The Parliamentary Standing Committee on Energy and Minerals has warned the government against entering new contracts with private investors in the gas sector in the absence of policy and special legislation to govern the field.
Committee chairman January Makamba issued the warning on Friday in a report submitted to Parliament for deliberation. The report scrutinised the performance of the government in the energy and minerals sector for the period from February 2011 to the present.
He said the absence of policy, legislation and strategic plan to govern and guide the sector has placed the county and its population on the losing side while making investors the beneficiaries.
He said Tanzania faces a shortage of experts in the gas industry, something that was not welcomed at all. Until today gas extracted at Mnazi Bay and Songosongo is controlled by one private investor - Pan African Energy, as the agreement signed gives the investor exclusive rights over the gas business.
Makamba said it came to the attention of his committee that the project of laying a gas pipeline from Mtwara to Tanga via Dar es Salaam would be delayed as the agreement for the loan that would be spent in implementing the projects was yet to be signed. The committee chairman states in his report that information reaching his committee provides that Pan African Energy and Songas are waging a dirty campaign against the project, something that worries the Chinese lenders.
The report has issued recommendations to streamline the sector, including enabling the Tanzania Petroleum Development Corporation (TPDC) in tandem with the Ministry of Energy and Minerals to prepare a cadre of experts that will supervise the sector.
Due to super profits generated by the sector, Makamba proposes that there should be a special unit that would closely monitor the implementation of Production Sharing Agreements (PSA), along with the ownership of gas pipelines and gas processing plants.
Other recommendations include enabling TPDC to roll over its project of availing gas to industries as a source of energy in production and houses for domestic use after its pilot project proved successful.
The report states that since Tanzania is now recognized as a country with huge deposits of gas there is a pressing need to enact special legislation, draft a policy and also have in a place a strategic plan to govern the sector.
There are 18 foreign companies with 26 gas exploration licenses, exploring gas in offshore and in deep sea in Mtwara region. The report states that Songosongo area is estimated to have gas deposits amounting to 2trillion cubic feet ( 2Tcf) out of which 880 billion cubic feet has been confirmed.
Mnazi Bay area is estimated to have gas amounting to 5trillion cubic feet ( 5Tcf) out of which 262 billion cf has been confirmed while estimates on gas presence in deep sea shows about 15Tcf.
Makamba also called for change of the fiscal regime in the sector by scrapping incentives such as tax exemptions in gas exploration activities. The government has also been advised to suspend the exercise of signing new agreements in oil and gas sectors until the new legislation and policy are in place.