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Restructuring Tanzania Petroleum Development Corporation (TPDC)

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Mapendekezo ya Kamati ya POAC

Ilipendekezwa kuwa Shirika la maendeleo ya Petroli Tanzania (TPDC ) ligawanywe ili kupata Mashirika mawili ya Umma  moja likisimamia utoaji wa leseni na Udhibiti wa Uchimbaji (upstream regulator) (Tanzania Petroleum Authority or National Hydrocarbons Authority) na lingine kuwa Kampuni ya kibiashara ya Mafuta na Gesi (National Oil and Gas Company) ambapo kila sehemu ya Muungano itakuwa na  Kampuni yake na kuondoa malalamiko ya sasa juu ya Mafuta na Gesi. Pendekezo hili Serikali haijalitolea majibu wala utaratibu wa kulitekeleza ili kuboresha usimamizi wa sekta ya Gesi na Mafuta.

Vile vile Pendekezo hili litaweka msingi wa Sekta ya Mafuta na Gesi kusimamiwa na chombo cha muungano badala ya sasa ambapo kinasimamiwa na TPDC ambayo sio Shirika la Muungano. Pendekezo hili litekelezwe mara moja.- POAC Report 2010

Interesting Articles from Africa Confidential :

Tanzania’s gas players

Songas consortium consists of PanAfrican Energy Limited, a subsidiary of Orca Exploration, CDC Globeleq and the state-owned Tanzania Petroleum Development Corporation (TPDC). Songas has operational rights over the Songo Songo-Dar es Salaam pipeline and well-established relationships with the government. Despite approaching new competition, it is keen to lock in the monopoly benefits it has enjoyed to date – hence its application for a 70% tariff increase for gas supplied to the Tanzania Electric Supply Company (Tanesco).

Maurel & Prom operates the Mnazi Bay field, hoping to supply a power plant at Mtwara and a newly announced fertiliser operation. With clear direction from the government, it could transform Mtwara and its own profits. No guidance is yet forthcoming. Both Maurel & Prom and Songas will face stiff competition if Britain’s Ophir Energy-BG Group and Petrobras develop their gas fields. The latter two have considerable acreage while the companies already in place have two discoveries. Both groups will be eyeing up the neighbouring exploration blocks on offer in the new round of bidding in April. The newcomers’ operations are likely to dwarf the existing ones. They see their main business opportunity in liquefied natural gas for export rather than for local markets.

A key figure will be David Jairo, Permanent Secretary at the Energy and Minerals Ministry, who is close to President Jakaya Kikwete having served as his Private Secretary. In the early 1990s, he was also in the Ministry of Water, Energy and Minerals, as it was then known, when Kikwete held the portfolio. He will be important in mediating among institutions, business and politicians. While Zitto Kabwe and January Makamba are putting energy at the top of their political agendas, more important in coming years will be whether Edward Lowassa wins 2015’s presidential election. If past performance is anything to go by, he could have an unfortunate impact on energy policy.

Gas finds offer hope of ending power-cuts
Powerful interests stood in the way of a sound energy policy emerging but everyone wants to turn on the gas
Despite obstacles from corrupt politicians, the exploitation of gas is likely to gather pace this year with new offshore discoveries. The opening on 12 April of the fourth offshore bidding round for 13 new blocks is likely to coincide with the commencement of drilling by Brazil’s Petrobras. Just one overworked pipeline runs the 200 kilometres from Songo Songo Island to Dar es Salaam. Last year’s gas discoveries by Ophir and British Gas in Tanzanian waters and this year’s by Anadarko in Mozambique, along with high fuel prices, will also help to generate interest in new export pipelines, liquefied natural gas (LNG) and much delayed gas-fired electricity generation.

However, Tanzania’s two existing gas deposits are not fully utilised. The oldest operation is the Songo Songo field, now operated by PanAfrican Energy Limited, a subsidiary of the Toronto-listed Orca Exploration Group. As part of the Songas consortium, it supplies gas to Dar es Salaam’s Ubungo power plant as well as to over 30 industrial facilities in the city.

Further south, the Mnazi Bay field near Mtwara town, now run by Maurel & Prom, is operating greatly below capacity since the collapse of plans to build a 300-megawatt power plant involving the gold mining companies Barrick and Artumas, the previous operators of Mnazi Bay. Three of the four Mnazi Bay wells are capped and the fourth is operating at just 10% of capacity. However, China is discussing financing that could revive plans for the plant at Mtwara, and Songas and Maurel & Prom hope to benefit from plans by the national electricity utility, Tanzania Electric Supply Company (Tanesco), for Dar es Salaam’s Kinyerezi plant to start generation in 2013.

Tanzania also has substantial coal reserves. Investors in gas fields cannot be certain that gas-generated power plants will necessarily be built and thus provide them with a market in the long run. Two feasibility studies will be carried out for a pipeline to Mombasa, one by Orca-owned EastCoast Transmission and Marketing, one by the East African Community. Ophir and BG are pinning their hopes on the development of LNG facilities.

The challenges are considerable. The power sector has been mismanaged for over 20 years. Power-rationing, first resorted to in the early nineties, is now a fact of daily life. The government first said it wanted to increase the use of natural gas in the 1990s but plans were thwarted by the corruption of key politicians and officials tied to Western companies exporting generating equipment that was not fuelled by gas. Also central has been the quick fix of hastily arranged power-purchases. Consequently, the power sector remains hamstrung and both the Dowans and IPTL generators are idle because of contractual disputes with Tanesco.

Many of those linked to the well-known cases of corruption in the power sector are still in or near to the corridors of power. Andrew Chenge was Attorney General when he approved the IPTL contract and he still sits on the Central Committee of the governing Chama cha Mapinduzi and in Parliament (AC Vol 51 No 4). Former Prime Minister Edward Lowassa, who resigned following revelations of his central role in the Richmond-Dowans affair, now chairs the Parliamentary Foreign Affairs, Defence and Security Committee and is believed to be preparing for a bid for the presidency in 2015.

One long-serving energy sector observer has also noted the tension between the Ministry of Energy and Minerals, Tanesco and the National Development Corporation. The NDC is responsible for state mining interests and is actively seeking investors in coal and wind power. NDC remains a key broker and has struck deals in China for the Mchuchuma coal mine as well as for wind in Singida Region. Yet another monolithic state institution in the power mix is unlikely to help to improve planning.

Regulation is also an issue. The Tanzania Petroleum Development Corporation has roles as both the regulator of upstream operations and as the state oil company and ultimate rights holder, which creates confusion and conflicts of interest. Legislation in the sector is outmoded, dating from 1980. A Natural Gas Bill has been in the works for some years but has been delayed by turf wars between fuel importers, TPDC, Parliament and Ministry officials. TPDC is looking to hive off an independent gas distribution entity and maintain its regulatory and operational roles. Industry interests want price control taken away from the Energy and Water Utilities Regulatory Authority. Moreover, there is pressure from Parliament to split TPDC and to have one upstream regulatory body and two state-owned oil companies, one each for Zanzibar and the mainland. The principal political backer for this is an opposition member of parliament, Zitto Kabwe, Chairman of the Parliamentary Public Investments Committee.

The lack of clarity in regulation, oversight and planning gives the advantage to companies already present and people with political connections. The Songas consortium and Orca’s PanAfrican Energy have considerable influence on pricing and infrastructure management. The senior management of these companies also has important personal and professional relationships with key players in government. Orca Deputy General Manager William Chiume is the son of the late Kanyama Chiume, an exiled Malawian politician resident in Tanzania and a confidant of former Presidents Julius Nyerere and Benjamin Mkapa. William Chiume also has President Kikwete’s ear.

Two politicians hope for political success through staking out development in the energy sector as their territory: Kabwe, of the opposition Chama cha Demokrasia na Maendeleo, and CCM’s newly elected MP, January Makamba. Kabwe chairs the Public Investments Committee and is seeking restructuring of TPDC and the directing of public funds to the power sector.

Makamba is a son of CCM party Chairman Yussuf Makamba and a former aide to Kikwete. Articulate and energetic, he is building alliances with the private sector as well as oil and gas investors with a view to achieving quick gains – such as switching on the Dowans generators, which cannot be used because of court orders – and medium-term infrastructure development, such as investment in the Songas-operated Songo Songo-to-Dar pipeline.

Kabwe and non-governmental organisations have also taken considerable interest in mining. Yet populist measures on royalties and taxation, as well as the absence of any major new ventures in the sector since 2007, have seen this interest diminish. The recently released Extractive Industries Transparency Initiative report for Tanzania covered TPDC, Songas and Maurel & Prom among other mining companies but it is unlikely to lead to the broad popular and political interest that mining evinced since it has not yet been verified and its conclusions are not clear. Consumers can only hope that the new gas finds will lead to lower prices and more capacity – despite the obstacles.

Source: Africa Confidential


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[Liganga: Project to end power woes] article in The Citizen-Tuesday, 15th March 2011

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Liganga: Project to end power woes

Written by zittokabwe

March 15, 2011 at 10:36 PM

An Eye Opener Week-long Visit to South Tanzania 1500MW Electricity Complex

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Last week the Parliamentary Public Organizations Accounts Committee (POAC) that I Chair embarked on our first week-long visit in accessing the state of the 3 Mega projects in Southern Tanzania that are being carried out by National Development Corporation (NDC).

We set off from Dar-es-Salaam and slept in Njombe town (expected capital of new Njombe Region. We drove to Ludewa then to Mchuchuma on to Liganga after that we set off to Ruvuma Region where we started off from Songea then to Ngaka Coalfields and we moved on to Mbeya Region to visit our the last project which was Kiwira Coal Mine located in Ileje/Kyela districts.

On the way we encountered a number of problems that any typical Mwananchi comes across everyday. Our bus broke down (9 of us drove in one car from Iringa to Makambako), we had to contend with lack of accommodation in some places, in Ludewa for instance Hon. Deo Filikunjombe MP of parliament of the area and Vice-Chairman of POAC provided accommodation in his own house and housed MPs from other political parties which goes to show what a great country we live in. In Mbeya we stayed in a work in progress hotel; some of the highlights of a very informative, exciting and thought provoking trip on how we can move forward these projects.

These 3 Coal mining mega projects are touted as the biggest electricity projects since we attained our independence over 50 years ago and would have a combined total of 1500MW and is being dubbed as South Tanzania 1500 MW Electricity Complex that will transform the Southern Corridor and Tanzania as a whole. It should be noted that currently we have 1034 MW installed capacity in terms of electricity generation and we are only generating about half of that estimates put it at 560 MW.

Site Visit to Mchuchuma Coal Mine

Board Chairman of NDC-Dr. Chrisant Mzindakaya giving his presentation to members of POAC











Mchuchuma Coal To Electricity Project

Our first visit took us to Ludewa District in Iringa Region to Mchuchuma Coal Mine which happens to fall in the constituency of our Vice-Chairman Hon. Deo Filikunjombe, MP of Ludewa Constituency.

The Mchuchuma coal mine has yet to kick off, what has been done so far is a feasibility study to determine the amount of coal reserves that we have at Mchuchuma Coal Mine and the floating of a tender for a strategic partner to take up the project in partnership with National Development Corporation (NDC) which they have done and a Chinese company by the name Sichuan Hongda Corporation Limited has won the tender and they are currently in talks and carrying out due-diligence.

It is estimated we have a total of 536 million tons of Coal reserves that can add up to 1.2bn tons at Mchuchuma Coal Mine.

With Mchuchuma Coal Mine, NDC together with Sichuan Hongda Corporation Limited intends to mine 3 million tons of coal per annum and mine mouth thermal power station of 600 MW.  Half of the generated power will be supplied to the Liganga Iron Ore project and the rest will be feed into the national grid. At this rate, Mchuchuma can produce Tanzania all its current power for the coming 150 years! I asked Dr. Mzindakaya, the Chairman of NDC what went wrong with our elders not to exploit these resources, he said DECISION MAKING!

Sichuan Hongda Corporation Limited and China Africa Development Fund plan to invest about USD $ 3 Billion Dollars in both the Mchuchuma Coal and Liganga Iron ore project. They expect to make about USD $ 1.2 Billion dollars a year. Somebody informed me that this Chinese company is experienced in Zinc mining and has no experience in Power generation….Due diligence?

Liganga Iron Ore Project

Our second visit took us to Liganga Hills and surrounding areas which has the biggest known iron ore resources in the country estimated to contain reserves ranging from 200 million to over 200 Billion tons.

On top of that the iron ore have excellent range of magmatic associated minerals that is Vanadium and Titanium magnetite which is a major source of raw material for iron and steel industry.

POAC Committee Members at Liganga in the background










Clear evidence that we have Iron ore deposits

Presentation at Liganga-Sponge Iron











The Challenges so far in implementing these projects are:

Lack of sense of urgency in decision making by the government to get these projects going- A killer disease and hence a go slow culture, Corruption as everyone wants a cut from the concerned parties. This vice is very pervasive in this country of ours, Lack of Infrastructure: Road, Rail and Electricity, Lack of connection to feed into the National Grid, Lack of qualified local experts for these projects. All these challenges can be overcome by having results oriented, pragmatic Ministers, sack corrupt bureaucrats and integrate the projects for coordination. A Presidential Special appointee on South Tanzania 1500 electricity complex? Perhaps!

Ngaka Coalfields Project-400 MW Power Station

Located in Mbinga district about 250km on the Njombe-Mchuchuma-Manda road, this is one of the most advanced and exciting development projects that the POAC committee saw and a lot of work has been done and they are currently having 45 staff on the ground.

The Ngaka Coal Project is being developed through Tancoal Energy Limited (Tancoal), a joint venture company between Atomic’s 85% owned Tanzanian subsidiary, Pacific Corporation East Africa (PCEA), which owns a 70% interest in Tancoal, and the National Development Corporation (NDC) of Tanzania,  which owns 30%.

They have already completed their Bankable Feasibility Study (BFS), their goal is the development of a thermal coal mining operation at Ngaka and the development of a 400 megawatt power station, utilizing proven clean coal gasification technology, at the Ngaka mine site. Malawi has already asked for a contract to supply them with 150MW from this project (money starts to flow?).

At the moment they are waiting for their special mining license from the Ministry of Energy and Minerals to commence exploration. The estimated coal reserves are 200 million tons and it is said to have the best coal in the country.

Presentation by Tancoal

Coal Pit










Backward & Forward Linkages









With Tanzanian Geologists who are leading the exploration employed by Tancoal

Kiwira Coal Mine Project

Our last visit took us to Kiwira Coal Mine which is currently at the hands of Kiwira Coal and Power Limited(KCPL) which is a company jointly owned by Tanpower Resources Limited (70%) and Government of Tanzania (30%).

The Government is at present finalizing the transfer back of shares from Tanpower Resources back to the government in order to transfer ownership to National Social and Security Fund (NSSF) and STAMICO to run Kiwira Coal Mine.

The government has committed in transferring ownership to NSSF. NSSF on their part have committed to buy it out and all its debts. It’s under this guise that NSSF took it upon them to give a presentation on their future intentions and how they will revive and develop Kiwira in the next 5 years in order to produce 500MW electricity that they will sell to TANESCO.

NSSF Director of Investments-Mr. Yohana Kidula giving a presentation on NSSF and their plans for Kiwira Coal Mine

Being welcome by staff of Kiwira Coal and Power Limited

This is what Kiwira should have looked like










Kiwira Coal Mine as it is now

Presentation by the Production Engineer









Poor run down infrastructure of Kiwira Coal Mine

We took time to talk to the workers and hear their cries











We travelled back from Kiwira through Mbeya, slept in Iringa and then back to Dar es Salaam. We brought no electricity  from the visit but HOPE.

* It’s a mind boggling question that we import 200,000 tons of steel yearly while our own iron ore is standing bare on the hills of Liganga in Ludewa.

*Does it make sense importing 230,000 tons of coal every year from South Africa while we have the best quality coal lying idle in Ngaka, Mbinga districts. Of course one will argue with trade theories of comparative or even competitive advantage! Prices of iron would half, avoid our rails from being stolen as scrap metal(chuma chakavu) for hungry steel mills and save our forex!

*Similarly for coal, we would save us an estimated US $ 40million a year! All in all jobs! Jobs! jobs let alone the multiplier effect.

Let us make decisions and turn South Tanzania 1500MW electricity complex live! No more promises, let us deliver power to the people………

Siku ya Kwanza 07-March-2011: Tukipokea taarifa ya Utekelezaji wa Miradi ya Makaa ya Mawe wa Mchuchuma na Chuma cha Liganga kutoka Shirika La Taifa La Maendeleo(NDC)

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Kushoto Makamu Mwenyekiti wa Kamati ya kudumu ya Bunge ya Hesabu za Mashirika ya Umma(POAC) na Mbunge wa Ludewa Deo Filikunjombe, Mwenyekiti wa Bodi ya National Development Corporation(NDC)Dk. Chrisant Mzindakaya, Mwenyekiti wa POAC na Mkurugezi Mtendaji wa NDC Gideon Nasari

Wajumbe wa Kamati ya Bunge ya Hesabu za mashirika ya umma (POAC) wakiwa katika ukumbi wa Hima-Ludewa

Mwenyekiti wa National Development Corporation(NDC) Dk. Chrisant Mzindakaya akitoa ufafanuzi juu ya mradi wa Mchuchuma

Kutokana na tafiti zilizofanyika kiasi cha makaa ya mawe ya Mchuchuma ni:

Kilichohakikiwa tani: 159 milioni

Kilichokisiwa kuwepo zaidi tani: 377 milioni

Jumla Tani: 536 milioni

Highlights za Taarifa ya NDC:

*Kampuni ya Kichina ya Sichuan Hongda Corporation Limited ilishinda zabuni kwa kuwasilisha mapendekezo ya kutekeleza miradi yote mwili(Makaa ya Mawe wa Mchuchuma na Chuma cha Liganga) kwa mfumo unganishi.

*Sichuan Hongda Corporation Limited ikishirikiana na China Development Fund wanatarajia kuwekeza Kiasi cha Dola za Kimarekani Bilioni tatu(USD $ 3 Billion) katka miradi hii mwili ya Mchuchuma na Liganga.

* Kutokana na uwekezaji huo, wankadria kupata mapato ya dola za kimarekani Bilioni(USD 1.2 Billion) kwa mwaka.

* Wanatarajia kuanzisha mgodi wa makaa ya mawe Mchuchuma utakaozalisha jumla tani milioni tatu(3 million tons) kwa mwaka.

* Kujenga Kituo cha Kuzalisha umeme wa megawati 600MW.

Makaa ya mawe -Mchuchuma yapo nje nje

Makaa ya Mawe yapo nje nje