How would you describe the current environment for foreign energy companies trying to operate in Tanzania?

Tanzania presents an attractive investment opportunity for foreign energy companies due to its relatively unexplored and underdeveloped region with significant petroleum potential. The country’s fast-growing economy and strategic location as an economic gateway to Southern and Central Africa further enhance its appeal. Additionally, Tanzania stands out as a stable country in a region that has experienced instability in the past. However, operating in Tanzania can be challenging, particularly in navigating complex processes for negotiating with the government and local partners, obtaining permits and approvals, managing commercial and taxation issues, and maintaining positive stakeholder relations during project operations. A recent challenge has been TANESCO’s payment issues to private energy suppliers, which the government aims to address through power sector restructuring and commercialization. The policy environment for petroleum exploration and development is still being defined, which adds uncertainty to investment projections. The forthcoming Gas Act is expected to provide clarity on the gas industry’s structure, but stakeholders may have competing interests that need to be balanced in the legislation.

How confident are you that the Gas Act, currently in its draft stage, will address most of the sector’s major framework concerns?

It is difficult to predict the precise impact of the Gas Act without comprehensive discussions among stakeholders. Different parties will advocate for their interests, leading to competing sub-interests. Striking a balance that satisfies all stakeholders is a challenging task, as complete satisfaction may be unattainable. The goal is to develop legislation that enables optimal and efficient gas industry development within the boundaries set by natural gas policy. Once the Gas Act is implemented, unforeseen issues may arise, necessitating amendments or new regulations to address them.

How would you characterize PanAfrican Energy’s (PAE’s) role in the NNGIP?

PanAfrican Energy’s role in the New Natural Gas Infrastructure Project (NNGIP) will be that of a gas supplier to support the pipeline’s operation. PAE is expected to provide up to 100 million cubic feet per day, but production needs to be doubled to 200 million cubic feet per day. We are currently in negotiations with the Ministry of Energy and Minerals and TPDC to determine the gas price and other terms that would enable PAE to secure financing from the International Finance Corporation (IFC) for doubling gas production. The investment required for this expansion includes drilling new wells, servicing existing ones, and installing additional infrastructure, amounting to approximately $150 million.

What is PAE’s long-term future in the country?

Tanzania continues to offer numerous opportunities for energy sector investors, and PAE will evaluate these opportunities based on their business viability. After nearly a decade of dedicated work and government approval, PAE has been successfully producing gas in Tanzania for a decade without major issues, supplying power to the national grid and major industries in Dar es Salaam. The company aims to continue its reliable operations and contribute to the country’s energy sector indefinitely, as long as it aligns with the company’s strategic objectives and makes business sense.