What You Need to Know
Prime Minister Dr. Mwigulu Nchemba has confirmed that Tanzania’s $42 billion Liquefied Natural Gas (LNG) project is progressing, with negotiations between the government and investors at an advanced stage. The project aims to produce 10 million tonnes of LNG annually and includes provisions for local gas consumption and participation of Tanzanian companies.
Africa-Press – Tanzania. PRIME Minister Dr Mwigulu Nchemba has assured the National Assembly that the 42 billion US dollar (over 100tri/-) Liquefied Natural Gas (LNG) megaproject is on track, with negotiations between the government and investors now at an advanced stage.
Responding to an impromptu question in the Prime Minister’s Questions session in Parliament yesterday, the Premier noted that while the project is strategic, several complex issues must be resolved before its commencement.
“Discussions are underway. Given the unprecedented scale of this investment, it is prudent for the government to be meticulous to ensure our national resources are properly safeguarded,” Dr Mwigulu said.
The Host Government Agreement (HGA) is expected to be signed midthis year, a critical milestone that must precede the Final Investment Decision (FID). Jointly operated by Equinor and Shell, the project aims to unlock approximately 47.13 trillion cubic feet of natural gas.
Other key partners in the consortium include ExxonMobil, Pavilion Energy, Medco Energi, and the Tanzania Petroleum Development Corporation (TPDC).
The Prime Minister in formed lawmakers that while the initial plan focused solely on exports, the government is now negotiating to retain at least three per cent of the extracted gas for domestic consumption to meet growing local energy demand.
Another priority in the talks is the participation of Tanzanian companies.
Dr Mwigulu emphasised that President Samia Suluhu Hassan has directed that local firms be empowered to help build a resilient economy and expand the national tax base.
The Premier informed lawmakers that initially, all LNG was to be exported, but with growing global energy demand, it was proposed that at least three per cent of the extracted gas be retained for domestic consumption.
Another key issue, according to the Premier, was the participation of local companies in the strategic project, with the aim of expanding the country’s tax base.
“President Samia Suluhu Hassan has insisted that for the country to build a strong economy and expand its tax base, we must empower local companies. This was among the issues we considered important before the commencement of the project,” the Prime Minister explained.
Dr Mwigulu was responding to a question from Mtwara Rural MP Arif Premji (CCM), who sought to know the legal and policy challenges delaying the execution of the mega energy project in the southern regions.
In his question, the MP noted that it has been approximately 12 years since the country identified the project as a priority area, yet its implementation has not started.
Elaborating, Dr Mwigulu said Tanzania has never implemented a project of such magnitude, hence the need to take necessary measures to ensure the country benefits.
He promised to provide an update on progress made with investors.
Shell and Equinor are key investors in the country’s over 100tri/- LNG project, which aims to harness Tanzania’s deepwater natural gas reserves.
Located in Likong’o in Lindi Region, the flagship project is expected to produce up to 10 million tonnes of LNG annually.
Shell and Equinor, together with other players including ExxonMobil, are pushing towards a Host Government Agreement (HGA), which would mark a significant milestone in the project’s development.
On the other hand, the Prime Minister said that for Tanzania to attain a one trillion US dollar economy, youth participation is crucial. He noted that the government is working to ensure young people are incentivised to engage in economic activities.
He said that, apart from establishing a special docket for youths, the Bank of Tanzania (BoT) has set aside 280bn/- as a guarantee scheme targeting young people, as the country aims to create over 8,000,000 jobs in line with CCM’s 2025–2030 election manifesto.
The Prime Minister made the remarks while responding to a question from Special Seats MP Timida Fyandomo (CCM), who sought to know the government’s strategies to empower youths to invest and address unemployment, given that between 600,000 and 1,000,000 young people enter the job market each year.
Further, Dr Mwigulu said the government is preparing legislation to establish a Guarantee Scheme Company dedicated to issuing guarantees for youths.
Tanzania’s LNG project has been a priority for over a decade, aiming to harness the country’s vast natural gas reserves. The project, primarily led by Equinor and Shell, is significant for the national economy, with plans to produce substantial LNG for both export and domestic use. The government is focused on ensuring local companies benefit from this strategic initiative, which is crucial for economic growth and job creation in the region. Historical delays have raised concerns, but recent assurances from the Prime Minister indicate a renewed commitment to moving forward with the project.
