by Ben Taylor
Progress in LNG plant negotiations
Negotiations between Tanzania’s Ministry of Energy and Equinor and two multinational oil companies – Shell and Equinor – on the proposed liquid natural gas (LNG) processing plant in Lindi region are said to have made good progress. However, the target date set by President Samia Suluhu Hassan for conclusion of the negotiations – December 2022 – was missed. The Minister for Energy, January Makamba, explained that the delay in concluding talks was solely due to the Christmas holidays.

Talks between the government’s negotiation team and Shell and Equinor and their partners were revived in 2021 after having been stalled for some time. The two sides are said to have agreed on key issues, and have signed an initial Host Government Agreement (HGA).

In June 2022, President Hassan witnessed the signing of the initial HGA, and directed the team to complete discussions on the remaining areas before the end of December. “We would have finished drafting the agreement,” said Mr Makamba, “but our partners are now taking leave during Christmas.” He added that the drafting will resume in the new year. Mr Makamba said the negotiations have been complex and have taken considerable time. “I was in Arusha for four days, and we were meeting from 7:00 in the morning to close to midnight,” he explained.

The investing companies are optimistic about the project’s execution after the discussions conclude. “From Equinor’s side, we are encouraged by the progress we have seen in the talks between the LNG investors and the government. While we are still working on finalising the agreement to progress our LNG project in Tanzania, we have now agreed on the key items and have entered the drafting stage,” reads a statement.

To date, the government in partnership with oil and gas companies have discovered a total of 57.54 trillion cubic feet (TCF) of natural gas in various blocks. This includes 10.41 TCF from onshore wells and 47.13 TCF discovered offshore. Natural gas is currently used mainly for electricity generation, industrial and domestic activities as well as powering vehicles. Around 60% of the electricity consumed in Tanzania is generated using natural gas, with the rest coming from other sources such as hydropower plants, oil, solar and biomass.

The planned LNG plant in Lindi will facilitate the export of the natural gas to the world market. The agreements to be signed after the current negotiations include the final Host Government Agreement, which spells out terms of the project, the project law and the benefit-sharing agreement. A final investment decision could be reached in 2025, potentially allowing exports to start before 2030.

Earlier, a new report by Stanbic Bank Tanzania has suggested that the Liquefied Natural Gas (LNG) project can potentially raise Tanzania’s Gross Domestic Product (GDP) by over USD $7bn (TSh 16 trillion) per annum and earn the government $2bn in revenue. “It is believed that, upon completion, Tanzania LNG will be the largest energy project in Africa’s history in terms of capital investment. It would increase Tanzania’s GDP by $7 billion per annum,” Stanbic Bank Tanzania said in a statement yesterday. Tanzania’s GDP in 2020 was estimated at USD $62 billion, according to the World Bank.

The magnitude of the economic impact is correlated with the expected future price of LNG. The Bank accounted for this by modelling different future price scenarios, ranging from $5.50 MMBTU to $12.00 MMBTU. “It represents a transformational economic impact; between 270,000 and 600,000 direct and indirect employment opportunities during the lifespan of the project; between $2 billion to $6 billion in fiscal contributions to the government of Tanzania per year; and between $3 billion to $8 billion per annum in balance of payments contributions,” the statement reads.

In his remarks at the report launch, Mr Makamba said the report insights were critical in providing an overall understanding of the macroeconomic impact of the project. He also affirmed the government’s commitment to finalizing the project and tapping into the wider opportunities provided by alternative energy sources. “We will be unapologetic in the extraction and consumption of gas energy that exists in our country,” said Mr Makamba. “In Africa, if we are to extract all gas resources, we will contribute just 3 to 3.5 percent of global greenhouse gas emissions. Tanzania is building a robust gas economy, and not just limited to liquefied.”

The Minister said the envisaged LNG project with its huge financial and economic impact to the nation would bring about changes on the way public and private institutions would operate. “It can’t be business as usual. It is huge investment, something never done before. Public and private institutions will be required to be able to execute their jobs on top global levels,” he said. (The Citizen, Daily News)

Gold miners launch legal action against Barrick Gold
A group of Tanzanian villagers is suing Canadian mining giant Barrick Gold over alleged police killings, torture and other abuses at North Mara gold mine in Tanzania. Further, the families of two miners allegedly killed at the mine in 2019 have launched a legal claim against the London Bullion Market Authority (LBMA) for certifying its gold as free from major human rights abuses.

The first claim, filed in the Superior Court of Justice in Ontario, Canada, accuses mining of being complicit in extrajudicial killings by police guarding its North Mara facility.

The miner has faced similar charges various times in recent years. In 2013, twelve villagers living in the neighbourhood of North Mara sued the company, then known as African Barrick Gold (ABG), in a UK court for the death of their six relatives, whom they said were shot by police in 2011. In 2015, the company agreed to an out of court settlement to compensate the villagers for undisclosed amounts of money.

This time, the plaintiffs include relatives of five men killed by police assigned to the mine, according to the filing. Nine of the plaintiffs say they were themselves beaten or shot by the police. The claim states that residents routinely enter “waste rock areas” at North Mara to retrieve rocks with trace amounts of gold, which they process and sell.

It also claims that Barrick “has had effective and practical control” over police stationed at the mine and that the company’s security agreements with the police effectively make them the mine’s “private and heavily armed security force.”

In the second case, the law firm Leigh Day has filed a legal claim at the High Court in London alleging that the LBMA has been wrongly certifying that gold originating from North Mara gold mine was free from major human rights abuses. According to a statement, the two men died while working at the mine. “The claimants assert that despite a publicly recognised pattern of systemic human rights abuses associated with the mine over many years, the LBMA has continued to certify gold from the mine under its LBMA Responsible Gold Standard,” the law firm claimed.

According to Leigh Day, the first miner died in July, 2019 after being shot by security staff at the facility while the second miner died in December of the same year after being shot by Tanzanian police. The claim, filed in the Superior Court of Justice in Ontario, Canada on Wednesday, accuses the world’s second-biggest gold miner of being complicit in extrajudicial killings by police guarding its North Mara facility, located about 30km (18 miles) from the border with Kenya.

Barrick Gold Corporation has refuted the allegations, saying Barrick had frequently made it clear that North Mara’s security personnel are unarmed and that the mine does not supervise, direct, control or instruct any mission, assignment or function of the Tanzanian police force, which is a state institution.

Barrick president and chief executive Mark Bristow said the group was proud of its human rights record around the world and of North Mara’s strong working relationship with the communities around the mine. He said many of the mine’s employees have been drawn from the surrounding villages and in line with Barrick’s other operations, North Mara prioritises local employment and procurement.

“While the vast majority of local residents are law-abiding, there are rogue bands, armed and well-organised, who from time to time invade North Mara to steal gold-bearing rock, presenting a serious risk to the safety of mine personnel and community members in the process,” said Mr Bristow.

“As recently as last month, North Mara was attacked by an armed force of almost 100 men. Despite the police’s attempts to repel them, 71 managed to scale the site’s nine-metre-high perimeter wall and engaged with the mine’s unarmed security personnel. The policemen eventually removed them, but one of the intruders died as a result of his injuries. “Two of the policemen were also injured. Barrick made a public announcement about the incident at the time. This was far from being a one-off occurrence and North Mara lives with the constant threat of such invasions.”

A spokesperson for the company also told Reuters news agency that the Canadian legal action “is riddled with inaccuracies,” and that it “attempts to advance claims against Barrick Gold Corporation in Ontario based on alleged actions of the Tanzanian police, even though Barrick exercises no control or direction of any nature over the Tanzanian police.” “We intend to vigorously defend against these allegations in the appropriate forum,” she said.

Tanzania’s deputy minister of Minerals, Dr Stephen Kiruswa, said the accusations were stirred up by “groups which want to get money from global NGOs,” playing down the seriousness of the legal action. “We have met residents near the mine and they are happy with the support of the miner to community life,” he said, adding that there were no any human rights abuses. (The Citizen, Al Jazeera, Reuters)

Tanzania, Uganda hit back at EU on oil pipeline plan
The governments of Tanzania and Uganda have responded in robust terms to criticism of the East Africa Crude Oil Pipeline (EACOP) project from the European Union Parliament.

In September, the EU Parliament adopted a resolution raising concerns of human rights violations, major environmental and climate risks posed by the execution of the EACOP project. According to the resolution, more than 100,000 persons are being forcibly evicted to make space for the pipeline, and they are being deprived of the use of their land and thus also their livelihood before receiving compensation.

The resolution calls “for the EU and the international community to exert maximum pressure on Ugandan and Tanzanian authorities, as well as the project promoters and stakeholders, to protect the environment and to put an end to the extractive activities in protected and sensitive ecosystems.” It further calls for efforts to use “the best available means to preserve the culture, health, and future of the communities affected and to explore alternatives in line with international climate and biodiversity commitments.”

Responding to the resolution, January Makamba, Tanzania’s Energy Minister said that the overall pipeline route has been designed to minimise environmental and social impacts. “Some physical displacement (loss of shelter) and economic impact (full or partial loss of farmland) is unavoidable,” he admitted, but added that “land acquisition is compliant with both the Laws of Tanzania and the Performance Standards of the International Finance Corporation (World Bank).” “We offer a choice between replacement housing (generally of higher standard than the existing dwelling) and cash compensation. Around 85% of the affected people have elected for replacement housing, and construction of these replacement houses is ongoing.”

Mr Makamba insisted that “no land will be accessed by the project until compensation has been paid and notice to vacate has been given. In fact, those affected will also be entitled to transitional food support and have access to livelihood restoration programmes. The land acquisition process is expected to be completed in mid-2023.”

Finally, he noted that “the pipeline will be monitored by a state of the art fibre-optic cable to detect both temperature changes and vibrations and it will be executed in an exemplary manner in terms of transparency, shared prosperity and sustainable development including the environment and respect for human rights.”

Responses in Uganda were less diplomatically expressed. The Deputy Speaker of the Ugandan Parliament, Thomas Tayebwa, described the resolutions as “deliberate misinformation.” “These are projects which were approved by the Parliament of a sovereign country,” he said, “and anything to do with challenging their approval is an affront to the independence of this House and we cannot take it lightly.”

“The EU bile against the project”, he went on, “betrays neo-colonial attitudes and imperialism of the EU Parliament”.
He further derided the EU Parliament for closing an eye to the EU’s own emissions. According to Mr Tayebwa, EACOP will only represent 0.5%, yet the EU with just 10% of the world population is responsible for 20% of emissions, and member countries are exploring plans to deepen fossil-fuel extraction.

by Dr Hildebrand Shayo

JNHPP Hydropower moves forward but major challenges for Tanzania’s energy sector remain
Large-scale hydropower development in Tanzania has, until recently, largely been government led. The Electricity Act of 2008 and the subsequent feed-in tariff policy has since endorsed stimulated private sector investment in electricity generation in the country.

The Act provides rules for power generation, storage, and distribution of electricity in Tanzania. A section devoted to rural electrification assigns duties to the Minister responsible for electricity matters and the Energy and Water Utilities Regulatory Authority (EWURA).

To enhance efficiency, Tanzania has been endeavouring to reform the electricity sector. This process began during the third phase of government under President Benjamin Mkapa. Nevertheless, the overall restructuring of the sector into three largely separate sub-sectors – a power generation, transmission and distribution – has not yet been achieved. This is largely due to the slow pace of reforms and the myriad forms of resistance faced. For one, energy is also a national security matter.

Let us ask what the main challenges are for Tanzania’s energy sector that each policymaker needs to be grappling with, even as the Julius Nyerere Hydropower Plant (JNHPP) is near completion [previously known as Stiegler’s Gorge – see https://www.tzaffairs.org/?s=stiegler&submit=Search]. In the context of how this sector is important to the growth of the economy, only a few will be highlighted here to help draw attention to where perhaps should focus when it is about the energy sector to make decisions better for the development of the nation.

Energy use in cooking and transport is the number one challenge in my view. If no action is taken, this can have a wide bearing on the environment and climate-related effects. Biomass fuels in the form of firewood and charcoal and liquid petroleum gas (LPG) are the main cooking fuels in urban Tanzania, with LPG slowly replacing biomass in rural and suburban areas.

It is regrettable most Tanzanians don’t appreciate that importing LPG for cooking and petroleum products for transport is precipitously draining Tanzania’s foreign currency reserves. Thus, moving to clean energy sources, especially electricity, for cooking and transporting clean cooking energy should be an important policy goal of the Government of Tanzania. To reduce the use of charcoal, which has contributed hugely to deforestation would be a big benefit to the country.

According to the latest Tanzania power system master plan, Tanzania’s electricity demand will expand at an annual rate of 13.8% during 2022–2030, rising from 10,176 GWh in 2022 to 28,664 GWh in 2030. This growth indicates that hydropower will continue to play a dominant role in Tanzania’s electricity system.

As President Samia Suluhu Hassan graced JNHPP water filling for the generation of 2,115MW of electricity upon completion on 22nd December 2022, Tanzania’s total power installed capacity by 2021 was 1,606MW. Tanzania’s electricity generation, according to the Ministry of Energy and Minerals, currently comes mostly from natural gas (48%), trailed by hydropower (31%), petrol (18%), solar (1%), and biofuels (1%) supplemented by power imports power from Uganda (10 MW), Zambia (5 MW), and Kenya (1 MW).

Ministry of Energy and Minerals data reveals that the average electricity consumption per capita in Tanzania is 108kWh per year, compared to Sub-Saharan Africa’s average consumption of 550kWh per year, and 2,500kWh average world consumption per year. Provided the demand for electricity in Tanzania is projected to be growing at 10-15% per year, with currently only 24% of the total population having access to electricity, urgent action needs to be taken that include Government plans to increase Tanzania’s generation capacity to 10,000 MW by 2025. To achieve this goal, the Government of Tanzania has embarked on reforming the electricity supply industry mainly by attracting private capital to the industry to invest in other energy sources.

Whilst the initiative to attract private capital is gaining momentum, the hydropower sector needs to be equipped for the technical, financial, social and environmental challenges that lie ahead.

For instance, there is currently excess electricity during the rainy season and insufficient electricity generation during the dry season. In the past this has resulted in significant electricity power rationing. Smoothing Tanzanian’s electricity generation curve by consuming or selling surplus electricity during the rainy season and increasing generation during the dry season, in order to reduce fuel imports for generators and meet Tanzania’s rising electricity demand is a major policy challenge facing hydropower development especially as the nation aligns itself for industrialisation.

This implies that to meet Tanzania’s mounting electricity demand, as calls to industrialise and increase value addition processing mount, accelerated development of its hydropower and power mix sources from potential unexplored sources is fundamental. From an investment and business point of view, it is generally acknowledged that there has been underinvestment not only in a generation but maintenance of infrastructure that occasionally when executed triggers among other things power rationing due to major maintenance.

In addition, another challenge is on what can be viewed as administrative and bureaucratic vested interests and inadequacies. Less-than-attractive (to power generators) electricity prices that are not deemed to be adequate to support system cost and capital expansion are a major cause of underinvestment. Insufficient investment in transmission lines is a critical obstacle for hydropower development; thus a further policy goal for Tanzania should be to attract investment by initiating efficiency and economic principles into the sector while trying to avoid politicisation of the energy sector.

Worldwide in recent years, there has been an increase in extremely unstable weather patterns and events, like flooding. Further, high sediment load caused by farming along water sources, landslide-induced destruction of water sources through animal husbandry and farming through unplanned irrigation schemes etc. This has the potential to severely reduce the base flow available to hydropower projects in the long run. The effect in addition to inadequate maintenance will thus be to increase both capital and operational costs, and loss of revenue from plant stoppages. Hence, increasing the resilience of hydropower plants is another policy goal for Tanzania to achieve its full potential in the energy sector’s goal.

Further, Tanzania’s electricity sector in my opinion experiences some governance problems. Tanesco, the national electricity utility and the sole buyer of electricity, can be frequently a victim of political interference. Electricity prices and power purchase agreements can often be driven by factors other than scientific or business economic principles.

Tanzania has much to benefit if it can export surplus electricity to other SADC region members. This can only happen if there are robust long-term plans to develop all potential energy sources. If achieved, Tanzania could increase its gross domestic product immensely and relieve itself from depending on donor handouts and going for development loans that sometimes can have unfavourable terms.

by Ben Taylor
Significant deal signed on LNG processing facility
Tanzania has signed a framework agreement with the Norwegian firm Equinor and UK-based Shell that brings the parties closer to starting construction on a $30bn project to process and export liquefied natural gas (LNG). The deal announced in June foresees a final investment decision by 2025, and a start of operations by 2029-2030 at a liquefied natural gas plant to be built in Tanzania’s southern coastal town of Lindi.

“We have never reached this stage of natural gas development in the history of our country,” said Energy Minister January Makamba during the signing ceremony. “This project will significantly change our economy,” he added.

President Samia Suluhu Hassan, also present at the ceremony, welcomed the preliminary agreement. “We have reached a good stage of discussions about the LNG project, but much work is still waiting for us to talk and make it competitive,” she said.

Plans for the LNG plant had stalled for several years under President John Magufuli, and President Hassan re-launched efforts after taking office in 2021.

“We had many stops but through [the] resolve of the government, we kept engaging, discussions and we believe Tanzanian gas presents a huge opportunity,” said Equinor country manager for Tanzania, Unni Fjaer.

Both Equinor and Shell have existing interests in natural gas in Tanzania. Along with US firm ExxonMobil, Equinor is exploiting an offshore block where it says it has found 20 trillion cubic feet of natural gas. Shell, together with Ophir Energy and Pavilion Energy, says it has discovered 16 trillion cubic feet of gas in two other offshore blocks in the same area.

Low-carbon energy potential, and projects
While Tanzania continues to seek to exploit her natural gas resources, the country is also powering ahead on low-carbon energy projects.

President Samia Suluhu Hassan stated while on a visit to the US in April that the country has a goal of producing 6,000MW from renewable energy by 2025. She said the electricity will be produced through a combination of hydropower, solar and wind projects.

The President was speaking at a discussion themed “A New Day for US-Tanzania Relations,” hosted by President and Chief Executive Officer of the Wilson Centre (and former US Ambassador to Tanzania), Mark Green.

Chief among Tanzania’s portfolio of renewable energy projects is the controversial 2,100MW Julius Nyerere Hydropower Project (JNHPP) at Stiegler’s Gorge, where construction is well under way (see previous issues of TA). Two smaller hydropower projects – the Ruhudji and Rumakali projects, both in Njombe region – are also lined up to begin producing 358MW and 222MW respectively. In combination, these three projects will nearly triple the country’s electricity supplies from the 2021 level of just over 1,605 MW.

Tanzania is also pressing ahead with both wind and solar power projects. In July, Energy Minister, January Makamba visited the site of a proposed 150MW solar farm in Kishapu District, Shinyanga Region. He explained how the project, financed by the French development agency AFD, will eventually feed power into the national grid, providing energy particularly to Simiyu and Mwanza regions, as well as to communities surrounding the plant.

Tanzania is recognised as having an abundance of the solar radiation necessary for generating large-scale power year round. It is estimated that 83% of the country’s land area has a high level of annual average radiation, and 14% has very high levels. This means the solar resource for power generation is viable in most, if not all, the country.

The President told the audience in the US that Tanzania has a target to produce between 600MW and 700MW of electricity from solar.

Similarly, the country has high potential for wind-power projects, with several parts of the country having strong and predictable wind patterns. Projects already underway include a 100MW plant near the town of Singida and a 300MW project near Makambako.

Geothermal energy potential is also being developed, with an initial focus on providing direct heat for agricultural and industrial purposes including greenhouse heating, grain drying, etc.

Currently, with per capita annual energy consumption of just 103KWh, Tanzania ranks in the bottom ten nations in the world, below even the norm across sub-Saharan Africa. In the past ten years, while the population has increased by 32% and electricity demand by an estimated 400%, total installed power generation capacity has increased much more slowly, from 1,521MW to 1,700MW: a pace equivalent to roughly one percent per year.

Fuel subsidies introduced to cushion citizens from price increases
In May, the government announced moves to protect consumers in Tanzania from the rapid global rise in fuel prices by introducing a TSh 100bn (USD $43m) monthly subsidy. The subsidy took effect on June 1st and resulted in a reduction in prices at the pump of around TSh 300 per litre.
Petrol, diesel and kerosene prices had risen to record highs of above TSh 3,000 per litre earlier in May after global oil prices shot up following Russia’s invasion of Ukraine.

Nevertheless, as global prices remain high, pump prices in Tanzania have continued to rise despite the government subsidy. In early August, the Energy and Water Utilities Regulatory Authority (EWURA) announced new price caps for fuel that saw prices for petrol and diesel rise to levels never recorded before in the local market. A litre of petrol in Dar es Salaam will cost TSh 3,410, while in Mtwara the same will cost TSh 3,762.
“Fuel is a strategic and very important product,” said the executive director of the Tanzania Association of Oil Marketing Companies (Taomac), Raphael Mgaya. “If the government continues with its efforts to ensure the commodity is available at affordable prices by the end user, then it will help strengthen the economy and reduce the risk of inflation,” he added.

by Ben Taylor
Note: we are seeking a new contributor to take over this section of Tanzanian Affairs. If you are interested, please contact the editor.

New gold refineries in Mwanza and Geita
President Samia Suluhu Hassan officially inaugurated the Mwanza Precious Metal Refinery (MMPR) gold refinery on June 13, 2021.

The refinery, which cost TSh 12.2 billion, was built by the State Mining Corporation (Stamico) in partnership with Dubai’s Lozera Company. It has the capacity to process 480kg of minerals per day.

The inauguration ceremony of the factory was attended by residents of Mwanza city, government officials, political and religious leaders.

The Chief Executive of the factory, Anand Mohan thanked the government for the successful completion of construction of the factory and said it will contribute to the growth of the Tanzanian economy.

This followed the completion of Geita Gold Refinery, owned and built by Tanzanian investors, with the help of TSh 18.4bn financing facility from Tanzania’s Azania Bank. The modern gold refinery was built and designed to facilitate operations of all miners from the smallest artisanal one to the largest mining firms in the country.

Data released when the Minerals Minister Dotto Biteko visited the factory in May, shows that the refinery has the capacity of producing 440kg pure gold a day, purifying the minerals to the 99.99% purity.

“Currently, the mining sector contributes handsomely to Tanzania’s Gross Domestic Product (GDP) but it’s been unfortunate that for a long time, gold from Tanzania faces a challenge of quality when it gets to the market and this is why we see the presence of this factory to be a step forward in the government’s initiatives to finding solutions to challenges facing the sector,” said the Minister.

He said the government placed a tender to look for a credible investor who would refine Tanzania’s gold in the year 2016. “34 companies came forward but none of them was able to meet the requirements. When we re-advertised the tender, 16 companies came forward and that was how we picked this investor and we went ahead and gave him the license,” he said.

Julius Nyerere Hydropower project
The government will spend TSh 1.4 trillion during the 2021-2022 financial year on the 2,115 Megawatts (MW) Julius Nyerere Hydroelectric Power Project at Stieglers’ Gorge, it was announced in Parliament in June. The money, requested by Energy Minister Medard Kalemani, is 59% of the entire amount that the ministry will spend in its budget for the 2021/2022 financial year.

Seeking MPs’ endorsement for the ministry’s TSh 2.4 trillion budget, Dr Kalemani said activities that will be implemented under the strategic project include; construction of diversion tunnels at the Rufiji River, building the main dam and spill-ways, construction of tunnels, power house and a switch yard. By May 2021, the project whose total cost is TSh 6.55 trillion, had already consumed TSh 2.49 trillion. According to the Minister, its completion was currently at around 52%.

During the coming financial year, the government will also continue with the implementation of a number of other power generation projects, including Ruhudji, Ramakali, Rusumo and extension of the 185MW Kinyerezi I among others. Other focus areas include the construction of the East African Crude Oil Pipeline (EACOP) and Liquefied Natural Gas (LNG) projects.

Dr Kalemani said the country’s power generation capacity has reached 1,605.85 MW, but is projected to reach 5,000MW by 2025, a surplus of 2,323MW over projected demand.

The plan was that the Julius Nyerere Dam would start being filled with water in November 2021 and start generating electricity by June 2022.

[For history of the project see TA120 TA121 TA124]

Large-scale solar power plant in Shinyanga
In Kishapu District, Shinyanga Region, TANESCO will implement the first large scale photo-voltaic (PV) Solar Power Plant of Tanzania. This plant will have a capacity of 50 MW and produce annually 91,600 MWh, in the same time reducing the emissions of greenhouse gas by 22,400 tCO2 eq.

The project has support from the French official aid agency, Agence Française de Développement (AFD), worth €130m. According to an AFD press release, the project represents “an important milestone for Tanzania towards a cleaner and sustainable energy supply and contributes to the necessary fight against climate change.”

According to the International Energy Agency (IEA), in Africa, solar PV is becoming the “new king” of electricity and is forecasted to be the fastest growing source of power generation in Africa by 2040.

Production based on solar has become one of the cheapest energy in the world with increasing performance. Modern PV plants are modular which makes them quick to install and easy to maintain. Operating costs are very low and environmental and social impacts are limited. The source of energy is of free and everlasting.

Solar plants can also contribute to the strategic independence and energy competitiveness of the country, mobilizing local resources and avoiding dependence on fluctuating hydrocarbon prices. Further, Solar PV power plants reconcile development and fight against climate change, producing far less emissions than coal or gas plants.

The challenge with solar power is managing intermittent supplies, with no producing capacity at night and reduced capacity in cloudy weather. The AFD support will include training for TANESCO teams in managing grids supplied by solar power.

by Ben Taylor

Note: we are seeking a new contributor to take over this section of Tanzanian Affairs. If you are interested, please contact the editor.

Tanzania-Uganda oil pipeline agreements signed
Uganda, Tanzania and the oil companies Total SE and China National Offshore Oil Company (CNOOC) signed three key agreements on April 11, 2021 in Uganda that pave the way for construction to start on the planned east African crude oil pipeline (EACOP). Both President Yoweri Museveni of Uganda and President Samia Suluhu Hassan of Tanzania were present to witness the signing of the agreements.

The 1,443km pipeline will transport crude oil from oil fields near Lake Albert in western Uganda to Chongoleani terminal in Tanga on the Tanzanian coast. From Lake Albert, the pipeline will head southwards, crossing into Tanzania near Bukoba and passing to the west of Lake Victoria before heading west to Tanga via Kahama, Singida and Kondoa. On completion, it is expected to be the world’s longest electrically heated pipeline. Uganda’s crude oil is highly viscous, so it must be heated to be kept liquid enough to flow.

Patrick Pouyanne, chief executive of the French oil giant Total, described this as a “momentous occasion in history … Expect the first oil tanker to dock at Tanga port in early 2025.”

The project is expected to cost at least USD $3.8bn, 80% of which will be spent in Tanzania. The full amount will be pooled through the EACOP holding company co-owned by the oil companies – Total E&P and China National Offshore Oil Company (CNOOC), and the governments of Uganda and Tanzania through their respective national oil companies, UNOC and TPDC. The transit tariff per barrel of crude oil going through the pipeline is to be capped at $12.77, after tax concessions were offered by the Tanzanian government.

President Museveni explained that he chose the date for signing the agreements as April 11th for sentimental reasons: to coincide with the toppling of former President Idi Amin by Ugandan rebel groups with the help of Tanzanian troops 42 years earlier on the same date. “So today is a triple victory for Uganda and Tanzania; militarily, politically, add economically,” he said. The event had been planned for March 22nd, but had been delayed out of respect for the late President Magufuli.
Environmental groups have expressed concern with the plans. A letter signed by 38 civil society organisations across both east African countries said the parties had failed to address environmental concerns over the pipeline and had steamrollered over court and parliamentary processes.

Diana Nabiruma, of the Africa Institute for Energy Governance (AFIEGO), told the (UK) Guardian newspaper: “It is concerning that major agreements are being signed and the companies are being given the go-ahead to award contracts and start developing the Lake Albert oil project. The projects pose major environmental risks. Resources, some shared with countries such as the DRC, Tanzania and Kenya, including Lake Albert as well as Lake Victoria and rivers, are at risk of oil pollution,” she said.

The #StopEACOP alliance campaign condemned the decision to build the pipeline, which it says will displace 12,000 families and would be a huge environmental risk at a time of climate emergency, when the world needs to move away from fossil fuels.

Vanessa Nakate, founder of the Rise Up climate movement in Uganda, said: “There is no reason for Total to engage in oil exploration and the construction of the east Africa crude oil pipeline because this means fuelling the destruction of the planet and worsening the already existing climate disasters in the most affected areas. There is no future in the fossil fuel industry and we cannot drink oil. We demand Total to rise up for the people and the planet,” she said.

David Pred, of Inclusive Development International, which supports communities to defend their rights against harmful corporate projects, said: “The oil companies are trying to dress up the investment decision signing ceremony, but fortunately this climate-destroying project is far from a done deal. Total and CNOOC still need to secure insurance and raise $2.5bn in debt financing for the EACOP to move forward and they are going to struggle mightily to find enough banks and insurance providers willing to associate themselves with such a project,” he claimed.

President Samia Suluhu Hassan commits to speed up LNG project
Among the many topics covered by the new President, she stressed the need to speed up the long-planned (and much-delayed) Liquid Natural Gas (LNG) processing plant on the southern Tanzania coast. The project cost is estimated at USD $30bn.

In two major speeches – on April 6 at a ceremony to swear-in new Permanent Secretaries and other officials, and April 22 in her maiden speech to parliament as President – she directed the Ministry of Energy to speed up the project by bringing in investors who are ready to start its implementation.

The LNG project has been stalled for some time now following the government’s decision to review Production Sharing Agreements (PSAs). Host Government Agreement (HGA) negotiations have been on and off, after they initially stopped in 2017 due to technicalities and resumed in 2018 only to stall again.

“We have been singing the LNG song for a very long time, I remember when I was sworn in as the Vice President I tried to work on it, but discovered it was beyond me and stopped,” she said. She stressed that it was time to understand who is in and who is out in the implementation of the project so that it can move forward. “We should do what we did when we decided to start construction of the Standard Gauge Railway (SGR) and we all saw how they came back seeking to be put on board,” she said.

There are a number of complicating factors to deal with in kick-starting the project. In addition to maximising the benefits to local communities and national revenue, negotiations will be affected by global gas price projections and the security situation in northern Mozambique.

Barrick Gold CEO praises President Magufuli
The president and chief executive of Barrick Gold Corporation, Mark Bristow, said the company mourned with the people of Tanzania at the loss of President John Magufuli.

Bristow described the late president as “a visionary statesman” who saw the value of a thriving mining sector to his country’s economy. He praised the late President for partnering with Barrick in a joint venture, Twiga Minerals Corporation, to manage the company’s mines in Tanzania and to share the economic benefits they generated equally. Bristow said Twiga would stand as a monument to President Magufuli’s foresight and should serve as a model for future partnerships between governments and mining companies in Africa.

The joint venture came after several years of a strained relationship between the government of Tanzania and Acacia, a company majority owned by Barrick and operating gold mines in Tanzania. President Magufuli accused Acacia of “stealing” by failing to pay proper taxes and exporting more gold than declared, and slapped the company with a USD $190bn tax bill. Protracted negotiations led to a compromise with Barrick offering a goodwill gesture to Tanzania of $300m, and establishment of Twiga Minerals as a joint venture.

Anti-smuggling measures at Mererani Tanzanite Mines declared ineffective
President Samia Suluhu Hassan noted new tactics of smuggling Tanzanite at the Mererani mines in Simanjiro District, Manyara region, and demanded security reinforcement to curb the malpractice. Previously, President Magufuli had overseen the construction of a perimeter wall surrounding the mines in an effort to reduce loses.

In her speech at the State House in Dar es Salaam on April 6, she said smugglers have now resorted to digging underground channels through which they have been sneaking Tanzanite past the 24.5km perimeter wall. As a result, she said, the stones are escaping just as before. “We have TPDF (Tanzania People’s Defence Forces) soldiers protecting the mineral site yet Tanzanite finds its way out of the fortified place,” said the President. She expressed her dismay over the trend, calling on the Ministry of Minerals to further reinforce security despite a successful installation of 24-hour surveillance CCTV cameras on the perimeter wall.

by Roger Nellist

Tanzania’s gold earnings surge
According to the Bank of Tanzania the country earned US$2.72 billion from gold exports during the twelve months ending on 31 July 2020. It was an increase of almost $1 billion over the previous year. The 52% increase meant that gold exports overtook tourism receipts as Tanzania’s number one foreign exchange earner. The principal reason for the surge in gold earnings was the higher price of gold on world commodity markets, as investors switched to gold to counter economic uncertainty arising from the Covid pandemic. In July 2020, the average price of a troy ounce of gold reached $1,846, compared with $1,732 in June and $1,531 in May. The July 2020 gold price was the highest since September 2011.

Other recent gold news
In October 2020, the recently formed Twiga Minerals Corporation declared its first dividend, of $250 million. In accordance with the respective shareholdings, $40 million of it (about TSh 100 billion) was received by Tanzania, reflecting the government’s 16% free stake. Twiga is the joint venture gold mining company established between Barrick Gold and the Tanzanian government in January 2020, following the government’s protracted dispute with Barrick’s subsidiary, Acacia Mining. It operates the three gold mines at Bulyanhulu, North Mara and Buzwagi.

In December 2020, five people in Mbeya region were suspended and arrested for allegedly smuggling 15.4 kilogrammes of gold worth TSh1.8 million. Three of the five were working at the Chunya Mineral Centre and were suspended by the Minerals Minister, Dotto Biteko. The other two were Police officers. The Director of Public Prosecutions announced that his office had acquired enough evidence to prosecute the five on six counts. Three of the five appeared in Court but the other two went missing.

LNG negotiations to resume
Just before Christmas the Tanzania Petroleum Development Corporation (TPDC) announced that it was hopeful that negotiations between Tanzania and foreign oil companies would resume in January 2021 for the Host Government Agreement (HGA) that will govern the establishment of the much-delayed Liquefied Natural Gas (LNG) project at Lindi. The HGA is a crucial project agreement and the negotiation of it has been proceeding on and off for several years. Originally, it was expected to be concluded by September 2019. However, negotiations stalled when the many companies involved – Shell, Ophir, Pavilion, Equinor and ExxonMobil – supposedly could not agree amongst themselves on important aspects of the project. Then Tanzania decided to review and renegotiate some of the terms of the Production Sharing Agreements under which those companies hold exploration and development rights in the country. In December 2020 TPDC confirmed that it was still finalising the amounts of compensation to be paid to landholders in the Lindi region where the LNG plant will be sited. Once the HGA is concluded the investors will then be able to make a Final Investment Decision. The complex LNG project is likely to cost about US$30 billion.

The use and benefits of domestic gas
TPDC also announced that between July 2004 (when Songo Songo gas was first piped to Ubungo in Dar es Salaam) and the end of 2020, the use of domestic gas had saved the country $15.6 billion (TSh 36 trillion) – by displacing expensive imported fuels. $13.2 billion of the savings was attributable to the generation of electricity for the national grid and the remaining $2.4 billion was saved by industries that elected to use domestic gas directly rather than imported fuels. TPDC explained that 48 factories are fully using gas in their operations, as well as four institutions. Moreover, about 1,000 households in Dar and Mtwara are also now powered by gas. Additionally, a modest number of vehicles (about 400) are currently powered by Compressed Natural Gas (CNG), the number being constrained by the costs of converting vehicles from petrol/diesel to CNG and by the lack of CNG refuelling stations. At the present time there is only one CNG station operating in Dar (at Ubungo). However, TPDC clarified in December that it is planning to build five more CNG stations – at Ubungo, Kibaha, the ferry/fish market, Muhimbili hospital and at the University.

In November 2020, TPDC’s Managing Director, James Matarajio, told a conference that TPDC plans to extend the use of gas by households in up-country areas like Morogoro, Dodoma, Mwanza and Tanga. He pointed to both environmental benefits and significant household energy cost savings arising from the use of domestic gas. Matarajio added that Tanzania has discovered sufficient gas resources to be able to export some to neighbouring countries after satisfying Tanzania’s domestic needs, including those of the LNG and perhaps other export-oriented projects too.

East Africa Crude Oil Pipeline (EACOP)
TPDC has confirmed that preparations are now well advanced for the construction of the Uganda–Tanzania East Africa Crude Oil Pipeline (EACOP), that will enable the oil discovered in Uganda in 2006 to be exported through Tanzania. The 898 miles long pipeline will link Uganda’s oil fields with an export terminal at the port of Tanga. About 80% of the pipeline will run through Tanzania. The project is expected to cost $3.5 billion and create more than 18,000 jobs for Tanzanians.
The two governments signed the overarching agreement for EACOP in September 2020, at a ceremony attended by Presidents Museveni and Magufuli. That was followed in October by signature of an agreement between the French oil giant, Total, and Tanzania. Total is the majority stakeholder in the Ugandan oil discoveries and is developing the pipeline project together with the China National Oil Company.

Possible fertiliser project
The Petroleum Upstream Regulatory Authority (PURA) which regulates the exploration, development and production of natural gas in Tanzania announced in mid-December 2020 that the planned $1.9 billion fertiliser project on the Mtwara coast is still on – but, significantly, the commercial terms have not yet been agreed with investors. According to PURA’s acting director general, Charles Sangweni, the main stumbling block is disagreement over the price that Tanzania’s natural gas will be sold to the fertiliser plant. Gas is the main raw material feedstock in the manufacture of fertiliser. Sangweni told the media at a workshop that the natural gas price should be at least $3 per MBTU but a German investor wants it reduced to $2.6, which would mean government having to subsidise the gas input. The plant is expected to export 70 percent of the fertiliser produced and the remaining 30 percent will be sold to Tanzanian farmers. It is unclear when the project will be realised. It had been expected to commence in 2016 through a joint venture between TPDC and foreign companies, but the partners were unable to agree on the commercial terms.

The project is reminiscent of the planned Kilwa Ammonia Company (KILAMCO) fertiliser project that this contributor advised on in the Tanzanian Ministry of Water, Energy and Minerals in the early 1980s. As a joint venture between TPDC (26%) and a large USA fertiliser company (74%), KILAMCO was to be a world-scale export-oriented project intended to earn the country much-needed foreign exchange at a time when the economy was in dire trouble. At $645 million (though subsequently downscaled to $425 million) it was to be the largest single investment ever in Tanzania. Intensive domestic and international efforts were made over several years to realise the project and by 1985 in-principle funding commitments were received from the World Bank Group, UK (CDC), Sweden, Italy, USA, Yugoslavia and China. However, by the late 1980s world fertiliser prices had softened considerably, undermining KILAMCO’s commercial viability. Moreover, TPDC was unable to raise the foreign exchange to support its equity stake and, given the magnitude of the sums involved, donors signalled that their financial support for the project would have to be fungible (reducing their commitments to other Tanzanian developmental projects). During the 1990s, the Songas gas-to-electricity project was developed as the preferred alternative use of Songo Songo gas, and began generating electricity at Ubungo in 2004.

Zanzibar’s hopes for oil and gas
Zanzibar President Ali Mohamed Shein told reporters in mid-October 2020 that the results of preliminary 2D seismic and other pre-drilling technical work undertaken to date point to the existence of geological structures with high oil and gas potential in five areas in the Pemba-Zanzibar block. The potential natural gas reserves there have been estimated at 3.8 trillion cubic feet. (For comparison, Tanzania has so far discovered coastal and offshore gas reserves of at least 57 tcf). He cautioned that it is early days yet and that more sophisticated 3D seismic needs to be acquired before any wells are drilled to confirm the possible reserves.

Editor’s Note: This is Roger’s final article as our regular contributor on Energy and Minerals, after eight years. I am confident that our readers would like to join me in thanking him for the brilliant way he has handled this important, sensitive and complex subject. Asante Roger, and best wishes for the future. Ben