Can you give us some background information on TPDC in terms of its historical background, and what would you say is your new role in the liberalized Petroleum Industry?
TPDC started in 1969, but we started active work in 1973. The initial role was purely to monitor and look after exploration activities, which the government had entered into, with the oil marketing companies. In 1977 because of the Gulf War, the oil marketing companies could not supply the country with fuel. TPDC had to step in and we started importing crude oil into the country. In 1982 we took over complete importation of products into the country, that is crude oil, and white products. The end of last year, from 1st of January, the government completely liberalized the industry and since we are a government body with a government policy which is not to engage into commercial activities. We had to leave or relinquish the commercial activities to the private sector. Our role now, from 1st January is purely to promote and monitor oil exploration into the country, and to work with oil exploration companies in the country.
One of your main role is promoting the sector and invite investors to participate in exploration projects. How many partners or companies have come already to Tanzania to participate in the sector?
Well at the moment we have 5 operating licences. We have CANOP from Canada - they have an exploration licence. We have DUBLIN from Canada, we have ENTRIM from Canada, we have WESTERN GEOPHYSICAL from the USA, doing deep sea exploration; and we have KHYBER RESOURCES - but we have not concluded an agreement with them yet. We are still in the negotiations. We have DOVER RESOURCES from Australia, who are doing exploration in the East of Songo Songo.
What are the different energy sources you actually promote here in the country?
With our new role, our main concern is to promote exploration. We have made two discoveries of gas. One in Songo Songo and the other one in NasBay in the southern part of the country. So we are as well trying to promote the development of the gas sector. One project is quite advanced. This is the gas to electricity, where there is a consortium of the Canadian and American who are going to generate electricity. Now we are also going to the other project south of the country that is the NasBay project, where there is an Irish company, with a British company, again to generate electricity from gas which has been discovered in that area. In addition, for instance for Songo Songo the gas which is used to generate electricity will only use about 25% of the available gas, so we have to look for a market for the other 75%, like industrial use, or other.
Natural gas is a new energy source here in Tanzania. How do you see the future of natural gas, and what are its benefits compared to fuel?
I think there is a big potential use for the gas. First of all it is going to replace some of the imported petroleum produces, while in the heavy industries like Breweries, Glass industries - they can convert from using liquid fuels into gas. In addition, because of the amount of gas that is still going to be available, and it is substantial, we will try to encourage the private sector to develop petro-chemical industries like fertilizer plants, for instance.
Talking about the Songo Songo Gas and Electricity Power project, by when is it going to be operating?
It should start producing in the year 2003. Construction will start at the beginning of next year. We have removed what we call "green fencing". Initially if you have a license to explore for oil and you don't make a discovery, you have lost the money. But now if you have lets say two or three different licenses, and you don't make a discovery in one license, but you make a discovery in the others, you can carry forward the costs and recover it in the other license. So we encourage companies to at least continue with the activities. If they don't make a discovery, they don't lose their money completely. We also have reduced most of the equipment for exploration which comes in tax-free. TPDC participation has been reduced from what is used to be 50% to now only a maximum of 20%. The licensed companies also have significantly deducted taxes. So there are a number of incentives which we are offering to the companies. As far as gas development projects are concerned these would follow under the Tanzania Investment Center incentives. | The refined fuel prices here in Tanzania are still very high in comparison to other African countries. What are the reasons and how do you see the price development for the future?
The price of fuel here is too high because of the taxes on the petroleum products. I think the government is now trying to review these taxes. They range from 45% to 60% depending on what product. This is quite substantial. I think from the Budget of this year, taxes will go down, and prices will as well go down. We believe so, but we can't be sure until we have heard the budget from the Ministry of Finance. We hope to minimize taxes on the petroleum produce, because petroleum is an input into a lot of sectors. If you raise the price of petroleum, just about everything goes up. You can't even be competitive in national trade either, because the petroleum product is too high.
Can you give us some more figures about TPDC, in terms of your number of your staff, and your turnover of last year?
Our turnover has been on an average of about 100 billion shillings. That will be about slightly more than 10 million dollars.
Because of the transition which we have been going through we had a staff of about 440, three years ago. We have cut down that number to now 105, but by July we think we are going to be around 65, because our role now has been reduced to purely exploration, promotion and the monitoring of licenses.
How would you describe your environmental policy in place here in Tanzania?
As far as exploration, on all projects we insist very much that there has to be an Environmental Impact Assessment. We are paying particular importance on the environment. We have done that for the Songo Songo project and for all other exploration projects. If there is seismic survey you have to have Environmental Impact Assessment. What impact would that have to the Environment? What would you do in order to rectify the impact that you are causing to the environment? We are paying particular attention to these kind of issues.
You have a very new role here in Tanzania, as a monitoring body, more promotion oriented body. With this new role, how do you see TPDC in the next 3 or 4 years, and how do you see the whole sector developing in the next couple of years?
The sector is going to grow in the sense that once the gas really starts flowing to Dar es Salaam, we will have more capacity to promote. Looking at the 5 licenses, which we are operating, we believe that in the next 2 years we may strike oil. Things will change completely once that happens.
TPDC's role is going to change significantly and it is going to be an integrated oil company. I don't think the government will want to be excluded in commercial activities, because there will be oil being produced. So you have to have a government instrument to look after the interests of the government. When you don't have an indigenous petroleum base, it is difficult to sustain a commercial petroleum company. Otherwise the government would just be pouring money where you are not getting any return out of it.
What is your final message to our readers, keeping in mind that they are all businessmen and potential investors?
Tanzania is one of the best places to look for oil. We believe there is abundant resources. We need to explore it, and we are offering very good incentives. |
