Tanzania Government Struggles to Find Solution for Citizens’ High Expectations From Gas Discovery

Nation-wide distribution  of  the natural gas mooted as one way to resolve the problem…

Gas Pipeline from Mtwara to Dar es Salaam under construction

Construction of Gas Pipeline from Mtwara  reaches Mkuranga area near Dar es Salaam (Photo Credit: CN News)

By TZ Business News Staff.

The Tanzania Government is working hard to reduce negative impact of  high expectations citizens have on benefits from gas deposits. The natural gas discovered in the country’s south eastern economic zone of the Indian ocean is set to be distributed all over the country for  industrial  and home use as part of effort to meet the high expectations among citizens.

Neema Lugangira, Senior Supplies Officer from the Ministry of Energy and Minerals said in Dar es Salaam recently the Government was aware Tanzanians were having very high expectations of benefits to be derived from the discovered gas. The government was therefore taking steps to mitigate problems which may be associated with the high expectations.

She made the comments in Dar es Salaam when the non-governmental organization TWAWEZA presented research findings confirming the high expectations.

Neema Lugangira

Neema Lugangira

Tanzania’s current natural gas reserves are about 55 trillion cubic feet (tcf) following additional discoveries.  The Tanzania minister for energy and minerals George Simbachawene recently said  as a result of on-going exploration activity, natural gas resources discovered in the country have risen from 46.5 tcf in June 2014 to 55.08 tcf in April 2015, equivalent to an increase of 18 percent.

The government is committed to  ensure gas  is delivered to the whole country, Neema said, adding that the recently passed ‘local content policy’ will ensure the equitable distribution of benefits to the whole country by ensuring that all foreign players in the industry submit local content plans to show how they intend to  contribute to the local content policy.

The local content policy aims to increase the benefits of  the oil and gas sector to Tanzania  through the localization of goods and services used by the industry in line with people expectations which are running high, she said.

TWAWEZA conducted a survey by phone  and learned lack of  information on what can be expected from the oil and gas industry has driven expectations  quite high among Tanzanians. Citizens are significantly misinformed about the potential of the country’s gas deposits– which led to very high expectations,  Aidan Eyakuze,  Executive Director of TWAWEZA told attendants of  a research report briefing held at the National Museum in Dar es Salaam.

About  2 out of 10 Tanzania (or 17%) think that they will be employed in the sector, he said. Using current population data,  this suggests that 4,000,000  Tanzanians  think they will get employment in the sector.  In comparison, Eyakuze said, the gas sector in Norway only employs 240,000 people.

People are also expecting that in ten years, total gas revenue will amount to Tsh 7.5 million (about  $3,409)  per person per year, while the most optimistic projections put this figure at Tsh 2.5 million (about $ 1,136) per person– or just a third of popular expectations.

Aidan Eyakuze

Aidan Eyakuze

Eyakuze said in general, citizens do not have access to sufficient information about Tanzania’s gas sector, and that this probably contributes to the  high, unrealistic expectations where more than half (53%)  of research respondents think gas from the new offshore discoveries is already flowing while projections indicate that 2025 will be the earliest this can happen.

Peter Bofin, Director of  the Dar es Salaam-based  oil and gas  consultancy firm, Martello Research warned Tanzanians bout the danger of the unrealistic high expectations. He called for increased dialogue  and discussion   across the country leading toward more realistic expectations. Bofin also called for increased disclosure of information to the public on oil and gas.

The TWAWEZA research also found out that 6 out of 10 citizens (59%) think natural gas deposits will improve their lives while  a similar number (58%) expect that the Government will invest gas revenue into public services.

The findings are based on data collected from two rounds of telephone calls where a total of 1,562 respondents across Mainland Tanzania  were reached. Zanzibar is not covered in the results.

More than half of the respondents (51%) expect the gas deposits to bring them a stable electricity supply. Currently just over 10% of the population is connected to the national grid. Slightly less than half (46%) of the respondents expect more affordable cooking gas. But they were also skeptical about how gas income might be shared.  More than half think that people in Government (33%) or the wealthy (22%) will benefit most from the gas revenues.

The Tanzania Government is developing two policies to regulate the gas sector, but 3 out of 4 people are not aware of the policies. However, citizens do have views on some key aspects of gas revenue management.

Almost half (46%) want to use the gas to provide domestic electricity, although the other half mention exporting the gas to East Africa or beyond. More than half of citizens (55%) want the Government to keep most of the revenue, whereas close to 1 out of 3 (30%) want the Government and foreign companies to share the revenue equally. Citizens also make a clear call for greater transparency and accountability.