Poor resource planning could see TZ lose out on revenue; Now Gas is 43tcf @ $430M in 2yrs 200tcf Gas

NEWS
[h=1]By RAY NALUYAGA The EastAfrican[/h]
Posted Saturday, October 19 2013 at 15:57

IN SUMMARY

• Despite the country’s vast natural resource base, it remains one of the world’s poorest, with the Human Development Index ranking it at 151 out of 182 countries.
• To draw maximum benefits from these resources, the country needs to put in place new tax structures, says researchers.

Tanzania risks losing out on huge revenues from its natural resources in coming years if it fails to put in place proper fiscal policies, experts have warned.

Despite the country’s vast natural resource base, it remains one of the world’s poorest, with the Human Development Index ranking it at 151 out of 182 countries.

Experts say in a new report that revenues arising from the resources have failed to trickle down to residents partly due to increasing cases of capital flight, without giving specifics on the firms and amounts involved.

Tanzania has confirmed natural gas reserves of 43 trillion cubic feet valued at $430 billion.

According to the Ministry of Energy and Natural Resources, Tanzania’s natural gas resources will increase to 200 trillion cubic feet in the next two years.

To draw maximum benefits from these resources, the country needs to put in place new tax structures, said a paper presented to the National Conference on Unleashing Growth Potentials in Tanzania last week by Ian Shanghvi, a researcher at the Economic and Social Research Foundation, and John Jingu, a lecturer at the University of Dar es Salaam.

The proposal could see Tanzania shift from the current practice of giving concessions to private firms. The adoption of a new general tax structure could see the standardisation of concessions and fiscal policies dealing with oil and gas, leaving no room for negotiations including on taxes.

The researchers said the concession system makes weak governments like Tanzania’s easy to manipulate by explorers.

According to the study, the concession by concession process gives discretion to government officials sitting in the negotiations and relevant ministries, which exposes them to corruption and manipulation.

With regard to government participation, the paper said the role of the state in the extractive industry is pivotal to safeguarding and pioneering the gains made in the sector.
It is important that the state control a bigger stake in all natural resource projects to enable it to be a key stakeholder in the decision making process.

“In that way, state participation — usually through state-owned enterprises — ensures that benefits of natural resources flow to the people,” said the study.

The current mining regime is that of offering mineral rights to private companies that includes processing and selling.

Once a company is offered a mineral right it can be traded, or used as security by financial institutions while the government waits for the company to pay royalties, taxes and other related fees.

All six major gold mine firms in the Tanzania are operating under this regime.

There have also been massive tax exemptions and remissions given to mining companies, which the Extractive Industries Transparency Initiative said have denied the country significant amount of revenue.


Between 2009 and 2010, Tanzania granted tax exemptions equivalent to 2.3 per cent of GDP or Tsh695 billion ($432 million). The amount was more than half of the Tsh1.3 trillion ($808.2 million) the government planned to borrow from commercial banks for infrastructure financing for 2011/2012.

Norway is a good example of a country that has managed to use its natural resources to significantly improve the wellbeing of its people by having concessions and fiscal terms standardised in its petroleum legislation, leaving no discretionary power to government officials.

The state owns 67 per cent of the shares in its oil and gas marketing company Statoil, which controls 80 per cent of oil and gas industry in the entire country.

The paper further warns that Tanzania must be aware of the dangers of what comes with resource wealth through what is termed as state capture. Defining it, the study said state capture is a situation where a few private interests seek to strategically influence the design of policies, laws and contracts to their advantage at the expense of the interests of the wider society.

Exploration of natural gas in Tanzania started in 1952 with the first natural gas discovery made in 1974 at SongoSongo Island in southern Tanzania. The second discovery was at Mnazi Bay also in southern Tanzania in 1982; in 2010 Tanzania confirmed large quantities of natural gas deposits.

Now you can see... CAPITAL FLIGHT na bado Wananchi watazidi kuwa Masikini kwasababu - wote NCHINI hatujasoma... tunaperuzana tu BUNGENI na kutishiana...

Nchi hii Mungu ameijaalia kuwa na maliasili nyingi sana zenye thamani kubwa sana,ikiwemo hiyo gesi asilia. Hata hivyo tatizo kubwa sana la viongozi wetu tuliowapa dhamana ya kutuongoza wamekuwa na ubinafsi wa kupitiliza wa kujijali wao tu na familia zao.

Si mnakumbuka jinsi benki kuu ya Uswisi, mwaka jana mwrzi wa 6 ilipofichua kuwa vigogo sita ndani ya serikali ya CCM, wameficha kwenye mabenki ya nchi hiyo dola za kimarekani zipatazo milioni 197?

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Jaribu kuimagine,wakati nchi yetu haijaanza Uddingston mkubwa wa kibiashara wa gesi hiyo asilia na mafuta,tayari viongozi wetu weshaanza kunufaika na utajiri huo mkubwa wa gesi na mafuta hapa nchini.

Ushahidi usio na mashaka yoyote kuwa pesa hizo zilizofichwa Uswisi kuwa ni za vigogo wakubwa sana kwenye serikali ya CCM,ni kwa kuwa benki hiyo ya Uswisi ilieleza wazi kuwa kama serikali ya Tanzania itahitaji kujua vigogo hao walioficha mapesa hayo huko Uswisi,ni kiasi tu cha Mwanasheria wetu mkuu,Jaji Werema kupeleka barua rasmi ya serkali ya Tanzania,kuomba pesa hizo zirejeshwe hapa nchini.

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