Magufuli exposes theft of billions through complex EFD

30Jun 2016
Our Reporter
The Guardian
Magufuli exposes theft of billions through complex EFD
  • Sacks 3 district commissioners just days after appointing them and welcomes the discovery of large helium gas deposits in Tanzania

PRESIDENT John Magufuli revealed yesterday that the government has uncovered an elaborate tax fraud through which one person was stealing up to 8 million/- by the minute from state revenues by using fake electronic fiscal devices (EFDs).

The unnamed individual is alleged to have registered several EFDs and used them to facilitate tax evasion by helping other businessmen to avoid paying value added tax (VAT), which is charged at a rate of 18 per cent.

"(This person) was carrying out (fraudulent) transactions of between 7m/- and 8m/- each minute. The government has lost a significant amount of revenue," the president said yesterday at the swearing in of new regional commissioners at State House.

"The good thing is that this person has been arrested ... we are now looking at how to recover the money," he added.

Magufuli also revoked the appointments of three district commissioners just days after announcing his new list of 139 district chiefs.

No reason was given for the abrupt U-turn on the trio made by the president, but the move has put into question the effectiveness of the government's vetting process before senior appointments are made to avoid embarrassments.

In what the president's office described as a “mini reshuffle”, the appointments of Fatma Hassan Toufiq (Rombo), Emile Yotham Ntakamulenga (Serengeti) and Fikiri Avias Said (Ikungi) have all been swiftly revoked.

Three new DCs - Agness Elias Hokororo (Rombo), Nurdin Hassan Babu (Serengeti) and Miraji Mtaturu (Ikungi) – have been appointed in their place, the State House statement said.

"President Magufuli has urged the newly appointed DCs to work hard and solve people's problems and serve with integrity and honesty," the statement added.

Meanwhile, as Norway-based helium exploration firm Helium One aims to boost global supply of the gas by the early 2020s by tapping new resources in Tanzania, the president yesterday called for national caution in any upcoming contract negotiations related to the matter.

The discovery of massive helium gas fields with a probable worth of billions of US dollars in the country’s East African Rift Valley system is seen by economic experts as having the potential to transform the national economy if properly managed.

"We thank God for the discovery of helium gas in Tanzania. I urge our economists, legal experts and all Tanzanians in general to get ready to seize this opportunity," Magufuli said in a Twitter social media network posting.

He added: "This discovery should inform us to get ready in the area of contract (negotiations) to ensure that this rare natural resource is used to develop our economy."

Tanzania has total estimated recoverable natural gas reserves of more than 57 trillion cubic feet (tcf), most of it discovered in deep-sea offshore blocks south of the country.

The country is still putting in place a legal and regulatory framework to govern its hydrocarbon industry, and only last year a petroleum law was passed.

Tanzanians have long complained that they were yet to see the benefits of the country’s vast natural resource wealth which includes precious minerals, natural gas, and now the newly-found helium deposits.

Helium One said it was exploring three new projects in Tanzania and working towards production by the early 2020s, aiming to produce 1 billion cubic feet (bcf) a year to help plug a supply deficit in the United States next decade.

The company holds more than 4,500 square kilometres of exclusive prospecting licenses in the Rukwa, Eyasi and Balangida areas of Tanzania which have helium concentrations of between 2.5 and 10.5 per cent by volume.

A resource assessment is due to be published later this month for Helium One's Rukwa project and geophysical surveys planned for its Eyasi and Balangida projects.

According to chief executive Thomas Abraham-James, the company has also started to look for investors for around $20 million of funding which it will need for further exploration, and has already had interest from investors in the United States.

"We hope to start drilling next year to prove everything at depth,” Abraham-James told Reuters in an interview, adding: “The technology for production already exists and is readily available, so there is no reason why we shouldn't be able to get into production by the time the United States starts to wind down in the early 2020s."

Although the global helium market is currently over-supplied by around 2 billion cubic feet (bcf), many refiners are looking towards 2021 when the world's largest helium producer, the US, finishes auctioning off its federal reserve, keeping a small part for government use only.

"We see an opportunity when the US government stops selling (helium) and there is a likely supply deficit of 1 to 1.5 bcf annually," Abraham-James said.

US reserves are also dwindling due to the lack of helium production from oil and gas fields, and the country has already had to start importing helium from Qatar. Other helium-producing countries include Algeria, Russia, Canada and China, according to the US Geological Survey.

Helium is usually a by-product of natural gas processing and liquefied natural gas production, but the high concentrations of helium found in Tanzania are naturally occurring, released from basement rocks.

Although it is commonly known as a gas for filling party balloons, it also plays an important role in scientific research, the aerospace, defence and technology industries, and healthcare equipment such as magnetic resonance imaging (MRI) scanners.

Meanwhile, energy and minerals minister Prof Sospeter Muhongo yesterday confirmed that officials from Helium One have presented their findings data to the government indicating the availability of 3He/4He, 40Ar/36Ar and 4He/20Ne that are estimated at 54 billion cubic feet (bcf) of the noble gas.

Speaking to The Guardian yesterday, the minister said: “The company’s chief executive officer, Thomas Abraham–James confirmed to me that Oxford university announced the discovery on June 28 ... I have requested them to fast track the drilling process in order to be sure of the actual proven resource.”

He described the current estimate of 54 bcf of helium reserve in Lake Rukwa as a blessing to Tanzania, saying the gas has strong global demand for use in hospitals, rocket balloons, arc welding and leakage detection.

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