Strengthening resource governance in the gas sector

Project description

Project title: Strengthening resource governance in the gas sector in Tanzania
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Tanzania
Lead executing agency: Ministry of Energy and Minerals (MEM)
Overall term: 2013 to 2016

Context

Large natural gas reserves have been discovered in Tanzania in recent years, generating high expectations within the population that the country will experience rapid development as a result of the income from gas extraction. However, most projects in the natural gas sector are still in their infancy. The high capital costs of establishing the infrastructure required by large-scale extraction and gas liquefaction projects mean that these projects will only be able to make a substantial contribution to increasing government revenues in the medium to long term. This contribution will also be limited to just a few decades.

Effective state resource governance is required to transform the gas sector into a driver of Tanzania’s development. The government has begun to draft the legal framework for extracting and processing natural gas, but several key elements are still missing. For instance, the country has no up-to-date sectoral legislation or any rules for applying this legislation. A communications strategy is also needed to provide the Tanzanian people with a realistic picture of the sector’s future, and to demonstrate the potential prospects for employees and small entrepreneurs working as suppliers to the gas industry.

Objective

The Tanzanian Government’s expertise and performance capacity have been strengthened to enable transparent and effective governance in natural the gas sector.

Approach

The current focus of GIZ’s involvement in the project is on supporting the Ministry of Energy and Minerals as it develops a communications strategy for the natural gas sector. GIZ’s technical and in-process consultancy draws on experience gained in recent years through German international cooperation in the decentralisation process. The consultancy work is concentrated on Mtwara and Lindi, as these provinces are the most affected by natural gas extraction. Civil society organisations are also being closely involved in the process.

GIZ is supporting the implementation of Tanzania’s gas policy by advising partners on issues relating to the taxation of raw materials, and on transparency and accountability in the extractive industries sector. In addition, the project is working on the topic of contract negotiation with the government’s training facility, the Uongozi Institute.

Results

A communications strategy has been developed, and initial key measures have been undertaken. For instance, the Ministry of Energy and Minerals, in cooperation with GIZ, is carrying out systematic media monitoring to enable the Ministry’s principal officers to use the media to perform their communication tasks in a more targeted and conflict-sensitive way.

An interministerial steering group for the natural gas sector has agreed on five measures. These include the decisions to establish a state fund to manage income from the extractive industries sector, and to form a supervisory body for the oil and gas sector. This body has also had a significant influence on the design of two laws: the Natural Gas Policy and the Tanzania Extractive Industry Transparency and Accountability Act.

The regional programme Employment for Sustainable Development in Africa (E4D/ SOGA) has used contacts made through the project to establish a partnership with British gas companies. An additional impact of the project has been to improve vocational training throughout the extractive industries sector.