THE government has been urged to review Production Sharing Agreement (PSA), system to focus on encouraging development and production of oil and gas.
Chief Executive Officer of Swala Oil and
Gas Company, Dr David Mestres Ridge, advised the government to
fast-track oil and gas exploration in the country. “The government
should be sensitive to challenges faced by the exploration and
production companies.
“Although the oil and gas sector has had
a steady growth over the years, the sector had already spent a fortune
in the exploration and therefore, needs some consideration especially in
the payment of taxes more so for those companies that have not yet made
any discoveries,” Dr Ridge explained.
“The oil industry has so far invested
over 1 billion US Dollars in exploring for oil and gas in Tanzania and
not made anything like that in return.” “It will need to invest another
20 billion US Dollars before it can start producing offshore gas.
That first 1 billion US Dollars has
resulted in the discovery of gas resources that could represent a
significant return to the country”, said Dr Ridge.
Dr Ridge said that they understand that
the nation needs tax but thinks that it is counterproductive to tax
operations if by taxing them, they are delayed or made more expensive:
the returns from operations will dwarf any revenues that the country may
make from the current tax regime and it is that we should be
encouraging.
He said that though he fully supported
the government’s desire to encourage more investors into all sectors of
the Tanzanian economy, there were already investors entrenched in the
country like Swala ‘who should be looked after’ if others were to
follow.
Dr Ridge added that as a company listed
on the Tanzanian Stock Exchange with Tanzanian DNA, Swala desired to be
treated as such over and above other ‘foreign’ companies.
The CEO also cited little or no
corresponding dissemination of information about the role of oil and gas
exploration companies to the public as recipe for un-called-for public
suspicions that is directed at the investors.
This notion, he said, disregarded the
fact that over the years, investors have sank in over USD 1billion in
exploration and more than USD 20 billion is needed to complete
profitable mining.
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