Amid hope and fears, TPDC turns 50

Dar es Salaam. The Tanzania Petroleum Development Corporation (TPDC) has grown from being a mere regulator to a strategic national company representing the country’s interests in petroleum-related projects.

TPDC, which is turning 50 years today, became the national oil company through which the government implements its petroleum exploration and development policies after Parliament passed the Petroleum Act of 2015.

Although it has many achievements in the energy sector, including connecting 42 industries with natural gas for power generation and ensuring that more than 50 per cent of electricity (about 884.5 MW) is produced using natural gas, analysts see more challenges in the upcoming projects.

Africa co-director for the Natural Resource Governance Institute (NRGI) Silas O’lang says the company has a challenge on how it will invest in the 25 per cent share in mega project implementation like the liquefied natural gas (LNG) planned in Lindi.

The National Oil Company will have exclusive rights over natural gas midstream and downstream value chain including the participation in the development and strategic ownership of natural gas projects and businesses on behalf of the government, according to the Petroleum Act 2015.

“This participation will depend on where TPDC will get the money to invest in the 25 per cent of project implementation. Paying cash could be difficult and the international oil company will take loan to cover the gap on behalf of the government,” he says.

“Then the government will stop receiving its profit share until the loan is repaid. This could be a challenge to TPDC hence will get lower profit out of the expectations,” he adds.

The lesson

Mr Godwin Samwel who happened to work with TPDC says in 1992 the management introduced a plan to impose tariffs on oil prices as a means of assisting TPDC in becoming financially independent but the government rejected the proposal. According to him, the management by then also introduced the idea of buying two depots of strategic oil reserves but the government declined as well.

“The reason behind was that the government was not allowed to involve and compete in business. If the government agreed, TPDC would be very strong financially. However, the current regime has shown a political will, which is the most important aspect to the future of TPDC,” he says.

Recently, the Controller and Auditor General (CAG) Prof Mussa Assad revealed in his 2017/18 reports that TPDC was one of the 14 state owned organisations passing through a financial crisis.

Apart from the challenges, TPDC acting director of exploration, development and production Ms Venosa Ngowi says the company has many things to demonstrate as achievement in the last 50 years.

According to her, the government used to spend a lot of money to power electricity to the national grid using expensive fuel. She says by then, the power cost $35 to 42 cents per unit but currently the government pays between $6 and $8 cents per the same unit. Ms Ngowi says TPDC has contributed to the successful discovery of 57 trillion cubic feet of natural gas in the mainland and Deep Sea through the International Oil Companies.

“The reserve can be spent for 40 years to come and as a country we are yet to count even one trillion cubic feet of gas. Already natural gas has contributed to generation of more than 50 per cent of electricity in the national grid and 42 industries have already been connected with natural gas for power generation,” she says.

“Exploration is still ongoing in many areas. The main aim is to reduce the cost of goods and services directly or indirectly and we assure the citizens will benefit from the TPDC presence,” she adds.

The gas domestication project received Sh20 billion in this financial year for the gas distribution to homes in Mikocheni as well as 150 houses in Mtwara Region.

TPDC acting managing director Kapuulya Musomba says their projection is to connect over 1,000 houses in Dar es Salaam but all depended on funding. The project is under Gasco - a subsidiary company of TPDC. Raymond Kavishe, a gas user at his Mikocheni Bar, says he was spending about Sh15,000 for charcoal per day but currently he has reduced half of the cost through natural gas uses for cooking.