ENERGY & MINERALS

by Ben Taylor

Equinor, Shell and Exxon agree major LNG project with Tanzanian authorities
The Government of Tanzania has agreed a deal with three companies – Equinor, Shell and Exxon Mobil – for the development of a liquefied natural gas (LNG) export terminal. The agreement is a milestone for the long-delayed project to unlock Tanzania’s vast but remote offshore gas resources, which the companies involved have said is expected to cost tens of billions of dollars. Experts put the likely cost at around US $42billon (£34bn).

The deal includes the main elements of a host government agreement to provide a regulatory framework and a production-sharing agreement and is subject to legal reviews and quality assurance before an expected signing in the coming weeks, Norway’s Equinor said.

“It paves the way for the series of milestones that need to follow to realise this fantastic LNG opportunity for the country and the world,” Equinor’s Tanzania country manager Unni Fjaer said in a statement.

“We are happy it is a big step towards the implementation of the project, although we have a lot to do,” said Tanzania’s chief negotiator Charles Sangweni. “If everything goes well as planned, I am confident that the final investment decision will be reached in 2025,” he told Reuters.

Equinor and Shell are joint operators of the development while Exxon, Pavilion Energy, Medco Energi and Tanzania’s national oil company TPDC are partners. Shell operates Tanzania’s Block 1 and Block 4, which hold 16 trillion cubic feet in estimated recoverable gas. Norwegian oil and gas producer Equinor operates Block 2, in which ExxonMobil holds a stake and which is estimated to hold more than 20 trillion cubic feet of gas.

Project-specific law in preparation
A few days after the deal was signed, Energy Minister, January Makamba, told Parliament that the government is preparing a project-specific law on the proposed Liquefied Natural Gas (LNG). A project-specific law gives investors preferential legal protections, boosting their confidence to invest.

“Madam Speaker, this law will be brought to the parliament for the first reading anytime from now,” Mr Makamba said, who called the finalisation of talks with the energy companies on the project “a historic milestone.”

Mr Makamba said that on top of the special project law, the government also plans to establish a special office for the highly anticipated project that authorities expect to unlock Tanzania’s vast offshore gas resources.

Dastan Kweka, a prominent analyst and commentator on oil and gas issues, said that the development was expected considering Tanzania’s recent relations with investors. “During the previous administration, Tanzania enacted several laws described as unfriendly to investors. There are also risks emanating from the change of administrations because every administration comes with its philosophy and priorities,” Mr Kweka noted.

In 2017, Tanzania passed laws allowing it to force mining and energy companies to renegotiate their contracts, which observers predicted would complicate its gas exploration plans.

“Project-specific laws help investors avoid these risks,” added Mr Kweka. “It gives them more certainty and protection. They most likely demanded the legislation as part of the conditions to invest in the project.”
Whether or not Tanzania will benefit from it will depend on how authorities handle it, he said, urging caution while developing the legislation.

“It is a law that if we had options as a nation, we would not accept,” he explained. “But because we have no option, whether Tanzania benefits or not will depend on how our government negotiates the terms with the investors.”

However, an expert working with one of the companies involved told The Chanzo online newspaper that there is no cause for concern.

“No one would invest US$43 billion without protective measures that the Parliament supports,” said the expert, who preferred to remain anonymous. “Project law is a mechanism that protects the investment.”

IMF: the project’s potential is transformative
Earlier in the year, the International Monetary Fund (IMF) published a paper on the macroeconomic implications of the project, concluding that “the project has the potential to transform the Tanzanian economy,” but that this will require “proper institutional and policy frameworks for the effective management of gas revenues”.

“In addition to the direct impacts of the LNG investment and gas production on economic activity,” said the paper, “the revenue generated from LNG exports could enable the Tanzanian government to invest on highly needed human capital and infrastructure, thereby raising the potential of the economy and lifting millions of Tanzanians out of poverty.”

“International experience shows that a balanced saving and investment approach that scales up public investment gradually, taking into account absorptive capacity, efficiency of public investment, volatility of revenues, and exhaustibility of gas reserves would serve Tanzania better than either saving or aggressively scaling up public investments.”

“While preparations towards project implementation progress, the Tanzanian authorities should start developing a policy framework for effective management of gas revenues. The first step would be having a comprehensive understanding of the macroeconomic implications of the project. … Meanwhile, improving the efficiency and effectiveness of public investments can help Tanzania prepare for a productive utilisation of upcoming gas revenues.”

LNG and the climate crisis
Despite being a fossil fuel, LNG is frequently cited as being compatible with the Paris Agreement. This is because some adoption of LNG (the ideal percentage is not agreed) would allegedly facilitate the Paris Agreement goal to limit global warming to 1.5°C above preindustrial levels. LNG would help countries reduce their emissions, as LNG emits less carbon than coal and oil, and could help bridge the period while advances and investments are made in the world of renewable energy. As a result, it is sometimes called a “transition fuel” or “bridge fuel.”

Further, Tanzania’s moral right to profit economically from her fossil fuel reserves is strong. The country’s contributions to global carbon dioxide emissions have always been tiny, and the argument is compelling that those who caused the problem should bear the cost of solving it. Furthermore, the benefits of LNG extraction for countries at lower levels of development, such as Tanzania, could include – as the IMF indicates – massive poverty reduction.

Nevertheless, LNG remains controversial, for various reasons. First, LNG emits large quantities of methane, a potent greenhouse gas, making it less preferrable from an emissions reduction perspective than originally thought. Second, LNG investment diverts finance not only from dirtier fossil fuels, but also from renewable energy. And third, new investments in LNG risk the entrenchment of further fossil fuel-based infrastructure, with stranded assets that will be rendered obsolete as decarbonisation proceeds worldwide, particularly as LNG facilities are extremely difficult to repurpose for cleaner fuels like hydrogen.

Alejandra Padín-Dujon, an analyst at Colombia University in New York, said the project was an “ecologically and politically risky bet”, given declining demand for LNG in Europe and global decarbonisation efforts.
“In a world that is rapidly moving toward decarbonisation,” she wrote on a blog for the London School of Economics (LSE), “investing in LNG may never pay off: by the time new facilities are up and running, global markets may not only have turned away from LNG (limiting demand and leading to stranded assets), but may actively penalise countries that rely on it.” (Reuters, The Chanzo, The Citizen, IMF, LSE)

Solar-power plants under construction on mainland and Zanzibar
Mainland Tanzania and Zanzibar have each initiated groundbreaking solar-power plants. The projects respectively represent the first grid-linked solar power generation project on the mainland and a major step towards reducing dependence on under-sea power cables for Zanzibar.

On the mainland, Tanzania has awarded China’s Sinohydro Corporation as the construction contractor for the country’s first-ever solar photovoltaic power station to feed into the national electricity grid.

The Tanzania Electricity Supply Company (TANESCO) signed the contract for the plant’s first phase of 50 MW capacity, in the presence of the Minister of Energy, January Makamba.

The project is part of a TSh 275 billion (£89m) 150 MW solar power initiative in Kishapu district, Shinyanga region. The power station will connect to the national grid through a 220 kV transmission line from Singida to Shinyanga.

TANESCO picked JV Artelia from France and Energiovida from Tanzania as consulting contractors. The estimated cost for the first phase is TSh 109 billion, the works are expected to start in mid-2023 and be completed within 12 months.

Mr. Makamba acknowledged at the signing ceremony that this marks the first introduction of solar electricity into the national grid of Tanzania. He commended the French Development Agency (AFD), which has provided a loan for the project’s implementation.

Tanzania is developing a new Renewable Energy Policy to further enhance investments in renewable energy, which will capitalise on the substantial financial resources, capital markets, and advancements in new technologies dedicated to renewable energy globally, Makamba said. He also announced ongoing efforts to identify areas with renewable energy resources and prioritise native investments in wind and solar projects. The Tanzanian government, Mr. Makamba said, will provide support in this regard and establish guidelines for project implementation.

Meanwhile, the government of semi-autonomous Zanzibar has signed an agreement with Mauritius-based Generation Capital Ltd and Tanzania’s Taifa Energy to build its first large-scale solar power plant, as it seeks to become energy independent. The plant will cost $140 million (£113m).

The Power Purchase Agreement (PPA) between the state-owned Zanzibar Electricity Corporation (Zeco) and the two companies to develop the 180MW plant will be implemented in phases, according to Zanzibar’s Ministry of Energy and Minerals.

“The project will be built in phases and will commence with the expedited construction of a 30 MW solar PV power plant at Bambi, Central District in South Unguja Region, that will be completed in 2024,” Joseph Kilangi, the Permanent Secretary at the Ministry of Energy and Minerals, said in a statement.

Zanzibar currently gets electricity through a 100 MW under-sea cable from mainland Tanzania, but now wants to generate its own energy as it pursues the development of its tourism sector. The province is betting on clean energy to help achieve that ambition.

In March this year, the government of Zanzibar committed to supply approximately 200 acres of land for the Zanzibar Clean and Renewable Energy Park Project, for instance. The project, to be developed by Astra Energy Inc, will generate 50MW of clean and renewable energy, largely driven by solar.

ENERGY & MINERALS

by Ben Taylor
Controversial oil pipeline gets government approval
The government of Tanzania gave formal approval in February for the construction of the USD $3.5bn East African Crude Oil Pipeline (EACOP), despite human rights and environmental concerns around the project. This followed official approval for the project from the Ugandan government in January.

The 900-mile pipeline will transport crude from oilfields in Lake Albert in north-western Uganda to the port of Tanga on the Indian Ocean, passing not far from Singida and Kondoa [see TA 128]. The pipe will be 600mm diameter steel with heating to improve the fluidity of the oil, and will require a 30m wide corridor over the entire route (Eacop.com). The $10 billion oilfield and pipeline project is being jointly developed by France’s TotalEnergies, the China National Offshore Oil Corporation (CNOOC) and the state oil companies of Uganda and Tanzania. The first oil is expected to flow in 2025.

“This construction approval marks another step forward to EACOP as it allows commencement of the main construction activities in Tanzania, upon completion of the ongoing land access process,” said EACOP Tanzania general manager Wendy Brown.

The project has been hailed by some as an economic boon for both countries, though it has run into strong opposition from human rights and environmental campaigners, who say it threatens the region’s fragile ecosystem and the livelihoods of tens of thousands of people.

Tanzania’s Energy Minister, January Makamba, dismissed the environmental and rights concerns as “propaganda”, and said that all environmental, safety and human rights standards have been complied with. “We are proud of the pipeline because it will increase Tanzania’s influence in the world,” he added.

Map showing pipeline route


The oil originates in two oilfields on Lake Albert. Drilling began in January at the Kingfisher field on the south-eastern edge of the lake, operated by CNOOC, while the second field on the lake’s northern shore is being developed by TotalEnergies. This second field, known as Tilenga, extends into Uganda’s largest national park, Murchison Falls. At least 100 oil wells are reported to have been drilled inside the reserve.

There are an estimated 6.5 billion barrels of crude oil under the lake, of which a little over 20% is thought to be recoverable. The reserves are expected to last up to 30 years, with production peaking at 230,000 barrels a day. This would be sufficient to make Uganda the fourth-largest hydrocarbon producer in sub-Saharan Africa.

The pipeline has been controversial for the potential damage it could do to the environment and to people’s lives and livelihoods along the route. Fishers on Lake Albert are already seeing pollution on the lake, and one-third of EACOP will pass through the Lake Victoria watershed, on which an estimated 40 million people depend for their livelihood. “A leak along the pipeline could be a cataclysm,” said Hilda Flavia Nakabuye, a Ugandan activist, and “once consumed, the oil extracted will emit nearly 34m tonnes of CO2 a year, six times the emissions of Uganda”.

TotalEnergies is being sued in France by a group of NGOs for allegedly failing to comply with the country’s 2017 duty-of-care law. The NGOs are asking the Paris court to suspend TotalEnergies’ Ugandan projects, claiming the company is in breach of their legal obligation to identify and prevent human rights and environmental abuses resulting from its own activities or those of its subcontractors.

Civil society organisations in Uganda have also fought against the project, but have met with stiff resistance from the authorities. According to reports, the army now has a regular presence across the oil-producing region, journalists have been persecuted and human rights activists hindered in their work. Dickens Kamugisha of the Africa Institute for Energy Governance, a small NGO, explained that “the government passed a law in 2016 designed to hinder the activity of NGOs. The aim is to muzzle civil society”. Another activist, Maxwell Atuhura, is among those to have been arrested over EACOP. “The more I informed people, the more I was being watched,” he said. “It started with tailing, then negative blurb about me on the local radio, and finally an arrest in May 2021. I spent two nights in jail. The police confiscated all my equipment and threatened me, telling me that I was risking my life to continue my work.” (The Nation, The Guardian)

President Samia calls for attention on Africa in the energy transition
President Samia Suluhu Hassan has called for western governments and companies to focus on the needs of African countries when acting to address climate change and steering the global energy transition. She made the call in Davos, Switzerland, in January, on the sidelines of the annual World Economic Forum (WEF).

President Samia said it was high time developed countries in Europe and America put focus on producing energy from Africa, and that resources in Africa could help smooth the energy transition. “Africa could be another source of energy,” she said. “When it comes to green energy, we have almost everything ranging from nickel, cobalt and copper.”

She also reached out to private sector in developed countries to provide funding for Africa to enable the continent to produce more energy from natural gas. “It is true that we need energy transition but this should take some time, we also need funding to embark on energy transition,” Dr Samia appealed. She noted that there is high demand for energy in the African continent amid the fourth industrial revolution which is taking place across the globe.

Further, the President urged African countries to put more efforts in strengthening regional power pools such as East African and Southern Africa power pools, saying not enough has been done. “If we create these power pools there will be no problems of shortage of energy because whoever who will be having a crisis will be served by the regional power pools,” she remarked.

She reminded leaders during the discussion that the energy transition is a global problem which requires global solutions. “There is a need for a multilateral approach in addressing the challenge,” she said, and expressed her concerns that many developed countries are formulating energy strategy unilaterally rather than engaging developing countries.

Speaking late in 2022 at the United Nations Climate Change Conference (COP27) in Egypt, President Samia said Tanzania is taking a number of initiatives aimed at mitigating the impacts of climate change for sustainable development.

She said the government has adopted a national climate change response strategy and contribution with a target of reducing greenhouse gas emissions between 30 to 35 per cent by the year 2030. This includes continuing to construct and expand rapid transport networks. She explained that these are expected to reduce more than 900 million tonnes of carbon emissions each year. (Daily News)

Agreement reached for new hydropower project in Kagera

Map showing location of the Katona Dam (background openstreetmap.org)

The government of Tanzania, the African Development Bank (AfDB), and the French Development Agency (AFD) have signed agreements for two development project loans worth a total of $300 million to finance the construction of the 88MW Kakono Hydropower Plant in Kagera region. The project also received a grant of 36 million Euros from the European Union (EU).

The project, to be implemented by the Electric Supply Company (TANESCO), will reportedly reduce greenhouse gas emissions by an estimated 216,065 metric tons per year and comply with highest international environmental and social standards. The government expects that the project will serve four million people and increase the service coverage rate by around 7% of the population.

Alongside the construction of the new hydropower plant, associated infrastructure will be built, including upgrading the existing Kyaka substation and a new 39-kilometre 220-kilovolt transmission line and capacity building support for TANESCO.

The French Ambassador to Tanzania Nabil Hajlaoui said: “We have heard President Samia Suluhu’s message. She aims to generate 5GW of electricity by 2025. France is ready to be part of this journey by investing in power generation and transmission projects to meet the rapidly growing electricity demand while reducing the carbon intensity of its energy mix.”

The concrete dam will be 51m in height above the river bed, creating a reservoir which will extend about 28km upstream of the dam, with a width of around 1.5km at the widest point. (AfDB)

Deals agreed with three Australian mining firms

Map showing the locations of the three recently announced projects.

President Samia Suluhu Hassan in April witnessed the signing of deals worth US$600 million with three different Australian companies as Tanzania seeks to gain more from its vast wealth of minerals.

During a function at the State House in Dodoma, the President witnessed her administration closing deals with Evolution Energy Minerals Limited, EcoGraf Limited and Peak Rare Earth Limited.

With EcoGraf Limited, Tanzania agreed to the development and operation of the Epanko Graphite Project in Morogoro. An initial investment worth US$127.7 million will be made. With Peak Rare Earths Limited, the government agreed to the development of the Ngualla Rare Earth Project with an initial investment of US$439 million. With Evolution Energy Minerals Limited, the Samia Administration agreed to the development of the Chilalo Graphite Project in Lindi with an initial investment worth US$100 million.

ENERGY & MINERALS

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.

HYDROPOWER & ENERGY

by Dr Hildebrand Shayo

Julius Nyerere Hydropower Plant (formerly known as Stiegler’s Gorge) near completion (Photo Elsewedy Electric)

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.

ENERGY & MINERALS

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.

ENERGY & MINERALS

by Ben Taylor

Natural Gas processing back on track?
The prospect of a liquified natural gas (LNG) project is back on the rails after stalling for years. Negotiations for its actualisation formally kicked off in January after inking of a crucial agreement.

Minister for Energy, Mr January Makamba, said the project would require an investment of a staggering TSh 70 trillion (USD $30bn).

The Minister was speaking after an agreement was signed between the Tanzania Petroleum Development Corporation (TPDC), on behalf of the Tanzania government, and Baker Botts LLP as a transaction advisor to the government. The signing at Gran Melia Hotel followed two days of talks between the UK-based legal firm and senior government officials.

The minister said it was the scale of the project that led the government to conclude that international expertise was needed, and thus to look for external consultants to lead the discussions. The search commenced through an international tender which, he said, was won by Baker Botts (UK) LLP, who will work in partnership with Tanzanian law firm, Apex Attorneys.

“We hope with this agreement, the road is cleared for realisation of the project,” he told journalists.

Tanzania has an estimated 57 trillion cubic feet (tcf) of natural gas reserves, mostly off shore, in Lindi Region. Of this, 43 tcf are recoverable while 23-25 tcf qualify for commercial exploitation.

According to Makamba, discussions between the government and other partners are expected to last until the middle of this year. “Thereafter, an agreement will be signed. This will give a timeframe for the imple­mentation of the project and the like”, he said.

Mr Makamba said the government was keen to see the take-off of the project so that the economy can benefit from the huge gas resources. If completed, the massive project would supply liquified gas for the households and for the export market.

A lead partner with Baker Botts (UK) LLP Hamish McArdo said he was optimistic on the swift conclusion of key issues in the project. He said his London-based firm was experienced in upstream oil and gas projects, especially in legal, technical and commercialisation aspects.

The decision to appoint a foreign firm for this work has attracted some criticism from pundits. They noted that other agreements, including that with Barrick Gold were concluded by Tanzanian legal experts, led by former Constitution and Legal Affairs Minister Palamagamba Kabudi.

In response, Mr Makamba explained that what was being sought was not legal advice but rather a consultant in LNG discussions who had the necessary ability and experience.

“If you look at the terms of reference, there are four types of skills needed. They are financial, commercial, technical and legal. This is the expertise that TPDC was looking for in a process that ended yesterday and which started in 2018,” he said.

“Globally, for discussions like this, countries that have never imple­mented a project like the LNG always look for additional expertise to advise them in the negotiating process. The country has its own position on what it wants to achieve in the project and then the firm supports this,” he said. He added that Tanzania had regulations that compel a foreign company to strike partnerships deals with a local firm, noting that that was why Baker Botts will work in partnership with Apex Attorneys.
The executive director of HakiRasilimali, which strives for indigenous participation in natural resources projects, Ms Racheal Chagonja, said there was no problem with the firm being offered the job. Nevertheless, she stressed the need for transparency in all processes.

“The experience we have had in negotiating mining contracts since 2017 is that they were shrouded in secrecy. Things need to be different as we now negotiate natural gas deals,” she said.

Kabanga Nickel prospects looking strong
The Kabanga Nickel Project has secured a $100 million investment from the world’s biggest mining company, BHP, of which it has allocated $10 million to acquire the hydromet tech to ensure that finished Class 1 battery grade nickel, copper and cobalt will be produced in the country. This was according to Kabanga Nickel’s Chief Executive Officer, Chris Showalter, in an extensive interview with The Citizen newspaper.

Globally, demand for nickel is projected to rise sharply in coming years, due to its importance to the battery technology used by electric vehicles.

“We are very pleased BHP decided to invest in Kabanga,” he said. “To recap the investment, an initial $40 million will be invested into Kabanga together with $10 million into Lifezone – the technology com­pany owner of the hydromet refining technology to be applied at the project.”

With an additional $50 million planned, BHP’s share in Kabanga Nickel will reach 17.8%, valuing the project at $658 million. This is the first new investment by BHP in Africa in years. “This investment secures access to a world class nickel sulphide resource and is aligned with BHP’s strategy to capture opportunities in future-facing commodities,” said a BHP spokesperson.

Showalter also explained that Kabanga Nickel had been moving fast since taking over the project in January 2021, working with the govern­ment to ensure that they have all the right mining and refining licences and the proper environmental permits, and working with the commu­nity to agree their needs, to agree resettlement proposals where neces­sary and to create the right community initiatives to ensure local people also derive benefits from the project.

Showalter talked up the environmental credentials of the nickel they will produce in Tanzania. “Nickel from Kabanga will be refined using hydrometallugy, rather than smelting,” he said, “which reduces emis­sions by around 80 percent. It will also be refined in Tanzania rather than being shipped around the world, reducing emissions further.”

He said this will increase demand for Tanzanian Nickel, because car and battery makers are under pressure to reduce carbon emissions both in their own operations as well as their supply chains. As a result, “they are likely to prefer our nickel than that produced by dirtier methods in places like Russia.”

Asked when the operation would start to produce, Showalter said that they expect mining to commence in 2025. He added that they will be updating the development plans over the next 12-18 months, which will firm up their timeline.

Renewable Energy Potential
Assessments of the potential for generating electricity from renewable sources – wind and solar – in Tanzania have concluded that the poten­tial is very high.

According to the World Bank, Tanzania has a solar energy potential greater than that of Spain and wind energy potential greater than that of the US State of California. With such great potential for solar and wind energy resources, Tanzania is naturally appropriate for producing solar and wind energy as a feasible alternative source for modern energy sup­ply from the national grid.

The Ministry of Energy (MoE) in collaboration with Tanzania Electric Supply Company Limited (Tanesco) and Rural Energy Agency (REA) under the support from DANIDA and SIDA conducted wind energy resource assessments. Among other areas with potential, the assessment identified that Makambako in Njombe region and Singida have suf­ficient wind speed for significant grid-scale electricity generation with an average wind speed of 8.9 m/s to 9.9 m/s.

Solar energy resources with high potential are widespread across the country, but particularly in Dodoma, Singida and Shinyanga regions. High solar energy levels are ranging from 2,800 to 3,500 hours of sun­shine per year.

Given the rapidly rising cost of fossil fuels, the rapid fall in the cost of renewable energy and the global urgent need to reduce emissions of carbon dioxide, these opportunities are likely to play a major role in Tanzania’s future power generation strategies.

ENERGY & MINERALS

by Ben Taylor

Kabanga Nickel mine approved
A potentially lucrative new nickel mine has been approved at Kabanga, in Ngara Distrist in north-west Tanzania. The Ministry of Minerals in October awarded a mining licence for the project to Tembo Nickel Corporation Limited (TNCL). After a two-year construction phase, commissioning is expected to start at the end of 2024. The overall capital cost estimate for Kabanga (including a 20% contingency for overruns) is USD $1.3 billion.

Minerals minister Doto Biteko said the feasibility report showed total deposits of 58 million tonnes of nickel ore.

“The mining operations are expected to be conducted by underground mining method whereby production is expected to reach an average of 600,000 tonnes of ore per annum in the first five years, and later to 2.2 million tonnes per annum,” he said.

Operating at full capacity, and assuming the resource proves to be as productive as expected, the mine has the potential to become the world’s third largest nickel mine.

The concentrates produced from the mine will be transported to refinery which is to be built in Kahama District. This will include an estimated 33,000 tonnes of nickel per year, and smaller amounts of copper and cobalt. The inclusion of an in-country refinery is seen as key to ensuring the project won government approval. The plan is to process the metals in a refining process that uses less electricity and has a reduced carbon footprint.

The government expects to collect an estimated $7.5 billion (TSh 17.2 trillion) through various fees and taxes over the mine’s 33-year anticipated lifespan. In addition, the government expects the mine and refinery to directly provide over 1,000 jobs.

TNCL is majority-owned by Kabanga Nickel Ltd, a UK-based mining firm, with the government of Tanzania holding a free-carried 16% stake. In a parallel deal with Barrick Gold and Glencore, the previous owners of the project, Kabanga Nickel acquired all data and information relating to the previous mineral resource estimation, all metallurgical test work and piloting data, analyses and studies, including a comprehensive draft feasibility study report produced in 2014 and subsequent updates. Barrick and Glencore lost their licence to develop the site in 2018 when new mining laws were introduced.

Kabanga Nickel describes the site as “the largest development-ready nickel sulphide deposit in the world, unmatched in scale and grade, with at least 30 years life of mine and further exploration upside. An extensive amount of exploration and resource definition has been completed to date, setting the Kabanga nickel project on a well-defined path to production.”

Chris Showalter, CEO of Kabanga Nickel described the issue of the licence as “a clear vote of confidence for the Project and team by our partners in the Government of Tanzania”. He acknowledged their support and as they move the project forward, and noted that development activities currently underway at the Kabanga Nickel Project can now accelerate in scale.

Kabanga will play a major role in accelerating the supply of much needed battery metals, essential for the global transition to a low carbon economy. The project will produce Class 1 nickel and cobalt products – two of the key elements used in lithium-ion batteries for electric vehicles (EVs) – and copper. The World Economic Forum has estimated that demand for high-purity nickel for EV battery production “will increase by a factor of 24 in 2030 compared to 2018 levels”.

Nevertheless, environment concerns remain significant. The US Environmental Protection Agency considers hardrock mining – such as this project – the top polluting industry in the US, and there is a long history of toxic emission problems at such operations around the world.

With this and the carbon emissions of mining in mind, Kabanga Nickel argue that the project will have a substantially lower environmental impact than most nickel mining. “Kabanga’s hydromet process is a game-changer,” says the company. “Traditionally, nickel sulphide deposits require smelting for beneficiation, which has a significantly greater environmental impact. Kabanga will be different, delivering Class 1 nickel on a sustainable basis.” They add that as a complete cradle-to-gate nickel operation, “refined metals will be produced in-country without smelting or the transportation of large volumes of concentrate over long, intercontinental distances,” reducing carbon emissions as a result.

Key to this is the adoption of an unusual, but more efficient refining process that replaces tradition energy-intensive smelting with “hydromet”, or hydrometallurgy – the use of water-based, solutions to extract metals – which has less than half the carbon footprint of smelting.

The nickel resource in Kabanga was discovered almost 50 years ago in the northwest corner of Tanzania, and has been the subject of repeated exploration programmes and feasibility studies by some of the world’s leading mining companies. Anglo American, BHP, Glencore and Barrick have collectively invested hundreds of millions of dollars in drilling and project analysis. It has never previously proved viable to exploit the resource, due primarily to its remote location. A combination of rising nickel demand – prices have more than doubled since 2016 – and more efficient technology for refining the ore have changed this calculation.

Tesla CEO, Elon Musk, has asked companies to “please mine more nickel.”

“I would emphatically say we are very much positioned to start delivering to Mr. Musk and all other strategic battery EVs,” said Kabanga Nickel CEO Chris Showalter.

Gold mining
The later months of 2021 saw several significant developments in Tanzania’s gold mining sector, some of which continue to reflect the major shake-up of the industry under President Magufuli (see previous issues of Tanzanian Affairs).

First, Minerals Minister Doto Biseko announced that negotiations were progressing well for a new large scale gold project was expected at Nyanzaga in Mwanza region. Under the project, the Australian mining firm OreCorp is expected to invest around USD $500m.

Previously the project had been a joint venture between Acacia and OreCorp, but Acacia sold it’s stake to the Australian firm in 2018. Acacia and its parent company, Barrick Gold, has in recent years been involved in a fierce dispute with the Tanzanian government over tax liabilities, and while the specific dispute appears to have been largely resolved, Acacia and Barrick have been scaling back some of their involvement in other projects in Tanzania – including Nyangaza as well as the Kabanga Nickel project (see above).

The second development also involves Barrick Gold, in the form of their joint venture with the Tanzanian government, Twiga Minerals Corporation. In this case, Barrick expanded their investments in Tanzania by acquiring six new prospecting licenses for their Bulyanhulu Gold Mine, again in Mwanza region.

Barrick’s chief executive Mark Bristow said the acquisition was a “significant step” for the company.

At the same mine, Barrick also commissioned a new laboratory for testing minerals that speeds up the pace at which testing can be done. The laboratory can also process 1,000 samples in one day, compared to one sample per 12 hours previously, boosting the company exploration efforts by enabling rapid turnaround of critical operational information. The lab also gives more accurate analysis of gold, silver and other elements.

Barrick also updated its third quarter performance in which Mr Bristow said both Bulyanhulu and North Mara mines were set to meet their 2021 production targets as well as to replace depleted reserves through brownfields exploration.

Finally, the Tanzania Revenue Authority (TRA) won its case at the Court of Appeal against Geita Gold Mine (GGM) relating to VAT payments on fuel supplied to contractors. The case dated back more than ten years, and saw GGM given a tax bill for TSh 6bn.

GGM’s first attempt to fault TRA’s tax bill suffered a loss at the Tax Revenue Appeals Board (TRAB) which sided with TRA and dismissed the tax case. The company’s second approach was to challenge the TRAB decision was at the Tax Revenue Appeals Tribunal (TRAT), which decided again in favour of TRA in 2012. Dissatisfied with the TRAT, GGM took the case to the Court of Appeal in Dodoma to challenge the decision. In November 2021, the Court of Appeal came down against GGM.

Energy strategy
Unpredictable rainfall and high demand for electric power have plagued Tanzanian consumers – both domestic and business – for many years. Power rationing was introduced by Tanesco once again in November 2021 after what they described as a shortfall of 345 MW at hydropower generation stations due to drought.

In response, the business community called on the government to find a lasting solution to power woes, including stopping rationing electricity in industrial areas during production peak hours.

Confederation of Tanzania Industries (CTI) advocacy and policy director Akida Mnyenyelwa said industrial areas needed a very stable power if manufactures were to operate at full capacity. Otherwise, he cautioned, the use of standby generators was not economically viable due to high running costs. “The scarcity of electricity linked to hydroelectric power generation poses a lot of woes to investors because we depend on the power that is not sustainable,” said Coca-Cola managing director Unguu Sulay.

“We have to refocus our attention away from hydroelectricity towards solar, wind and or natural gas,” recommended Mr Sulay.

Zitto Kabwe, leader of opposition party ACT-Wazalendo, said there were legal obstacles preventing effective power generation in Tanzania. He noted that Tanzania’s power system masterplan and its subsequent updates sufficiently prescribe national energy supply strategies, but that implementation had been suspended since 2016. The consequence, he said, was that “lined up investments such as those targeting gas exploration, investment in renewable energy and so on, weren’t fulfilled.” According to him, one of the immediate solutions to the power conundrum would be the implementation of the power system masterplan.

Earlier, the newly appointed Energy Minister, January Makamba, highlighted ten focus areas for his new portfolio to strengthen the sector. He promised reform to the leadership and management of Tanesco and the Tanzania Petroleum Development Corporation (TPDC). He promised also to revive the long-stalled negotiations over a proposed Liquid Natural Gas (LNG) processing plant in Lindi.

The Minister said the government will focus on improving cooking energy as 70% of people use forest products and other biomass which are not sustainable for development. He also said the government would look at affordable and reliable energy from the private sector through independent power producers and focus on the renewables and go big now that tech allows stability of production. “There needs to be proper decision making. Tanzania is blessed with multiple energy resources (wind, solar etc). Tanzania can become an energy powerhouse,” he said.
Looming over all these debates is the hydroelectric power plant currently under construction at Stiegler’s Gorge. The controversial dam – a pet project of the late President Magufuli – is designed to have the capacity to supply 2,115 MW to the national electricity grid, a massive increase on the total national generation capacity of 1,600 MW in 2020. The dam will not have this capacity until at least 2027, however, though the first turbine could come online in June 2022, supplying up to 235 MW of power.

ENERGY & MINERALS

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.

The Julius Nyerere Hydropower project construction site on the occasion of a visit in August by Medard Kalemani, the Tanzanian Minister of Energy, accompanied by Assem Gazzer, his Egyptian counterpart.


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.

WHO LENT HIS NAME TO STIEGLER’S GORGE?

by Rolf D. Baldus

Stiegler in camp (Source: Günter Kraus / Rolf D. Baldus)

A Gorge in Africa’s oldest and largest protected Area
The Tanzanian Government is building a large hydroelectric dam at a place called “Stiegler’s Gorge” in Southern Tanzania, where the mighty Rufiji river thunders through a narrow 100m deep gorge and over several kilometres of rapids. To the north is the newly proclaimed Nyerere National Park, while to the south lies the famous Selous Game Reserve, declared a UNESCO World Heritage Site in 1982 – a status that may be imperilled by the hydropower project. The man after whom the gorge was named – “Stiegler” – remained a mystery until recently.

Franz Stiegler goes to Africa
It was generally assumed that Stiegler had been a Swiss engineer who, at the beginning of the last century, examined the possibilities of constructing a bridge or a dam across the gorge and that he was killed by an elephant while hunting close to the gorge. Information from relatives of the man and some further research, however, has now shed light on this mysterious person and the events leading to his death.

Franz Stiegler was born in a village called Dießen on the Ammersee in Southern Germany around 1878. He became a civil engineer and emigrated to German East Africa in 1905 or in early 1906.

In 1905 the German colonial Government had started to construct the “Tanganyika Railway” (Central Line), which was to connect Dar es Salaam with Lake Tanganyika. Young Stiegler was employed as a surveyor starting in February 1907.

Map showing Franz Stiegler’s route in 1907/08 – Rolf D. Baldus

Later in that year he became the leader of the Rufiji Expedition. In July 1907 he camped at the Pangani Rapids on the Rufiji River – the place which now bears his name. On July 13th, 1907 he wrote in a card to his sister that a lion had attacked the camp and severely injured one of his African staff. Notwithstanding, he concludes: “It is a very nice trip.”

The expedition was to explore the river and the surrounding lands, conduct trigonometric and hydrological surveys, in particular take measurements of water flow and water levels. The colonial administration wanted to appraise the navigability of the Rufiji and the Kilombero (Ulanga) rivers. The viability of connecting Boma Ulanga (southern Kilombero Valley) by railway with the Central Line and with the lower Rufiji was another question.

On December 12th 1907 Stiegler camped at the Shuguli Falls, a very scenic spot where the Kilombero flows over a kilometre or so through a myriad of falls, ponds and ravines. He writes from there to his sister that he will continue from the falls up the Kilombero River to Boma Ulanga. Then he would unfortunately have to return to work on the railway again.

Stiegler was assisted by several local employees and at times by the German survey technician R. Pelz, who will later write in an obituary that Stiegler was “an example of a distinguished and fair-minded superior.”

Franz Stiegler came from a family of hunters, and he used the opportunities that the game-rich land offered, to hunt, not least to feed his party. He bought hunting licences, as his name can be found in the lists of licence-holders which were published every year in Official Gazette for German East Africa.

A deadly encounter with an elephant
On February 17, 1908, Stiegler camped 8 km away from Mberera Mountain. He was most probably on the way back to Morogoro. His local companions narrated later that he went hunting and wounded an elephant. The Deutsch Ostafrikanische Zeitung of April 11, 1908, gives this account: “The elephant … immediately attacked and flung a black man aside. Stiegler also jumped aside, but probably not fast enough, for he was seized by the elephant and hurled into the air. Death was instantaneous.” The body was taken to “Lugongeka’s village” the next morning and buried there. This village can be found on a German map of the time. From Shuguli it is 20 km up the Kilombero river on the south bank.

The place where Franz Stiegler met his fate is about 100 km direct distance south-west and upriver of the gorge which was later named after him.

The German and later the British colonial Governments continued to call the place Pangani Rapids. We find the term Stiegler’s Gorge first mentioned in the 1950´s. A tourist map of around 1970 uses the term too in connection with a lodge that seems to have existed on the high ground over the rapids. It remains a mystery who named the Gorge after Franz Stiegler and when.

The author wishes to acknowledge the contribution of Günter Kraus, a relative of Franz Stiegler, who provided indispensable information and to Mike Shand (University of Glasgow) for his assistance with the mapping.

Bibliography:
Baldus, Rolf D. (Ed.): Wild Heart of Africa. The Selous Game Reserve in Tanzania. Johannesburg 2009.
Baldus, Rolf D. (2021) The End of the Game, in: Sports Afield, No.1 and http://www.wildlife-baldus.com/selous_game.html

ENERGY & MINERALS

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.