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| Energy and Minerals Minister, George Simbachawene |
The National Energy Policy gives priority to domestic use of oil and gas discovered and puts a premium on developing renewable power sources like wind, solar, and geothermal.
Tanzania has found vast quantities of natural gas, which has attracted foreign firms interested in supplying energy-hungry Asian markets.
The draft National Energy Policy 2015 was developed by public and private stakeholders with input from development partners. Tanzania’s Energy and Minerals Minister George Simbachawene said the draft promotes equal development in both urban and rural areas.
“The ministry will provide leadership, oversight guidance and policy direction,” he said.
Tanzania started exploring for oil and gas in 1952, but the country remains under-explored both onshore and offshore.
The National Energy Policy recognises the need to put in place clear programmes for data acquisition, mechanisms for licensing as well as development of oil and gas resources.
Tanzania is estimated to have about 53.28 trillion cubic feet of natural gas with potential for more discoveries. BG Group, Ophir Energy Plc, Statoil and ExxonMobil plan to build an onshore gas liquefaction and export terminal for offshore discoveries to be exported as liquefied natural gas.
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The National Energy Policy also seeks to address a standoff between Tanzania’s mainland and its semi-autonomous island of Zanzibar regarding the sharing of future crude oil and natural gas revenues.
Shell signed an agreement with Tanzania’s central government for rights to offshore blocks 9 to 12 in 2002, but Zanzibar disputed the award due to revenue-sharing concerns, leading to a 10-year delay exploration work. The island insisted that the oil and gas revenue from any discovery in blocks 9 to 12 should be for its sole benefit.
The dispute between Zanzibar and Tanzania mainland has prevented Shell from starting work in the four blocks or from selling its exploration rights in East Africa.
Zanzibar’s authorities have in the past insisted on having a separate agreement for firms investing on the island or within its territorial waters while Tanzania’s government wanted a single code covering the whole country.
Refined oil
Tanzania imports refined oil products for domestic consumption and Mr Simbachawene said the existing infrastructure is geared towards receiving imports as the country has not discovered crude oil.
“In case of oil discovery, midstream and downstream infrastructure will be required. Construction and ownership of major infrastructure requires a substantial amount of capital and appropriate planning,” said Mr Simbachawene.
The government aims to participate in developing mid and downstream infrastructure to maximise revenue. The National Energy Policy envisages a mechanism to ensure that the domestic market is prioritised over exports. The objective is to enhance reliability of supply and utilisation of oil and gas products for the domestic market.
Tanzania has a coal reserve of about 1.9 billion tonnes, of which 25 per cent is proven, with potential for five billion tonnes.
Tanzania’s installed power generation capacity is 1,591MW. It imports 8MW from Uganda; 5MW from Zambia and 0.85MW from Kenya.
Annual demand growth for electricity averages 10 to 15 per cent. Mr Simbachawene said Tanzania plans to develop coal and uranium resources for electricity generation.
The demand for power is driven by increased economic activities. The peak demand by 2025 is projected to be around 8,000MW, which requires installed generation capacity to increase to at least 10,000MW.
Several natural gas generation projects are being developed and their completion will add about 1,500MW by 2017.
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The East African
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