M a r k e t N e w s

Tanzania: Economist Warns Tanzania Over Gas Revenue

Posted on : Tuesday, 4th November 2014

 Tanzania has been warned to utilize wisely its revenue expected to obtain from natural gas resource for the national sustainable human development.

 
Speaking on the political economy of natural resource exploration, Professor Ola Olsson, Senior Lecturer from School of Business, Economics and Laws, University of Gothenburg, Sweden, said the natural resource will automatically increase cash inflow in term of revenue and economic growth.
 
He argued that Tanzania should create an open Natural gas fund which is free from political interference, focuses on bringing inclusive economic growth for sustainable human development.
 
"Tanzania cannot direct distribute the revenue obtained from natural gas to the local people, because even her budget still has huge deficit, depending on donors, so the best way for all people to enjoying economic growth is through improving of health, education and infrastructures services," he remarked
 
He added that, Tanzania should learn from countries which have been succeeded on managing natural resources revenue wisely obtained from extractive industries such as Botswana, Norway asking for consultancy, legal assistance and expertise.
 
Dr.Razack Lokina, EFD's Researcher and Senior Lecturer Department of Economics, from University of Dar es Salaam said managing natural resources for sustainable growth and human development in Tanzania is not easy, due to the fact that most of our decision makers are not fully aware about other complicities.
 
He said mining sector has only contributed 3.3% in gross national income (2011) and 3.5% (2012) which is very slight compare to it amount available but Gas will soon overtake mining sector if well managed.
 
He told East African Business Week that Gas does not only serve as a major foreign exchange earner for a nation but also creates employment avenues for both men and women.
 
Lokina noted that the country is facing hug skill gap relevant for the Oil and gas industry, and urged that massive training is called for both men and women including sector governance issues such as revenue management, managing expectations, developing capacity of technocrats at various government agencies.
 
Tanzania should consider on how to maximize tax revenues without desensitizing exploration and production from 50% to 60% of rents is common for gas & oil, repatriation of all revenues; dividends can be paid out from these after tax and royalties on revenue not profits.
 
According to him, Tanzania should avoid using revenues to cover recurrent labour expenditures, and avoid situations that could lead to debt if revenues fall cited on what is happening in Ghana economic situation.
 
He warned about equity stakes that will be bought with future dividends, but equity can be demanded prior to exploration in exchange for access referring on recent product sharing agreements.
 
He argued to educating the public and civil society organizations, and avoiding revenue management challenges through transparency in budgetary process and in fiscal rules, and Set up a resource fund to sterilize and save windfalls, and to direct investment of rents.

Source : ALL AFRICA
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