Tanzania oil and gas companies reject local content regulations

An oil rig. Differences between Tanzania and oil companies over local content obligations contained in Petroleum Act 2015 have resurfaced with the government collecting stakeholders’ views in efforts to enforce regulations. PHOTO | AFP 

By The EastAfrican Team

In Summary

• The companies through their organisation, Oil and Gas Association of Tanzania (Ogat) last week told the Energy and Water Utilities Regulatory Authority (Ewura) that they are uncomfortable with the local content requirement in Tanzania and want a review.

Differences between Tanzania and oil companies over local content obligations contained in Petroleum Act 2015 have resurfaced with the government collecting stakeholders’ views in efforts to enforce regulations.

The companies through their organisation, Oil and Gas Association of Tanzania (Ogat) last week told the Energy and Water Utilities Regulatory Authority (Ewura) that they are uncomfortable with the local content requirement in Tanzania and want a review.

The meeting was convened by Ewura after Energy Minister Prof Sospeter Muhongo on January 6, directed the regulator to hold a stakeholders’ consultation meetings on the draft petroleum regulations 2017.

The companies rejected the draft regulations, saying were costly.

“Our aim is to help the government come up with a realistic regulation on local content. All the concerns are taken into account in the process, backed by an extensive study on best practices,” Halfani Halfani, a senior official with Ophir Energy, a UK-based oil and gas exploration company, said.

The draft regulation lay down procedures to be followed by foreign companies to guarantee compliance with local content requirement.

According the proposed regulations, before engaging in any petroleum-related activity, a contractor must submit a local content plan for approval.

The plan must have details of employment, training, succession plans, research and development, procurement of goods and services and technology transfer.

The regulations also call for submission of quarterly implementation reports.

“If the regulations are implemented, companies will be spending most of their time focusing on meeting requirements for local content compliance at the expense of their primary undertakings,” said Mr Halfani.

“It is actually like the government managing the day-to-day activities of oil companies.”

He noted that the draft local content regulations unfairly target foreign oil companies.

“There is no mechanism in the proposed regulation to hold government officials accountable for failure to meet local content obligations on their part,” he said.