Mpendanchi-2
JF-Expert Member
- Apr 4, 2009
- 304
- 37
Baada ya Wataalamu wazarendo wa TPDC na wizara, kuamua kuachana na Mradi wa Songas wa kupanua miundombinu yake ili aendeleze mikataba yake ya kinyonyaji , na kuamua kuanzisha mradi mpya utakaojenga bomba kubwa na processing plants za kustosha kwa gesi hadi miaka 30 ijayo, Songas wamechanganyikiwa wanahaha kuandika mabarua yasiyo na vichwa ili kusambaza kwenye vyombo vya habari kupinga mradi usiowahusu!!!
Soma habari hii chini kwa makini utaelewa nini kinaendelea ingawa ni ndefu lakini polepole utaimaliza.
Why Dar fell in `love with` Chinese deal
As Songas `sees red`
With the battle for the gas deal intensifying within the government's circle as well as outside the country, details that pushed Tanzania to go for the $1billion (Sh1.72 trillion) soft loan to finance the construction of 522km gas pipeline from Mtwara to Dar es Salaam have emerged.
The revelation comes amid the growing criticism about the project (see another separate story) with private investors mainly Songas sees the project as over-exaggerated and unnecessary, considering the country's economy as well as the demand for electricity.
Songas Limited ("Songas") is a vertically-integrated gas processing, transportation and electricity generation company using gas that was discovered at Songo Songo Island ("SSI").
The proposed gas pipeline would constitute a 24-30-inches pipe compared to the 12-16-inch existing one, with intent to increase the quantity of gas transported, which eventually would contribute to easing the power crisis, costly to the national economy.
According to the details gathered by The Guardian on Sunday, project implementation would be effected under the Chinese assistance in terms of financing and technical aspects after the government agreed in principle with the Chinese authorities to acquire a substantial amount of money on a soft loan basis.
The move would reduce the cost of producing thermo electricity from the current $0.34 cents to $0.12 cents per kilowatts according to cost analysts from power generating companies.
The proposed gas pipeline has the capacity to supply gas that is enough to produce up to 2,000 megawatts of electricity including the 300 megawatts plant at Manzi Bay, according to details gathered by The Guardian on Sunday.
According to the details gathered by The Guardian on Sunday, Dar es Salaam opted to go for the Chinese loan, after the latter gave flexible lending conditions, which beat all key players including National Social Security Funds, local banks and the World Bank.
The $1 billion loan that has also shocked Washington, with US government seeing an expanding Beijing influence to the old friend, Dar es Salaam, was given at the 2 percent interest rate per annum.
The Guardian on Sunday has also learnt that following the $1 billion loan from China, the US government is also working behind the closed doors to maintain its influence in Tanzania, which it sees as a strategic partner in East Africa.
Earlier, National Social Security Funds (NSSF) was eyeing the deal with a plan to loan the Tanzania Petroleum Development Corporation (TPDC) a total of $1 billion in order to build the modern bigger gas pipeline
NSSF also had a second option of entering into joint venture partnership with TPDC in a $1 billion gas deal, before their move was ended by the government's decision to seek a soft loan in China.
Apart from charging the lowest interest rate, Chinese lenders also gave Tanzania a grace period of seven years, before the latter started paying the loans.Not only that, but also, the Chinese lenders gave 20 years as period to service the loan, which would cost Tanzania an average $60 million per annum at the time the government starts paying the loan.
While some local politicians led by a prominent opposition legislator were in favour of NSSF, wanting the Fund to be given an opportunity to loan the government the $1 billion for gas infrastructure, none of them was aware about where the money would come from.
The Guardian on Sunday established that NSSF was also planning to borrow from China at the rate of 3 percent, and then use the money to loan the government through TPDC, at the rate of 8 percent interest rate per annum.
Interest rate is the cost of borrowing money charged by various lenders, and it's this charge that give lenders profits in their lending business.
"We considered the offers issued by the three suitors, NSSF, China and World Bank." Said a senior government official close to the deal but who declined to be named, citing the sensitivity of the matter.
The official added, "However we never officially approached the World Bank about the project, but if we would have failed, we would have approached the bank for funding."
"We are at very good working partnership with NSSF, but, we thought the Chinese deal was very attractive and competitive for us compared to other lenders." The official told The Guardian on Sunday.
When contacted the Minister for Energy and Minerals, William Ngeleja declined to comment about the matter, saying the Ministry of Finance was in the best position to give comments about the $1 billion loan from China.
However, The Guardian on Sunday didn't manage to get the Finance Minister, Mustafa Mkulo yesterday to comment about the deal.
At the local level, no any bank or consortium of banks would have been able to raise that amount of money, let alone agreeing to lend for such a long period of 20 years.
According to well placed sources, NSSF was shocked and angered by the government's move to borrow from China, while it had offered to give the $1 billion loan to TPDC since last year.
Songas sees red in $1 billion deal
As Tanzania enters crucial state in execution of a $1billion deal involving the construction of a 522 km gas pipeline--- the project it believes will ease the country's crippling power crisis, a major energy sector dealer – Songas – is calling the project ‘a white elephant' that will compound public misery.
Songas, a big investor in gas transportation infrastructure as well as electricity supply since 2004, has questioned the viability of the government's move to secure a $1 billion loan to finance the construction of a 522 km gas pipeline.
The company, owner of the 225km Mtwara-Dar es Salaam pipeline, has documented its misgivings, the highlight of which is that the anticipated gas pipeline is exaggerated and unnecessary.
In a letter dated October 7, 2011, addressed to the Permanent Secretary of the Ministry of Energy and Minerals (a copy of which The Guardian on Sunday obtained), Songas charges: "This proposed project is massively over-sized for Tanzania's existing gas reserves and with a price tag of $1 billion, costs nearly ten times as much as Songa's expansion project."
It states further: "We also understand that a feasibility study is yet to be carried out for the Project." In the letter signed by Songa's Managing Director, Christopher Ford, the company says investing in the significant capital in infrastructure based upon reserves which had yet to be found was speculative and ran the risk of leaving the Government and the people of Tanzania with an unused asset, an empty pipeline and heavy burden on Government finances.
The letter also copied to Energy and Minerals Minister, William Ngeleja, Chief Secretary Philemon Luhanjo, PS, Finance, chief executive officers of Tanesco, TPDC and energy regulator, EWURA, proceeds to explain:
"…the infrastructure capacity required to fully utilise reserves at Songosongo is 140 million cubic feet a day utilisation of the much smaller proven reserves in Mtwara would require a pipeline with a capacity of 20- 30 million cubic feet a day. Tanzania today has no other significant proven reserve".
It is also the view of Songas executives that: "If additional reserves are discovered in Tanzania (potentially in Ruvuma basin for example) as we all hope will be the case, gas supply infrastructure should be built at that time in parallel with development of the new gas field. Songas would of course be pleased to offer a proposal for such a project and to be weighed fairly against other proposals at that time."
However, amid Songas' move to punch holes in the government's projected gas pipeline elicited dismissive reaction from sources at the Ministry of Energy and Minerals who termed the firm's claims that gas reserves weren't adequate as baseless.
An official who declined to disclose his identity in compliance with the PS being the authorized spokesperson, remarked: "At Songosongo Island there is a proven reserve of not less than 1.3 and a maximum of 2 trillion cubic feet which can be sufficient for the next 13 years up to 2024, but exploration in various areas surrounding that area have indicated availability of more gas reserve that the stated amount."
In Gas and Oil industry, proved reserves are the lowest risk most ( some people talk about these as P90 reserves this is in probability terms and suggests they have a 90% chance of being produced). These are the ones that people take most seriously when planning infrastructure and valuing an oil / gas company.
Probable reserves are higher risk (have a 50% chance of being produced) and possible reserves are very high risk (only 10% chance of being produced). It is good to understand these riskier resources and the aim of most oil and gas companies is undertaking exploration to try and prove up reserves. Once there is a good idea of proven reserves then infrastructure is planned.
There are other sub classifications (risked and un-risked etc etc) and other considerations in establishing the quality of reserves (source of data, seismic quality, economic feasibility – how much does it cost to get that gas, how quickly they can be produced etc etc) but the above is the easiest way to think of reserves. It is also important to understand the difference between a resource and reserve.
The source added: "For the case of Mtwara, lies are inherent in the Songas letter, and they may have done so purposely since they are clearly aware that Mnazi Bay has a reserve of between 4 and 5 trillion cubic feet while the combined reserves at three wells; Chaza 1 Pweza 1 and Chewa is 7.5 trillion cubic feet."
However, the data from Tanzania Petroleum Development Corporation (TPDC) show the opposite, indicating that there's a proven reserve of about 1.3trillion cubic feet with a maximum of 2 trillion cubic feet which can be sufficient for the next 13 years up to 2024, if fully utilized.
TPDC also believes that exploration in various areas surrounding that area have indicated availability of more gas reserves than the current proven reserves.
The Guardian on Sunday further established that the proven gas reserves could be enough to serve the country in generating power for the next over 50 years, based on the amount of gas (105 million cubic feet a day) used currently for power generation as well as commercial and industrial production.
However, based on the fact that power demand increases by 10 percent annually, it is projected that the current maximum electricity demand at peak hours of 850 Megawatts could go up to 1580 Megawatts by the by 2015 due to new and expansion of existing investment, thus reducing the gas life span.
But despite increase in demand, the reserves are regarded as substantially enough for nearly 90 years. Contacted by The Guardian on Sunday, the Minister for Energy and Minerals, William Ngeleja, declined to comment directly about the matter, but insisted that there's enough provable reserves with a lifespan of about 25 years.
"Since the Songas letter wasn't addressed to me, I am not ready to comment on it in the press, but I believe the Permanent Secretary will handle the matter fairly and timely," Minister Ngeleja told The Guardian on Sunday.
Alarmed by the government's move to invest hugely in the gas infrastructure, Songas, through its letter, is now cornering the government as it plans to reduce the amount of gas processed at Songosongo Island in Lindi Region by 35 million standard cubic feet a day, the decision which could lead to reduction of 175 Megawatts of power from the national grid system, should the State not comply with Songas' demands.
The amount of electricity (175 Megawatts) to be reduced is almost the total power generated by Songas from its Ubungo power plant and sold to state owned power company – Tanesco. It generates a maximum of 180 Megawatts.
The government recently finalized an agreement with China on the funding of the two new gas processing plants and pipeline, with an initial capacity to transport 420 million standard cubic feet per a day enough for 2000 Megawatts and a maximum of 784 million cubic feet which could generate 3,900 Megawatts.
The mega project, with a cost of $1.058, in principle has all it takes to shake up Songas, who see their plan to expand the existing processing plant at Songosongo suffering a big blow.
A letter dated 7th October 2011 from Songas addressed to the Permanent Secretary of Energy and Minerals, a copy of which The Gurdian on Sunday has seen, states: "If Government decides to implement the proposed alternative project instead of the Songas Expansion Project, it is likely that Songas investors, lenders and contractors would suffer a loss of confidence in the Tanzania operating environment. This would make resumption of the expansion project, if for example the alternative project was found not to be feasible, very difficult".
"Furthermore without a tangible long term expansion project, it would be necessary for technical reasons and in accordance with prudent operating practices, to reduce immediately production levels at the Songosongo Island processing plant to 70 million cubic feet a day" says the letter.
Reduction of amount processed and subsequently transported from 105 million cubic feet to 70 million would result decrease of power generation by 175 Megawatts
The said processing plant had an original installed capacity of 70 million cubic feet per day, but the capacity was increased to 90 million in 2009 and finally to the current capacity of 105 million cubic feet following technical adjustment, necessitated by power shortage.
The proposed expansion by Songas intends to have the quantity of gas processed and subsequently transported reach 140 million cubic feet a day, with its completion expected in early 2013.
Other sources at the energy ministry told this paper that there were much gas reserves in the deep sea of Indian Ocean although the exact amount was yet to be established.
Other areas reported to have a gas reserves are Nyuni located at Songosongo West, Mkuranga as well as Ruvuma basin.
SOURCE: THE GUARDIAN
Soma habari hii chini kwa makini utaelewa nini kinaendelea ingawa ni ndefu lakini polepole utaimaliza.
Why Dar fell in `love with` Chinese deal
With the battle for the gas deal intensifying within the government's circle as well as outside the country, details that pushed Tanzania to go for the $1billion (Sh1.72 trillion) soft loan to finance the construction of 522km gas pipeline from Mtwara to Dar es Salaam have emerged.
The revelation comes amid the growing criticism about the project (see another separate story) with private investors mainly Songas sees the project as over-exaggerated and unnecessary, considering the country's economy as well as the demand for electricity.
Songas Limited ("Songas") is a vertically-integrated gas processing, transportation and electricity generation company using gas that was discovered at Songo Songo Island ("SSI").
The proposed gas pipeline would constitute a 24-30-inches pipe compared to the 12-16-inch existing one, with intent to increase the quantity of gas transported, which eventually would contribute to easing the power crisis, costly to the national economy.
According to the details gathered by The Guardian on Sunday, project implementation would be effected under the Chinese assistance in terms of financing and technical aspects after the government agreed in principle with the Chinese authorities to acquire a substantial amount of money on a soft loan basis.
The move would reduce the cost of producing thermo electricity from the current $0.34 cents to $0.12 cents per kilowatts according to cost analysts from power generating companies.
The proposed gas pipeline has the capacity to supply gas that is enough to produce up to 2,000 megawatts of electricity including the 300 megawatts plant at Manzi Bay, according to details gathered by The Guardian on Sunday.
According to the details gathered by The Guardian on Sunday, Dar es Salaam opted to go for the Chinese loan, after the latter gave flexible lending conditions, which beat all key players including National Social Security Funds, local banks and the World Bank.
The $1 billion loan that has also shocked Washington, with US government seeing an expanding Beijing influence to the old friend, Dar es Salaam, was given at the 2 percent interest rate per annum.
The Guardian on Sunday has also learnt that following the $1 billion loan from China, the US government is also working behind the closed doors to maintain its influence in Tanzania, which it sees as a strategic partner in East Africa.
Earlier, National Social Security Funds (NSSF) was eyeing the deal with a plan to loan the Tanzania Petroleum Development Corporation (TPDC) a total of $1 billion in order to build the modern bigger gas pipeline
NSSF also had a second option of entering into joint venture partnership with TPDC in a $1 billion gas deal, before their move was ended by the government's decision to seek a soft loan in China.
Apart from charging the lowest interest rate, Chinese lenders also gave Tanzania a grace period of seven years, before the latter started paying the loans.Not only that, but also, the Chinese lenders gave 20 years as period to service the loan, which would cost Tanzania an average $60 million per annum at the time the government starts paying the loan.
While some local politicians led by a prominent opposition legislator were in favour of NSSF, wanting the Fund to be given an opportunity to loan the government the $1 billion for gas infrastructure, none of them was aware about where the money would come from.
The Guardian on Sunday established that NSSF was also planning to borrow from China at the rate of 3 percent, and then use the money to loan the government through TPDC, at the rate of 8 percent interest rate per annum.
Interest rate is the cost of borrowing money charged by various lenders, and it's this charge that give lenders profits in their lending business.
"We considered the offers issued by the three suitors, NSSF, China and World Bank." Said a senior government official close to the deal but who declined to be named, citing the sensitivity of the matter.
The official added, "However we never officially approached the World Bank about the project, but if we would have failed, we would have approached the bank for funding."
"We are at very good working partnership with NSSF, but, we thought the Chinese deal was very attractive and competitive for us compared to other lenders." The official told The Guardian on Sunday.
When contacted the Minister for Energy and Minerals, William Ngeleja declined to comment about the matter, saying the Ministry of Finance was in the best position to give comments about the $1 billion loan from China.
However, The Guardian on Sunday didn't manage to get the Finance Minister, Mustafa Mkulo yesterday to comment about the deal.
At the local level, no any bank or consortium of banks would have been able to raise that amount of money, let alone agreeing to lend for such a long period of 20 years.
According to well placed sources, NSSF was shocked and angered by the government's move to borrow from China, while it had offered to give the $1 billion loan to TPDC since last year.
Songas sees red in $1 billion deal
As Tanzania enters crucial state in execution of a $1billion deal involving the construction of a 522 km gas pipeline--- the project it believes will ease the country's crippling power crisis, a major energy sector dealer – Songas – is calling the project ‘a white elephant' that will compound public misery.
Songas, a big investor in gas transportation infrastructure as well as electricity supply since 2004, has questioned the viability of the government's move to secure a $1 billion loan to finance the construction of a 522 km gas pipeline.
The company, owner of the 225km Mtwara-Dar es Salaam pipeline, has documented its misgivings, the highlight of which is that the anticipated gas pipeline is exaggerated and unnecessary.
In a letter dated October 7, 2011, addressed to the Permanent Secretary of the Ministry of Energy and Minerals (a copy of which The Guardian on Sunday obtained), Songas charges: "This proposed project is massively over-sized for Tanzania's existing gas reserves and with a price tag of $1 billion, costs nearly ten times as much as Songa's expansion project."
It states further: "We also understand that a feasibility study is yet to be carried out for the Project." In the letter signed by Songa's Managing Director, Christopher Ford, the company says investing in the significant capital in infrastructure based upon reserves which had yet to be found was speculative and ran the risk of leaving the Government and the people of Tanzania with an unused asset, an empty pipeline and heavy burden on Government finances.
The letter also copied to Energy and Minerals Minister, William Ngeleja, Chief Secretary Philemon Luhanjo, PS, Finance, chief executive officers of Tanesco, TPDC and energy regulator, EWURA, proceeds to explain:
"…the infrastructure capacity required to fully utilise reserves at Songosongo is 140 million cubic feet a day utilisation of the much smaller proven reserves in Mtwara would require a pipeline with a capacity of 20- 30 million cubic feet a day. Tanzania today has no other significant proven reserve".
It is also the view of Songas executives that: "If additional reserves are discovered in Tanzania (potentially in Ruvuma basin for example) as we all hope will be the case, gas supply infrastructure should be built at that time in parallel with development of the new gas field. Songas would of course be pleased to offer a proposal for such a project and to be weighed fairly against other proposals at that time."
However, amid Songas' move to punch holes in the government's projected gas pipeline elicited dismissive reaction from sources at the Ministry of Energy and Minerals who termed the firm's claims that gas reserves weren't adequate as baseless.
An official who declined to disclose his identity in compliance with the PS being the authorized spokesperson, remarked: "At Songosongo Island there is a proven reserve of not less than 1.3 and a maximum of 2 trillion cubic feet which can be sufficient for the next 13 years up to 2024, but exploration in various areas surrounding that area have indicated availability of more gas reserve that the stated amount."
In Gas and Oil industry, proved reserves are the lowest risk most ( some people talk about these as P90 reserves this is in probability terms and suggests they have a 90% chance of being produced). These are the ones that people take most seriously when planning infrastructure and valuing an oil / gas company.
Probable reserves are higher risk (have a 50% chance of being produced) and possible reserves are very high risk (only 10% chance of being produced). It is good to understand these riskier resources and the aim of most oil and gas companies is undertaking exploration to try and prove up reserves. Once there is a good idea of proven reserves then infrastructure is planned.
There are other sub classifications (risked and un-risked etc etc) and other considerations in establishing the quality of reserves (source of data, seismic quality, economic feasibility – how much does it cost to get that gas, how quickly they can be produced etc etc) but the above is the easiest way to think of reserves. It is also important to understand the difference between a resource and reserve.
The source added: "For the case of Mtwara, lies are inherent in the Songas letter, and they may have done so purposely since they are clearly aware that Mnazi Bay has a reserve of between 4 and 5 trillion cubic feet while the combined reserves at three wells; Chaza 1 Pweza 1 and Chewa is 7.5 trillion cubic feet."
However, the data from Tanzania Petroleum Development Corporation (TPDC) show the opposite, indicating that there's a proven reserve of about 1.3trillion cubic feet with a maximum of 2 trillion cubic feet which can be sufficient for the next 13 years up to 2024, if fully utilized.
TPDC also believes that exploration in various areas surrounding that area have indicated availability of more gas reserves than the current proven reserves.
The Guardian on Sunday further established that the proven gas reserves could be enough to serve the country in generating power for the next over 50 years, based on the amount of gas (105 million cubic feet a day) used currently for power generation as well as commercial and industrial production.
However, based on the fact that power demand increases by 10 percent annually, it is projected that the current maximum electricity demand at peak hours of 850 Megawatts could go up to 1580 Megawatts by the by 2015 due to new and expansion of existing investment, thus reducing the gas life span.
But despite increase in demand, the reserves are regarded as substantially enough for nearly 90 years. Contacted by The Guardian on Sunday, the Minister for Energy and Minerals, William Ngeleja, declined to comment directly about the matter, but insisted that there's enough provable reserves with a lifespan of about 25 years.
"Since the Songas letter wasn't addressed to me, I am not ready to comment on it in the press, but I believe the Permanent Secretary will handle the matter fairly and timely," Minister Ngeleja told The Guardian on Sunday.
Alarmed by the government's move to invest hugely in the gas infrastructure, Songas, through its letter, is now cornering the government as it plans to reduce the amount of gas processed at Songosongo Island in Lindi Region by 35 million standard cubic feet a day, the decision which could lead to reduction of 175 Megawatts of power from the national grid system, should the State not comply with Songas' demands.
The amount of electricity (175 Megawatts) to be reduced is almost the total power generated by Songas from its Ubungo power plant and sold to state owned power company – Tanesco. It generates a maximum of 180 Megawatts.
The government recently finalized an agreement with China on the funding of the two new gas processing plants and pipeline, with an initial capacity to transport 420 million standard cubic feet per a day enough for 2000 Megawatts and a maximum of 784 million cubic feet which could generate 3,900 Megawatts.
The mega project, with a cost of $1.058, in principle has all it takes to shake up Songas, who see their plan to expand the existing processing plant at Songosongo suffering a big blow.
A letter dated 7th October 2011 from Songas addressed to the Permanent Secretary of Energy and Minerals, a copy of which The Gurdian on Sunday has seen, states: "If Government decides to implement the proposed alternative project instead of the Songas Expansion Project, it is likely that Songas investors, lenders and contractors would suffer a loss of confidence in the Tanzania operating environment. This would make resumption of the expansion project, if for example the alternative project was found not to be feasible, very difficult".
"Furthermore without a tangible long term expansion project, it would be necessary for technical reasons and in accordance with prudent operating practices, to reduce immediately production levels at the Songosongo Island processing plant to 70 million cubic feet a day" says the letter.
Reduction of amount processed and subsequently transported from 105 million cubic feet to 70 million would result decrease of power generation by 175 Megawatts
The said processing plant had an original installed capacity of 70 million cubic feet per day, but the capacity was increased to 90 million in 2009 and finally to the current capacity of 105 million cubic feet following technical adjustment, necessitated by power shortage.
The proposed expansion by Songas intends to have the quantity of gas processed and subsequently transported reach 140 million cubic feet a day, with its completion expected in early 2013.
Other sources at the energy ministry told this paper that there were much gas reserves in the deep sea of Indian Ocean although the exact amount was yet to be established.
Other areas reported to have a gas reserves are Nyuni located at Songosongo West, Mkuranga as well as Ruvuma basin.
SOURCE: THE GUARDIAN
