Tanzania seeks formula to share oil revenue with Isles


JF-Expert Member
Feb 11, 2007
Tanzania seeks formula to share oil revenue with Isles

Special Correspondent

Tanzania is seeking ways of sharing the oil revenues it expects to get from new discoveries with zanzibar.

The country is looking for an international firm that will draft the revenue sharing formula. The Ministry of Energy and Minerals has already received bids from ten international firms.

Tahir Abdullah, director of planning at the Ministry of Energy in Zanzibar told The EastAfrican last week that nobody can “at this stage” form an opinion on how the revenues will be shared.

Mr Abdullah said however that the plan may not be far from what energy experts are considering as a no-miss recipe for a healthy oil industry.

“Oil revenue from should be transparently managed, adequately taxed, and protected from abuse and corruption,” he said.

Experts say that since the level of corruption in the country is still high, the government will need to prevent smuggling and will also have to prevent diversion to illegal private use.

For the oil venture to make an impact on the economy and boost the lives of ordinary Tanzanians, the plan has to recommend the use of independent auditing procedures, support public supervision by non-governmental organisations and encourage independent media.

To facilitate this process, creating a professionally managed oil fund should be seriously considered. Such a fund would protect oil revenues from being embezzled.

As in the Alaska model, part of the revenue should be distributed directly to the bank accounts of every Tanzanian,” they say.

Tanzania has a depressive per capita income of $250 but also an impressive list of abundant natural resources such as gold, diamond, uranium, coal, bauxite and soda ash.

A public debate to discuss oil production, taxation and the distribution of income will be held latter this year.

Mainland Tanzania and Zanzibar are required by the constitution to handle jointly issues pertaining to oil, currency, military and foreign diplomacy among other union matters.

“The object of this Constitution is to facilitate the pursuit of building the United Republic that public affairs are conducted in such a way as to ensure that the national resources and heritage are harnessed, preserved and applied for the common good,” it says in part.

Oil has provoked political tensions, civil wars and kidnappings in the Niger Delta in Nigeria, southern Sudan and the Bakisa valley in West Africa.

Indian, American and European companies have been involved in oil and gas exploration in Tanzania. ONGC Videsh of India had a stint in the country.

Countries in both the developed and the developing worlds rely on a stable and secure supply of oil. However, abuses and misallocations of oil revenues often lead to social and political instability and, at times, armed conflict.

The broader the political co-operation and public consensus, and the greater the transparency in the management of oil revenues, the greater the chance that a prospective supplier like Tanzania will remain stable.

Tanzania explored recently 12 blocks which are estimated to hold good gas and oil reserves. The country is endowed with diverse energy sources including biomass, natural gas, hydropower, coal, geothermal, solar and wind power, much of which is untapped.

Extensive gas fields have been identified off the coast at Songo Songo and Mnazi Bay.

Current natural gas reserves are estimated to be 2 trillion cubic feet.

The now tapped Songo Songo gas-to-electricity project has a ready market of 17 potential industrial users of natural gas in the Dar es Salaam area.

Companies which were involved in oil exploration include: PanOcean Energy, Aminex plc and EnerGulf, Orca Exploration Group, Abood Seed Oil Industries Ltd and AES Tanzania Holdings Ltd.

Others are: Agip (Tanzania) Ltd, Bibiti Oil Ltd, Birchand Oil Mills, Bulk Oil Tanzania, Caltex (Tanzania), Coastal Oil Industries Ltd, Engen Petroleum (Tanzania) Ltd and Gulf Africa Petroleum.

The rest are: Independent Power Tanzania, Mount Meru Products Ltd, Murzah Oil Mills Ltd, Petrobras Tanzania, Shell (Tanzania), Songas and the Tanzanian & Italian Petroleum Refining Company Ltd.
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