In this interview with The Banker Reporter, Francis Kajubi talks to Stanbic Bank Tanzania’s Head of Oil and Gas Corporate and Investment Banking, Elias Ngunagwa on the role that the bank is playing in supporting the oil and gas sector, excerpts:
What informed Stanbic Bank’s decision to participate in this year’s Oil and Gas Congress?
Stanbic Bank Tanzania has supported the Oil and Gas Congress for the last three years. We believe that public private partnerships (PPPs) have a critical contribution towards accelerating Tanzania’s industrialization process hence by supporting oil and gas development, the bank is directly investing in this sector and enhancing the country’s economic growth. We believe that such meetings build understanding of the sector, foster networking among associated companies in the oil and gas value chain and facilitate the signing of deals.
What have you communicated to participants at the congress?
The financial panel discussion at this year’s congress deliberated how financial infrastructure can support the growth of the energy sector in Tanzania. In this aspect, Stanbic Bank is offering capital and tailor-made financial solutions such as syndicated loan facilities to accelerate PPP investment in Tanzania including the oil and gas projects. Stanbic Bank this year alone has provided financing to the tune of U$117 million to the government which has been used to fund key infrastructure projects within the country.
Given that natural gas is responsible for 60 percent of power being generated in the country, what role does Stanbic Bank play in this arena?
The bank understands the role that natural gas plays to drive economic growth of the country through the provision of reliable electricity/power. Stanbic Bank’s approach has been strategic by targeting the entire gas value chain, right from the gas suppliers to the industrial and power companies that consume use it to produce power. The bank has established strong relationships with key players in the gas industry and this has enabled us to come up with customized solutions and products that add value to the companies
How do you look at the entire oil and gas sub-sector in the country as a niche market for your banking products?
We believe that the oil and gas sub-sector has a great potential to become a significant contributor to the national economy. Backed by experienced teams and deep expertise of the sector, we are positioned at the forefront offering a comprehensive suite of transactional, global markets and financing solutions to help the sector ignite growth, driving broad and inclusive participation across the entire economy.
Investing in oil and gas is a long-term business which also means that interest rates have to be globally competitive, is Stanbic ready to lower interest rates to global standards to attract international oil companies?
Stanbic is a commercial bank operating in a competitive environment therefore all interest rates are charged according to their liquidity profile as well as Bank of Tanzania regulations.
As an expert what can you recommend the state to do in order to speed up investment and growth in the oil and gas industry?
As I mentioned earlier, collaboration is the key to achieving the desired investment in the sector. Stakeholders in the oil and gas industry should be encouraged through enabling policies, to initiate partnerships to advance the sector, as well as attract more investment opportunities and capital.
Is hiked taxation one of the barriers hindering rapid growth of the sub-sector?
The fifth phase government has been working towards a more favorable and predictable tax regime not only for the oil and gas sub-sector but across the board. This has gone a long way to ensure that the tax risk is properly mitigated and in turn boost market confidence to players. The ongoing developments are evidenced by the National Bureau of Statistics latest report where by the Foreign Direct Investment (FDI) recorded an 18 percent increase (U$1.1billion) in 2018, and Tanzania has been improving its ease of doing business gradually. The promising results indicate that investor confidence has improved.