Tanzania advised to borrow a leaf on oil, gas extraction from Zambia and BotswanaBy Prosper Makene By Prosper Makene

 

By Prosper Makene

8th October 2013

 

http://www.ippmedia.com/frontend/?l=60156

 

The government has been advised to learn from how Zambia and Botswana managed to settle their mining development agreements (MDAs) so as ensure that oil and gas contracts are well covered to benefit all Tanzanians.

Speaking with reporters who were attending a two-day training on oil and gas at the weekend, Environmental Action Team (LEAT) executive director Rugemeleza Nshala said even though Botswana and Zambia have less populations than Tanzania, there is a need to study how they have managed to ink their contacts with mining companies investing in those countries.

Nshala also said the government of Botswana has well settled contracts on diamond mining while Zambia has good agreements on copper mining. This makes the citizens of those countries benefit from the extractive industries.

“Mining is is an activity that needs to be shared by all people in the community hence the government must be careful when singing contracts with the multinational companies,” he said.

He noted that in the past development agreements may have been needed to attract investments but the Zambian people have paid a high price in terms of foregone public revenues that could have been invested in public services and infrastructure.

He added: “Mining Development Agreements (MDAs) need much attention before signing them because they covers a wide range of issues some of which are not covered by the general laws of the country.”

He added: “The issues include taxation, immigration, exercising of ministerial discretions, settlement of disputes, waiver of sovereignty, exchange control, infrastructure and barring of law.”

He pointed out that in gas and oil areas, Tanzania and not foreign mining companies must be the major shareholders in exploration, processing and selling.

He underscored that Ghana gets higher production but miniscule revenue, this being due to the contracts they signed with foreign companies.

For example, Ghana’s gold production rose from 287,124 ounces in 1986 to 2,625,500 in 2007, while diamonds increased from 560,538 to 839,235 carats in the same period and bauxite production rose from 226,461 to 1,003,368 tonnes.

“Between 1990 and 2007 Ghana collected USD387m as royalty charged at the lowest rate of 3 percent instead of USD775.47m charged at the medium rate of 6 percent or USD1,550.95m at the highest of 12 percent. Bevause of this Ghana lost about USD1,163.21bn …,” he said.

He clarified: “Tanzania and Ghana are all common law countries which uphold the principal of separation of powers where the functions of each branch of government are clearly delineated and cannot be interfered with …. the MDAs in these countries violate this coordinal principal of governance as they sideline the jurisdiction of the parliaments and judiciaries in mining industry.”

Speaking when launching the two-day training on oil and gas for business reporters, MCT chairman of the Think Tank Prof Issa Shivji said the government should re-consider the local investors in exploring gas and oil in the country.

“The government should encourage and support the citizens to invest in the gas and oil sector so as to avoid losing this crucial resource to foreign investors,” he said.
“Even if they will not compete with foreign investors, local investors need to be supported by any means,” he insisted.

SOURCE: THE GUARDIAN