Tanzania moves to close loopholes in energy, mining contracts

Prof. Sospeter-Muhongo, Tanzania's Energy and Minerals Minister

Prof. Sospeter-Muhongo, Tanzania’s Energy and Minerals Minister

The Tanzanian Government is reviewing all energy and mineral contracts, with the objective to scrap clauses in the inked document, allowing investors to reap millions of Tanzanian shillings in extra profits.

Tanzania, which is East Africa’s richest natural gas resource and gold producer, has been at tentative argument with mining firms to get higher taxes and royalties for its 45million population.

In their talks, big mining corporations including Acacia agreed in 2014 to start paying 0.3 percent of their turnover, but Authorities in Africa’s fourth largest gold producer want to turn that into energy companies.

Most recently there has been public concern over monthly service fees paid by the state-run utility Tanzania National Electric Supply Company (Tanesco) to independent power suppliers saying they are a burden to the government.

The Energy and Water Utility Regulatory Authority (Ewura) revealed this week that the government paid Tzsh277bn last year to two independent power suppliers; Aggreko and IPTL.

However speaking to reporters on Thursday, Energy and Minerals Minister Prof. Sospeter Muhongo said his ministry has now revived the process which was mysteriously suspended last year.

The Minister said the government has now taken precautions in all new contracts to ensure its share is protected.
“We won’t freeze the contracts which were signed some decades ago but we will amend some sections which are not very friendly,” he said

About 300 companies both local and international want to invest in the energy sector.

The minister said the government’s development target requires a reliable power supply to push its economy speed from 7 percent to 10 percent.

Nevertheless access to power supply in Tanzania is still low amid government efforts. About 40 percent of Tanzanians have access to electricity and authorities say the plan is to increase that number to 75 percent by 2025.