Could you give us a brief insight on the development of the mining and energy sector here in Tanzania for the last couple of years?
We have done a lot of things as far as the Mining and Energy sector is concerned. Let me start with the mining sector. In 1997, we came out with the new mining Act. We had an Act, which was outdated, and it could not match well with the current situation. So we came up with the Mining Act, we also came up with the new Mineral Policy, which basically focused on the importance of the private sector to enter into the mining business. But most important we thought that the government should not involve itself with mining. It is supposed to be facilitating the private sector to enter into this business. This helped us a lot and we came up with a new physical regime for the mining sector which is globally competitive. As a result, a lot of foreign investors are coming into Tanzania. This thing started seriously in 1997, but to date we are hoping to open three physical mines. We did one last year is in Nzega, which is called The Golden Pride Project. We are hoping to commission another one in Geita in the Northern part of the Country, which is owned by Ashanti Goldfields-Anglo, and we have another project at Bulyankulu, which is managed by Kahama Mining Company, but controlled by Barrick. Now you can see just after turning a few things around, we got a lot of potential investors within the mining sector.
In 1998 Tanzania was the first Country in Africa to have received a certain amount of exploration funds in terms of FDI (Foreign Direct Investment). The mining sector has attracted foreign investors and aid of US$800 million as just technical cost.
We have another Project in Tarime which is owned by the East African Mines, which we will commission soon. Really the mining sector has taken a leap because of the changing Act, putting in place a new Mineral Policies and a good physical regime. So I will say that, the future of the Mining Sector is positive, and more exploration are being done. On the side of energy, there are a lot of things which we are doing. At the moment, we start with oil sub-sector. There are a number of foreign companies that are doing some exploration in the Country. We have not yet succeeded in extracting oil, but we have succeeded in extracting gas. The Songosongo Gas Project. This is in the Southern part of the country, which has a lot of reserves for gas. It is now being developed by Oxalate, that is a Canadian Company, and ADS. It is a project which we think, in the next two years would be commissioned.
This is being financed by the World Bank, and other Financial Institutions, and the Government itself.. It will serve a number of villages in the Southern part of Tanzania , but again it will help us a lot in the development of the industry sector within the Country. Right now there are a number of issues that we are trying to do, like , initially Trans Canada are share holders in this project, but they should give way to ADS Company.
We also have gas at Nazi Bay in the Southern part of the Country, and we have Signage Entaro Oil. These are two Companies which are trying to work on it. The most important part which centers on the negotiations which are done is the cost of the project itself. How to sources finances, from different sources. But we hope that once we develop these projects especially the Songosongo project we would have found a solution. One of the critical problem which we are facing is the high cost of energy in this country.
On the electricity side, we depend much on hydro generation. We have stations based in Mtera in the Southern part of the Country, Kidatu, Pangani, and now we are about to commission a new hydro station, called Kihansi which will generate 180 mw into the system. We have not put a lot of emphasis on alternative source of energy so far. One of the problem that we are facing is that only 10% of the population has access to electricity, so the rest about 80% just depend on bio gas. We are trying to look at other potential areas like the coal which we have in the Southern part of the Country, it is called Mchuchuma Coal Mines.
We have already made some progress in terms of negotiations with potential investors, so things are now on the negotiating table. We are thinking of interconnecting from Zambia, from the Southern Africa power Bull, and we are member of that Power Bull, but this will remain just an interconnector. We are also thinking of working with Uganda. Within the East Africa Cooperation, we are arranging some sort of a master plan for entire EA and work out on how we should invest in the electricity sub-sector. We have made some progress in other sources of energy like solar power, thermo. One of the problems which we are now facing is the high cost of instruments and the levels of income of our people, especially in the rural areas. Just now we are working very hard to try and come out with the new energy policy because the one which we are using is a policy which was prepared in 1992, but given the different reforms which are taking place in the energy sector, we think that we have to tackle some of these, especially first of all the monopolistic structure which governs the energy sector. We have one utility company for all the country which is TANESCO. We want to re-structure it, in fact we want to privatize it and encourage private capital to come in.
| In the oil sector we have liberalized the oil sub-sector, we have left it for the private sector. The Government should stay away, what we have to do is to create regulatory bodies to regulate, both for petroleum and energy sub-sector.
There are a number of things that we are doing, given different reforms that are happening, but we are really in the part of expanding our energy sector, both the Petroleum sub-sector and the energy sub-sector.
Energy costs in the country are very high, and are said to be the highest in East Africa. Mining companies are complaining about the high production cost. One part of bringing the cost down is to open up the market and attract more foreign investors. What area would you say needs the most investment?
For the electricity sub-sector we have just started because we are just talking about generation, transmission, and distribution. So what we want to do is unbundled these three utilities. We really need to follow some sort of horizontal integration instead of vertical integration in the sense that we want to invite investors, for instance on the distribution side we have to invite private capital also on transmission and finally on generation. We are going to do this in phases. We want to invite investors to get into the electricity sub-sector. There a number of reasons why we have not done so. Most of the physical infrastructure which was created by TANESCO was done through the World Bank , IFM and other financial institution. Now it is in the maturity stages and we have to pay them. But with the devaluation of our currency it has become difficult. We used to get these loans when the dollar was equivalent of 6 shillings now a dollar is at Tosho. 800/= So you can imagine the burden which TANESCO carries, in terms of paying back loans. These are the things which we want to do, but it will take some time.
In order to attract foreign investors you need to promote your sector, what is the strategy in promoting your sector abroad to attract foreign investors?
As far as the mining sector is concerned, my Ministry or rather the Government has made sure that we participate in all kind of international conferences and dialogues, trying to explain what we are doing in the mining sector. We have tried very much to improve things by introducing the Mineral Policy, the Mining Act, and the Physical Review. A number of interesting companies are coming in and are taking part in the process, companies like Siemens and others. We have been interviewed by a number of International Magazines. This is part of the strategy which we are using to promote our Country and we have also prepared video cassette materials which we present outside the country. So people really know what is happening.
Could you name three advantages for foreign investors to come to your country, could you also name gray areas, which have to be improved in future?
The most important advantage for investors is not something to capitalize on but Tanzania is the most peaceful country in Africa and this can be proved beyond reasonable doubt. Security and safety is guaranteed here and the government interference has been minimized. So it is just the decision of the investor himself or herself and I think finally the given number of reforms which are taking place in the country, we have acknowledged that the private sector should be an engine if we want to boost our economy. This has been proven in the mining sector. We started just in 1997. Now a lot of things have happened.
In terms of gray areas there is some of the physical infrastructure like roads which is in a bad state. These things are improving and can be confirmed by the type of foreign companies which are investing in the mining sector. If we talk of Anglogold coming here to spend over 200-300 m USD, then you know that there is a potential.How do you see the future of the sector within three years time?
What I see in the future is a substantial amount of mining sector contributing to the economy. We suspect that it could go up to 15 or 20 %. We have done a lot of things to ensure that the investor in the mining sector are comfortable. What is important now is to keep track on what we have promised to the investors. |
