TPSF SEEKS INCLUSION IN OIL, GAS INDUSTRY

The Tanzania Oil and Gas Corporation is looking to raise Tsh500bn ($30 million) from the public to invest in commercial exploration and development of oil and gas in the country. 

The capital will be raised from the sale of 500 million ($300,000) shares at Tsh1,000 ($0.59) per share from July through a collective investment scheme in a bid to take advantage of the investment opportunities in the oil and gas industry.

The Tanzania Oil and Gas Corporation, is the brainchild of the Tanzania Private Sector Foundation (TPSF). TPSF was formed in 1998 to promote the participation of the private sector in the country’s economic activities.

The corporation plans to take advantage of the draft local content policy for oil and gas, currently being debated by stakeholders to ensure local participation in the country’s multibillion dollar gas sub-sector before it is passed later this year.

Tanzania has discovered an estimated 43 trillion cubic feet of recoverable natural gas but the government’s recent decision not to grant exploration licences to local companies, who wish to invest in the sub-sector valued at $430 billion, has created heated debate.

The government maintains that local investors and companies will be unable to raise $120 million capital required for offshore exploration for a single well.

The government said the Tanzania Petroleum Development Corporation (TPDC), which will own a majority stake in most of the oil and gas ventures, represented all Tanzanians.

But Godfrey Simbeye, managing director at TPSF, said they were using the corporation to urge the government to include a phrase in the local content policy requiring oil and gas investors to team up with local companies.

“We are going to take advantage of the local content policy that is currently under review to push for reforms. We believe local companies can own a significant stake in gas wells through joint ventures with international oil and gas companies,” said Mr Simbeye.

Mr Simbeye said the private sector would want a 90 per cent stake of the supply chain when commercialisation of natural gas starts in 2020. He referred to Ghana’s local content policy, which requires foreign oil and gas companies to sell a stake of their company to local firms.

Debate

Industry stakeholders are about to start debating the local content policy whose aim is to enhance the participation of local businesses in providing goods and services to the oil and gas industry. The draft local content policy is also aimed at creating local experts and a skilled and knowledgable work force.

The draft also proposes that all oil and gas operators use goods and services produced and provided by businesses owned by Tanzanians if they can meet the required quality and quantity. 

Haji Semboja, senior economics lecturer at the University of Dar es Salaam welcomed the idea and said it could be emulated in other sectors such as agriculture. Local empowerment and public and private partnerships would help it succeed.