Canada-listed Orca Exploration, which operates Tanzania’s Songo Songo gas field, on June 6 called remarks by a government team that examined gas deals signed between 1999 and 2012 “inaccurate.”
Orca-owned PanAfrican Energy Tanzania (PAET) operates the shallow water field under a production sharing agreement (PSA) with the Tanzania Petroleum Development Corporation (TDPC).
Presenting its findings in parliament on June 2 after studying eleven such PSAs including the PAET one, Dunstan Kitandula, a parliamentarian who chaired the investigation committee, recommended that five former energy ministers who signed the government contracts be investigated. Among them are two who signed the Songo Songo PSA with PAET in 2001 and the Block 2 agreement with Equinor (Statoil).
Orca said that, although it has not received the full report, it is concerned about inaccuracies.
Its CEO David Lyon said in a June 6 statement.”Despite PAET and Orca making extensive submissions of facts to the Special Committee, Orca believes that there are a number of findings and allegations in connection with the report which appear inaccurate or inconsistent with the actual facts as understood by Orca and PAET.” The company said it “stands by its impeccable operational record and the significant economic benefit of those operations which have accrued to …Tanzania.”
“Orca and PAET have complied fully with the terms of the contracts entered into with all parties, including the government of Tanzania, TPDC and [state utility] Tanesco,” it added.
The 11-member probe team was appointed November 2017 but began its work on January 2, 2018. It was mandated to ascertain whether the country is benefiting or not from its natural gas wealth. It found that Tanzania lost $128 million (291 bn Tanzania shillings) due to contracts that it said favored private investors more than the country.
Kitandula said the contracts should be renegotiated in terms of two laws that were passed mid 2017 giving the government powers to force minerals and natural gas contracts to be reviewed.
The inquiry was the fourth in just under two years to be instituted by populist President John Magufuli’s government into the gas and mining sectors, in his belief that the country is not benefiting as much as it should from its resources. In February his government told Orca to delay its proposed sale of a 40% stake in PAET to Swala, a local firm, alleging that PAET owes taxes.
Kitandula’s team also recommended that a gas-to-power contract for Songas be not renewed when due to expire in 2024, alleging irregularities. Songas is majority-owned by Globeleq Africa (a 70-30% joint venture of the UK’s CDC and Norway’s Norfund), with state entities, TPDC, Tanesco, and Tanzania Development Finance Company owning the balance.
Officials in the attorney general’s office need better training on contract vetting, added Kitandula (shown below).