Prime
Key agreement on $42bn LNG project in sight
What you need to know:
- Finalisation of the Host Government Agreement will pave the way for the project to proceed to next implementation levels
Dar es Salaam. A long-awaited deal to set out the terms of Tanzania’s $42 billion liquefied natural gas (LNG) plant will be finalised within two weeks, The Citizen has reliably learnt.
Finalisation of the Host Government Agreement (HGA) between Tanzania and international partners will pave the way for the project to proceed to next implementation levels.
The HGA will establish the essential legal and fiscal framework required to reach the final investment decision (FID), a vital milestone expected to accelerate the project’s development and bolster energy security and economic growth in the region.
“We are optimistic that if not this week, then by the end of the month, the agreement will be finalised,” a source privy to the topic told The Citizen.
The source, who preferred not to be named, said so far the two parties have agreed on a huge percentage of the issues under discussion.
Deputy Prime Minister and Minister for Energy Doto Biteko confirmed that the negotiations are nearing completion but declined to mention the exact timeframe in the interest of the negotiations.
He noted that this was after a lengthy process of aligning on key issues with the international energy companies (IECs) involved. “This progress is thanks to President Samia Suluhu Hassan’s strong interest in finalising the agreement,” Dr Biteko said.
Following the conclusion of negotiations, the finalised document will be submitted to the relevant authorities for approval. The project timeline, directed by President Hassan in 2022, aims for HGA completion to enable preparatory engineering phases (pre-FEED and FEED) before the FID in 2025, leading to production commencement.
Earlier this year, government negotiators received feedback from the Attorney General’s Office recommending improvements to the agreement and discussions are ongoing to reconcile differing positions before formal submission.
The Attorney General’s office previously returned the draft HGA for further revisions, with additional consultations planned to address raised concerns and finalise the agreement ahead of signing.
The LNG project is set to be implemented in the Likong’o area of Lindi Region. The project has faced delays due to complex negotiations and regulatory considerations.
President Hassan has underscored the strategic importance of the LNG venture, emphasising its potential to bring significant capital and revenue to Tanzania, while ensuring benefits prioritise residents of the Lindi and Mtwara regions. She has also advocated for empowering Tanzanians to participate fully in the project.
The President said in March that Tanzania is open to collaborating with countries interested in gas development, stressing the need to update laws and regulations to attract private sector investment.
President Hassan called the project “massive, strategic and special”, urging all parties to maintain a flexible, give-and-take approach in ongoing negotiations to achieve mutual success.
She has also advocated for empowering Tanzanians to participate fully in the project.
Tanzania possesses substantial natural gas reserves, estimated at 57 trillion cubic feet.
These reserves are primarily located offshore in the Indian Ocean, with significant discoveries at Songo Songo Island and Mnazi Bay.
