration in Tanzania," Mr Kamuzora pointed out. The insurance clause in policy paper reads: "..

All insurances pursuant to this contract shall be obtained from registered Tanzanian insurers in accordance with Tanzania Insurance Law in so far as the coverage is available and can be reinsured as appropriate with "A" rated reinsurers or better or as may be specifically agreed by TPDC. 

Such insurances shall be for such amounts and on such terms and conditions as may be approved by TPDC."

Source: The Daily News, reported by John Kulekana  from Dar es Salaam, Tanzania

 

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