Tanzania: Parliament endorses crucial petroleum bills

In a historic decision, Members of Parliament (MPs) on Sunday unanimously approved legal and regulatory framework for developing the country’s hydrocarbons industry, after days of what was vividly hot and contentious debate.

If all goes well and President Jakaya Kikwete signs the Petroleum Bill of 2015, Tanzania will have in place the law governing operations of the industry.

Tanzania is estimated to have more than 55 trillion cubic feet (tcf) of natural gas following a recent string of on-shore and off shore discoveries mostly the southern part of the country. It, however, has yet to make oil discoveries despite striking several encouraging signs.

Under the terms of the proposed law, energy companies will pay royalty for oil and gas production in onshore, shelf areas and offshore output Some sources say the state’s share of profit on natural gas production would range from a minimum of 60 to 85 per cent, pegged on specific daily gas output.

Members of parliament, mainly from CCM voted overwhelmingly in favour of the 2015 Petroleum Bill after the nononsense speaker, Ms Anne Makinda, gave marching orders to more than 40 opposition legislators for indiscipline, including shouting and obstruction on Saturday.

Meanwhile, the MPs yesterday also passed Oil and Gas Revenue Management Bill and Tanzania Extractive Industries (Transparency and Accountability) Bill.

“We are here for business as opposed trouble making in the House,” she ruled and order those who she described as rogue MPs to go out for five days ... Some opposition MPs led by Ubungo legislator, Mr John Mnyika (CHADEMA) contend that industry players and non governmental organisations (NGOs) should have been given more time to scrutinise the proposed law.

The Bill proposes for the establishment of the Petroleum Upstream Regulatory Authority (PURA), which will regulate and monitor the petroleum upstream sub sector. It also proposes for financial provisions, whereby the sources of funds for PURA are well set out.

It further provides for matters relating to tax exemption, accounts, audits and annual reports of PURA. The Bill further proposes that under this Act, the Energy and Water Utilities Regulatory Authority (EWURA) will exercise regulatory powers in respect to midstream and downstream petroleum and natural gas activities.

The proposed law also seeks to transform the Tanzania Petroleum Development Corporation (TPDC) into the National Oil Company (NOC), which will have the mandate to manage the country’s commercial interest in the petroleum operations as well as mid and downstream natural gas activities.

NOC is proposed to be vested with exclusive rights in the entire petroleum upstream value chain and the natural gas mid and downstream value chain. Oil and Gas Advisory Bureau will also be established and will be tasked to advise the cabinet on strategic matters relating to oil and gas economy.

This proposed law is also aimed at repealing two previous laws that were used to govern petroleum industry in the country. The two legislations are -- the Petroleum (Exploration and Production) Act cap 328, which was dealing with the upstream petroleum operations, and the Petroleum Act Cap. 392, which was dealing with mid and downstream petroleum supply operations.

Winding up the debate, Energy and Minerals Minister George Simbachawene told the House that the government is well prepared to enter into natural gas business, dispelling accusations especially from the opposition that the proposed laws are contentious and that they have been rushed.

“Their arguments are baseless because it has taken the government a great deal to build capacity through training to local experts, senior government officers, MPs and other stakeholders in this sector. They have visited various countries, including Norway, Trinidad and Tobago, to learn how the sector benefits it people,” he said.

He added that under the proposed law, the government has made sure that Tanzanians are effectively involved in the oil and gas sector, praising the MPs for approving the proposed laws.

Mr Simbachawene said it was the right time for the country to have such laws to allow it to go ahead into negotiating good deals in natural gas that has been discovered.

He also said that recommendations of stakeholders including that of MPs, Coalition of Civil Society Organizations (SCO) and the Tanganyika Law Society that were collected during the public hearing have been considered and suggestions were taken on board.

In the proposed law, there is also an element of government participation in the sector, in which Local Content, Corporate Social Responsibility and Integrity Pledge have all been provided for. The provision clearly explains how government can successfully participate in the entire petroleum value chain.

It also seeks to ensure that the oil and gas industry benefits all Tanzanians including preference of using goods and services provided by Tanzanian entrepreneurs, training and employment of Tanzanians, as well as technology transfers.
Source: Daily News, reported from Dar es Salaam, Tanzania
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