Gas revenue won't uplift lives in Kilwa, Mtwara districts - don

Prof. Honest Ngowi

Hopes that revenues from gas production would help transform lives of millions of people in the country are being unmasked after a study demonstrated that service levies paid to districts is minimal compared to other income generating activities in areas where gas production has picked up.

 

Prof. Honest Ngowi of the Mzumbe University Business School in Dar es Salaam made this note of concern yesterday at a breakfast talk organized by Policy Forum and hosted by the British Council premises in Dar es Salaam.

 

He delivered a talk, “Tanzania’s gas economy: Examining local and national perspectives” based on a wider study titled ‘‘Service levy revenue from gas companies in Kilwa and Mtwara District Councils,’ Prof. Ngowi disclosed that the two districts endowed with natural gas reserves receive less amounts paid as service levy by Pan-African Energy Company, with local roots, and a French firm, Maurice and Prom.

 

Initially Pan-African Energy was paying the levy at Ilala District Council in Dar es Salaam where it was registered, but later the Ministry of Energy and Minerals ordered the diversion of the funds to Kilwa district where the firm makes exploration and drilling, in accordance with the Petroleum (Exploration and Production) Act, 1980.The firm received its permit from the Tanzania Petroleum Development Corporation (TPDC) to explore and drill for natural gas in the district in the past decade and is required to pay 0.3 percent of its gross annual sales as service levy, as stipulated in Local Government Finances Act of 1982.

 

Findings by the business school don indicate that Kilwa District Council received Sh. 1.1 billion from April 2012 to July 2014, an annual average of Sh. 391.1 million.

 

 Findings for Mtwara District Council show that during the same trading period, the council received Sh. 93 million from the French firm, which handles gas production at Mnazi Bay. 

 

The service levy is much less than other sources of revenue such as cashew nuts being the main source of council income generation, with a whopping Sh 932 million earnings in the 2014/15 trading period.

 

 Other companies were still at the stage of gas exploration and are not required to pay the gas service levy yet, the don noted, elaborating that Mtwara District Council stands to obtain potentially large amounts of the gas service levy when mass production starts in the coming years.

 

Discussants of the presentation were harsh with what the government was doing on the issue, accusing it of failing to be open about gas business activities and ongoing exploration.

 

Flaviana Charles, a programme officer at the Legal and Human Rights Centre (LHRC) in the city declared that if Tanzanians are not careful the same gas will be in a nutshell what residents in the Lake zone have experienced with gold mining bursts in the zone.

 

SOURCE: THE GUARDIAN