Indicative gas price stirs dispute

SYLIVESTER DOMASA

THE Energy and Water Utility Regulatory Authority (EWURA) will decide at an open session on Friday whether to raise or lower the cap price of natural gas at the time the government targets to improve power supply and demand for natural gas.

The regulator had proposed 4.25 US dollars and 2.60 US dollars per unit to cement and fertiliser companies respectively, but stakeholders in the energy sector were worried whether the new price would benefit the government and Tanzanians.

Attending a public inquiry for indicative prices of natural gas for strategic investments, a cross section of delegates said the decision by the regulator should not create another form of subsidy to investors but seek to benefit all parties—the investor, the government and the people.

“Tanzania and the people where natural gas is extracted needs to rip off the benefit. We need to take precautions on pricing natural gas to ensure the government also benefits,” Engineer Joyce Kisamo, who represented Oil and Gas Advisory Bureau said at the meeting. The price proposed by Ewura targeted investments strategically located within 100km from the natural gas exit point. According to the engineer.

The price of the same service is likely to become extremely high to investors outside gas-rich regions—Lindi and Mtwara. Since the discovery of natural gas in Tanzania, now with recoverable reserves of 57 trillion cubic feet, there are absolutely no prices indicative for natural gas compelling the Tanzania Petroleum Development Corporation (TPDC) to negotiate with investors on the charges.

Another contributor, representing the Pan African Energy observed that it was crucial for the government to generate revenues from selling the natural gas. His suggestion based on the fact that the government had strategically invested on infrastructures for transporting the natural gas.

However, details released by the regulator shown, the transportation tariff within 100km will stand at 0.5 per cent. Nevertheless the strategic investments targeted by the government include any investment which would employ at least 1,500 locals, plus an investment capital of not less than 300 million US dollars of which transaction must be undertaken through a registered local financial institution.

Speaking at the workshop, Ewura Director General Engineer Felix Ngamlagosi, said after evaluating opinion and suggestions from stakeholders including investors the regulator will meet next week to come up with the new indicative price.

“The existing gas price impasse will come to an end. Ewura is aiming at fast tracking the process and increase transparency in pricing natural gas and encouraging more investments in natural gas related ventures,” he said.

The director general admitted that the gas pricing dispute between TPDC and Dangote industries and East Coast against PanAfrican Energy were a result of lack of natural gas pricing indicative.

However, officiating the meeting on behalf of the Dar es Salaam Regional Commissioner Mr Paul Makonda, Kigamboni District Commissioner Mr Hashim Ngandilwa said natural gas in a country that produces oil is sold at a very low price due to the cost of exploration and development.

In markets such as Middle East, US and Belgium the price range between 2.50 US dollars and 14.50 US dollars for 1,000 cubic feet. During the natural gas dispute between TPDC and Dangote industries, the investor demanded to buy a million cubic feet of natural gas at 4.00 dollars while TPDC insisted on 8.00 US dollars regardless of the 40km distance from exit point.

Mr Amil Abas, from Pakistan Fauji Fertiliser Company advised that the price of natural gas be linked with export markets to allow both investor and the government to benefit.