Ministry proposes 'gas revenue fund'

BY DAVID KISANGA

23rd October 2013

Eliakim Maswi, Permanent Secretary in the Energy and Minerals ministry

 A proposal has been made for the establishment of a special fund from the collection of gas extraction revenue to be used for the development of the country, when the natural resource runs out and the proposal is to be included in the new gas policy.

The section should, among other things provide details on how the anticipated revenue will be managed and integrated into the existing government system with a view of mitigating the overall impact of the revenue on the economy.

This proposal was made on Monday by the Permanent Secretary in the Energy and Minerals ministry, Eliakim Maswi.

He was speaking before the Parliamentary Public Accounts Committee (PAC) in Dar es Salaam when he said that under the gas and oil policy - that is to be ready by May next year - the Ministry has proposed to the Treasury to set up a special fund for the collection of revenue from gas extraction.

“We have proposed to the Treasury to create this fund…it is their responsibility to think about the wellbeing of the nation’s future development,” he said.

Maswi advised that Tanzania ought to copy Norway’s example of setting aside a special fund from its revenue obtained from gas.

He said presently, Norway has managed to set aside in its coffers about USD 395bn/- from which only five percent is spent for other national development issues. As for Tanzania, the proposal is for ten percent of total gas revenues to be spent on national development issues while the rest should be reserved for future investment and benefits.

He warned: “We have to be very careful, especially when handling revenue from gas. This is because, if not well spent, the country will regret it in the near future.”

He reminded policy makers that minerals do not last forever and will at a certain point get exhausted and it is for that inevitable future that the fund is meant.

“The discovery of oil and gas provides the country with the opportunity to fast-track its economic and social transformation process but we must also save,” he said.

“Gas resources are finite,” he went on to say ‘…even though the associated revenue can be immense but if not well managed, these revenue has the potential to undermine the macroeconomic, budgetary and governance structures that have been built over the last two decades,” he warned.

According to Maswi, in order to sustain the economic and social transformation process beyond the oil and gas era, the government has to manage the gas revenues in a manner that will encourage the development and growth of other sources of wealth.

He said Tanzania will start getting profits from its oil in the next twelve years or so and as such, it must be careful in revenue collection and saving as well.

SOURCE: THE GUARDIAN