ENERGY & MINERALS

by Roger Nellist

Simbachawene replaces Muhongo as Minister
The Escrow account scandal finally claimed the head of Energy and Minerals Minister Sospeter Muhongo, who resigned on 24 January saying he was tired of the “false” allegations levelled against him. His Ministry’s Permanent Secretary, Eliakim Maswi, has been suspended since December 2014 pending investigations into his role in the matter.

Muhongo, who is a respected geologist, denies any wrong-doing but was blamed for failing to exercise due diligence in the saga. He had also upset the Public Accounts Committee, which had been calling for his removal over other issues (see TA110). Muhongo remains politically ambitious and his supporters maintain that he was not personally involved in the Escrow scandal, even though it happened on his watch.

President Kikwete named George Simbachawene as the new Minister of Energy and Minerals, and appointed Charles Mwijage as the new Deputy Minister. Simbachawene was formerly the Deputy Minister of Lands and Housing. After being sworn in at State House, he acknowledged the crucial role that energy plays in the country’s development and said that boosting rural electrification is among his top priorities. He added: “While I am aware that the Ministry faces many challenges, I personally feel that these can be overcome by effectively partnering with the private sector”.

Slow progress with LNG…
Concerns are being expressed that the government’s pre-occupation with the constitution and the 2015 elections is damaging the prospects for Tanzania’s long-term gas commercialisation. It is believed that some key gas legislation, that the companies need to give them regulatory certainty before committing billions of dollars of investment, will not be enacted by the current Parliament. Moreover, the escrow account scandal has now resulted in a change of leadership in the Energy Ministry and the government has not settled on a site for the LNG project – whether in Mtwara or in Lindi – despite the project partners submitting a location proposal a year ago. The Ministry says there are some land acquisition policy issues that need settling first. There are worries that these delays and uncertainties may unsettle the investors, especially at a time of low oil prices, and that the potential overseas markets for Tanzanian LNG may get filled by other big gas producers.

The current Mtwara versus Lindi rivalry for servicing the gas industry mirrors the decision that had to be made by the British Government in 1947 as to which town would be the port for the ill-fated groundnuts scheme. Mtwara was chosen and, over subsequent years, Lindi’s facilities gradually declined. The Citizen on 1 February 2015 gave a potted history, citing Kathleen Stahl’s ‘Sail in the Wilderness’ (published in 1961 with a foreword by Mwalimu Nyerere). The article begins: “Mtwara is booming and buzzing. It was not like this seven years ago… Even the richest person in Africa, hailing from an oil producing country, is also frequently visiting Mtwara. He is constructing a cement plant named after him – Dangote Industries (Tanzania) Limited. No wonder roads are being paved and hotels upgraded”.

Singida wind farm project
In March, it was announced that the government is in talks with the China’s Export-Import Bank (EximBank) for a low-interest $132 million loan to fund Tanzania’s first wind power project. The wind farm will be built in Singida and is expected to start next year with a capacity for generating 50 megawatts (MW) of electricity, with plans to raise that to 300 MW in future. The project is a joint venture between the National Development Corporation (NDC), TANESCO and a privately owned company, Power Pool East Africa Limited. The initial aim had been to commission the wind farm in 2013 but construction was delayed because EximBank raised its interest rate from 1% to 2% and accelerated the loan repayment period from 25 to 20 years.

Tanzania presently relies heavily on hydro-electric power, natural gas and fuel oil for electricity generation, and the government wants to add wind and geothermal power to its energy mix.

1 Comment »

  1. Tanzanian Affairs » ENERGY & MINERALS said,

    January 1, 2016 at 12:58 pm

    […] President Magufuli has reappointed Professor Sospeter Muhongo as Minister of Energy and Minerals. Muhongo had resigned from the position last January (see TA111). […]

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