{{The outgoing head of the World Trade Organisation, Mr Pascal Lamy, has advised Tanzania to go for an efficient regulation system if it is to benefit fully from its newly-discovered offshore natural gas.}}
Mr Lamy said many developing countries that have discovered oil and gas–and are also rich in natural resources–face regulation and management challenges.
Mr Lamy, who retires at the end of August, called for transparency in the sector worth billions of Dollars.
“The key is to ensure that the regulatory structure–including government oversight–is sufficiently developed to promote the efficient, transparent and equitable awarding of extraction rights,” he added.
Making the most of these resources will call for transparent and equitable ways of collecting royalties. Tanzania has yet to benefit meaningfully from its mining sector–mainly because it does not have the right regulation and supervisory skills. And this despite world class gold mines and other minerals.
“Transfer of technology to local interests is vitally important but this will require a foundation of know-how among local engineers and workers,” Mr Lamy went on.“To develop this sort of institutional infrastructure will take time but it is an investment that will go a long way to ensure that gains from this wealth are invested wisely.”
Initial estimates show that Tanzania has 41.7 trillion cubic feet (tcf) of natural gas reserves. It is expected that, along with Mozambique, Tanzania will be the world’s third-largest exporter of natural gas in the near future. This implies that the East African region is hot on the heels of Qatar and Indonesia, the first and second largest producers of liquid natural gas in the world respectively.
According to Energy and Minerals minister Sospeter Muhongo, Tanzania’s reserves will reach 100 trillion cubic feet in the next two years. The gas finds stand at 53 trillion cubic, with an estimated value of far over $430 billion (about Sh688 trillion), which is nearly 40 times this year’s national budget.
Leading the gas findings is British Gas Group, which has made eight consecutive offshore natural gas discoveries, two successful appraisal wells and one successful field test. Norway’s Statoil Statoil and its partner ExxonMobil have made their third high-impact large offshore gas discovery in a year. Exploration companies plan to drill 17 new wells in 2013/14. “You have almost an embarrassment of riches in Mozambique and Tanzania, in terms of the volumes of gas being discovered,” says Mr Philip Wolfe of UBS financial services, which advises Thailand’s PTT Exploration and Production, now a major player in Mozambique.
On the high economic growth and high poverty mismatch in resource-rich countries like Tanzania, Mr Lamy noted: “As Donald Kaberuka, the president of the African Development Bank, said recently, African governments still need to translate growth into greater social inclusion. But this is not exclusive of Africa. It is a challenge faced by many countries in the world today, developed and developing.”
Education is the key to it all, he said. “If you want to ensure the development of your economy and the most equitable allocation of national income, education must be available to the majority of the citizens. Beyond this, you must have a sound system of revenue collection so that wealth can be redistributed and the gap between rich and poor narrowed.”
NMG
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