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Tanzania's hopes of becoming an exporter of natural gas face fresh delays after the country's opposition refused to participate in further talks to rewrite the constitution.
The constitutional review, which campaigners have likened to a "small revolution", is key to Royal Dutch Shell's hopes of searching for hydrocarbons in Tanzania's Zanzibar archipelago.
Other international energy companies, including ExxonMobil of the US, Norway's Statoil and London-listed BG Group and Ophir, are also waiting for legislation held up by the constitutional proceedings before pushing ahead with multibillion-dollar investments to develop the country's substantial gas discoveries.
The delay prolongs the constitutional uncertainty over whether Zanzibar, which has its own semi-autonomous government, can sign its own exploration deal and thus secure all the revenues.
East Africa's fastest-growing economy was due to put a new constitution, dealing with everything from curtailing presidential powers to the relationship between mainland Tanganyika and the tourist islands of Zanzibar, to a popular referendum next year.
But the opposition boycott and several missed deadlines mean the new law is unlikely to be approved before presidential elections scheduled for October 2015.
"The deadlines have beaten us," said Deus Kibamba, a constitutional expert.
Freeman Mbowe, chairman of the opposition Chadema party that is boycotting the constitutional debate, said an opposition umbrella group had no plans to return to talks when the assembly is due to reconvene in August.
"[A new constitution] is an opportunity to heal our wounds that have been sustained for the last 50 years of our independence ... [but] we saw no hope of achieving the dream," he said.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. Tanzania faces delays to export natural gas - FT.com
The constitutional disagreement centres on whether Tanzania will continue to comprise of two governments – a semi-autonomous one for Zanzibar and an overreaching one for both Zanzibar and mainland Tanganyika – or three, one each for Zanzibar, Tanganyika and Tanzania, the name given to their 1964 union.
Zanzibar, a largely Muslim archipelago, has long agitated for greater independence and last year signed a deal with Shell to unlock a decade-delayed hydrocarbons deal. But Tanganyika and Zanzibar have not delineated their sea boundaries and Tanzania has not legally confirmed Zanzibar's right to explore for oil and gas.
Analysts believe the international groups eyeing Tanzania will now postpone final investment decisions until after next year's elections. This would mean Tanzania falling even further behind neighbouring Mozambique, which hopes to start exporting gas in 2018.
"It is holding up the process," an oil industry insider said of the dispute. "[Companies] are ready to start the day they agree on a way forward … [but] there needs to be political will."
Eurasia Group, a political risk consultancy, said production was now unlikely until "2022 at the earliest – a date at which the global gas market will probably face significant supply increases."
Othman Masoud Othman, Zanzibar's attorney-general, agreed that energy groups were unlikely to commit investments under the current uncertainty.
"You really have to have a very clear regime – that would need to start with the constitutional framework. The new constitution I think would just make [Shell's right to explore] clear and would add certainty," he said.
Sospeter Muhongo, Tanzania's energy minister, insisted the country's gas policy was "not held up". But because of the constitutional review occupying lawmakers' time and even the same room, parliament was now unlikely to consider the policy until towards the end of the year.
The delay – and its potential impact on the energy industry – is a blow for Jakaya Kikwete, due to step down next year as Tanzania's president, who hoped a new constitution would be the cornerstone of his legacy.
Tanzania faces delays to export natural gas - FT.com
The constitutional review, which campaigners have likened to a "small revolution", is key to Royal Dutch Shell's hopes of searching for hydrocarbons in Tanzania's Zanzibar archipelago.
Other international energy companies, including ExxonMobil of the US, Norway's Statoil and London-listed BG Group and Ophir, are also waiting for legislation held up by the constitutional proceedings before pushing ahead with multibillion-dollar investments to develop the country's substantial gas discoveries.
The delay prolongs the constitutional uncertainty over whether Zanzibar, which has its own semi-autonomous government, can sign its own exploration deal and thus secure all the revenues.
East Africa's fastest-growing economy was due to put a new constitution, dealing with everything from curtailing presidential powers to the relationship between mainland Tanganyika and the tourist islands of Zanzibar, to a popular referendum next year.
But the opposition boycott and several missed deadlines mean the new law is unlikely to be approved before presidential elections scheduled for October 2015.
"The deadlines have beaten us," said Deus Kibamba, a constitutional expert.
Freeman Mbowe, chairman of the opposition Chadema party that is boycotting the constitutional debate, said an opposition umbrella group had no plans to return to talks when the assembly is due to reconvene in August.
"[A new constitution] is an opportunity to heal our wounds that have been sustained for the last 50 years of our independence ... [but] we saw no hope of achieving the dream," he said.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. Tanzania faces delays to export natural gas - FT.com
The constitutional disagreement centres on whether Tanzania will continue to comprise of two governments – a semi-autonomous one for Zanzibar and an overreaching one for both Zanzibar and mainland Tanganyika – or three, one each for Zanzibar, Tanganyika and Tanzania, the name given to their 1964 union.
Zanzibar, a largely Muslim archipelago, has long agitated for greater independence and last year signed a deal with Shell to unlock a decade-delayed hydrocarbons deal. But Tanganyika and Zanzibar have not delineated their sea boundaries and Tanzania has not legally confirmed Zanzibar's right to explore for oil and gas.
Analysts believe the international groups eyeing Tanzania will now postpone final investment decisions until after next year's elections. This would mean Tanzania falling even further behind neighbouring Mozambique, which hopes to start exporting gas in 2018.
"It is holding up the process," an oil industry insider said of the dispute. "[Companies] are ready to start the day they agree on a way forward … [but] there needs to be political will."
Eurasia Group, a political risk consultancy, said production was now unlikely until "2022 at the earliest – a date at which the global gas market will probably face significant supply increases."
Othman Masoud Othman, Zanzibar's attorney-general, agreed that energy groups were unlikely to commit investments under the current uncertainty.
"You really have to have a very clear regime – that would need to start with the constitutional framework. The new constitution I think would just make [Shell's right to explore] clear and would add certainty," he said.
Sospeter Muhongo, Tanzania's energy minister, insisted the country's gas policy was "not held up". But because of the constitutional review occupying lawmakers' time and even the same room, parliament was now unlikely to consider the policy until towards the end of the year.
The delay – and its potential impact on the energy industry – is a blow for Jakaya Kikwete, due to step down next year as Tanzania's president, who hoped a new constitution would be the cornerstone of his legacy.
Tanzania faces delays to export natural gas - FT.com