By Nicholas Bariyo
Special to DOW JONES NEWSWIRES
KAMPALA, Uganda--Tanzania plans to review all contracts signed
with investors in its natural gas and mining sectors in the east
African country's latest drive to tighten control and raise greater
revenue from its expanding natural resource industry.
The Tanzania Revenue Authority said on Thursday that the review,
to be conducted over four months, would involve the renegotiation
of all mining development agreements as well as production sharing
agreements in the lucrative natural gas sector.
"The main objective of the proposed renegotiation is to secure
for the country an enhanced and fair share [of revenue] from the
extraction of non-renewable natural resources with significant
inherent resource rent that require a mix of different tax
instruments to be effectively captured," TRA said in a
statement.
According to Energy and Minerals Minister, Sospeter Muhongo,
Tanzania plans to use proceeds from the gas sector to create a
sovereign wealth fund to invest in infrastructure projects. The
energy and minerals ministry estimates that the country to raise
between $2 billion and $2.5 billion a year over a period of about
30 years from the natural gas sector when the newly discovered
reserves come into commercial production.
The World Bank estimates that total investment to develop
Tanzania's natural gas resources could top $20 billion-$40
billion.
The step follows a similar one in neighboring Mozambique as
governments seek greater control of their natural resources,
following a flurry of natural gas discoveries. The U.S. Geological
Survey department estimates that the east African coastal regions,
which straddle the shores of Kenya, Tanzania and Mozambique, hold
more natural gas reserves than that of Nigeria, the continent's
biggest energy producer.
The move is likely to test relations between governments and
multinational corporations. U.S. company Exxon Mobil Corp. (XOM),
Norway's Statoil ASA (STO), the U.K.'s BG Group PLC (BG.LN), as
well as Italy's Eni SpA (E), are implementing multibillion dollar
projects to exploit the gas fields in the region.
Exploration companies have discovered nearly 50 trillion cubic
feet of natural gas in Tanzania and along with more than 180
trillion cubic feet in neighboring Mozambique, in the biggest
discoveries in a decade, analysts say.
And with energy-hungry Asian markets, both Tanzania and
Mozambique are jostling to be the first to export liquefied natural
gas to Asia. But analysts have warned that reworking agreements
risk dissuading investments and slowing the commercialization of
the gas fields.
Statoil said Thursday that its existing agreement for the
Tanzanian license remains binding. "In an industry where it can
take many years and billions of dollars from discovery to first
gas, it is critical to have competitive terms and opportunities as
well as stable predictable frame conditions," Knut Rostad, a
Statoil spokesman, told The Wall Street Journal.
A spokesman for BG Group said that the company is still waiting
to examine the government's proposal.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
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