Africa-Press – Tanzania. ANALYSTS have hailed the recent move taken by President Samia Suluhu Hassan to revive negotiations on the historic 30 billion US dollars Liquefied Natural Gas (LNG) project in Lindi Region, saying it will bring tremendous opportunities and transform the country’s economy.
The discussions held virtually between President Samia and the Royal Dutch Shell plc Chief Executive Officer, Mr Ben Van Beur brings fresh hopes to Tanzanians, especially the southern part of the country residents after waiting for some years.
According to the analysts, Tanzania stands to benefit from several aspects including receiving the total project income through share of the production allocated, corporate tax, various levies, skills, and transfer of technology.
They said, the LNG project will also bring with it an influx of jobs, multiple opportunities for local companies, new infrastructure and a boost in economic activities among the many the opportunities.
A Senior Lecturer at the University of Dar es Salam (UDSM), Dr Abel Kinyondo said upon its execution the mega project, the is expected to exert huge benefits to the economy of the country, citing an example of the local content, where individuals will get an opportunity to work and supply materials for its uptake.
He noted that the transfer of technology and skills will in turn bring about a trickle down effects elsewhere and as well, and open up more economic investments as well as infrastructures’ network, and in turn support various means of transportation.
“The country’s foreign direct investment (FDIs) will increase as gas will be exported to other countries, meaning that Tanzania’s reserves will become stronger, hence stabilize the shilling,” said Dr Kinyondo.
Dr Kinyondo was also of the views that the multiplier effect from the LNG value chain will produce significant government revenues and domestic gas for power generation and suffice use in the country from the current 50 per cent to 100 per cent.
He said the project will create a widespread industrialisation supported by a reliable power supply, citing an example of the gas bi-products, whose inputs will be used to produce fertilizers.
The same sentiment were echoed by the Chairman and founder of the Association of Tanzania Oil and Gas Service Providers (ATOGS), Mr Abdulsamad Abdulrahim, who applauded President Samia for the great milestone and wisdom she has been demonstrating in the oil and gas sectors.
“Globally, the message has been received overwhelmingly well and has created confidence among the business community,” noted Mr Abdulrahim.
He hinted that the LNG project is going to showcase Tanzania’s capacity and unlock the domestic market, noting that the government is going to benefit with the gas from day one of production.
“Upon its execution, the gas produced can be consumed for a period of 500 years…making Tanzania a regional hub in the supply of gas to neighbouring countries like Kenya and Uganda among others.
An economist-cum-investment banker, Dr Hildebrand Shayo was of the view that looking at the bigger picture, if the project takes off and assuming there will be no major drivers to affect its processing, liquefying the gas and exporting it will offer an important diversification opportunity, especially when the traditional export market is on gold, followed by agricultural products.
Dr Shayo disclosed that LNG based natural prices in other markets have been higher when compared for a decade now.
Thus, Tanzania moving into this market would provide the government with higher returns and the country would benefit immensely through royalty and tax revenues.
“However, as we celebrate, Tanzania turning into gas riches, we need to remind ourselves as the country that challenges remain.
“LNG industry is extremely competitive and attracts global investors even though, discussion has started, the country must look for jurisdiction with attributes such as favourable policies, supportive infrastructure, regulatory processes etc. Getting into this terrain, Tanzania’s tax and fiscal environment, regulatory approval, time lines and policy support must be improved especially relative to competing regions,” said Dr Shayo.
Likewise, Dr Abdulrahim called upon the government to make the project competitive and cost effective to deliver well in the market.
Elaborating on the status of the project, the Director of Exploration Development and Production at the Tanzania Petroleum Development Corporation (TPDC), Mr Kelvin Komba noted that the assurance with regard to the existence of the project is a big step for Tanzania.
“The next step is continuing with discussions with the companies and once they have been finalized, the implementation of the project will kick start soon,” added Mr Komba.
