Shift focus to natural gas, Parliament tells government

Dar es Salaam. Amidst rising prices of petroleum products, the parliament now wants Tanzania to reduce its reliance on oil and instead focus on natural gas, which the country is abundantly blessed with.

The Parliamentary Committee on Energy and Minerals said in the House yesterday that the government needs to work on issues that hinder the growth of the use of natural gas in the country.

In doing so, said the committee in its presentation, many more people will shift from petroleum products to natural gas.

Tanzania, just like many other non-oil-producing countries, has borne the brunt of decisions by members of the Organisation of the Petroleum Exporting Countries (Opec) to either cut or raise production.

This, coupled with the appreciation of the United States dollar, which means a depreciation of the Tanzanian shilling, sends shock waves to Tanzanian motorists who depend on oil to power their vehicles.

Prices in Dar es Salaam reached Sh3,084 and Sh3,078 for a litre of petrol and diesel, respectively, in January 2024, compared with Sh2,819 and Sh3,295 in January 2023.

In January 2021, just a few months before the start of the war in Ukraine, Dar es Salaam residents were paying a litre of petrol at Sh1,834, while that of diesel cost Sh1,695.

Against such a background, lawmakers say that since Tanzania does not have direct control over petroleum prices, it was high time that the government injected enough funds that would see the country expand the use of its natural gas.

Tanzania, which is currently planning a multibillion-dollar Liquefied Natural Gas (LNG) plant, has discovered 57.54 trillion cubic feet of natural gas reserves.

The country is already producing natural gas at Mnazibay and Songosongo, which is used for electricity generation, domestic use, industrial use, and for powering vehicles.

In this case, Tanzania, which imported a total of 1,118,746 metric tonnes of petroleum products during the last quarter of 2023, has managed to convert only about 3,000 vehicles from the use of petrol and diesel to the use of natural gas.

As such, the Committee chairman, Mr David Mathayo (Same West, CCM), told the Parliament yesterday that though the number of vehicles that have been converted to the use of natural gas remains low, the fact that the number has increased from 1,139 in the 2020/2021 financial year to about 3,000 at present suggests that many more motorists are looking for affordable means of putting their vehicles on the road.

“The increase is because shifting to the use of natural gas reduces the amount that one would use for the purpose of putting his or her vehicle on the road by 40 percent,” he said.

It was thus the Committee’s take that the government needs to increase the number of refuelling stations for natural gas from the current five.

He said since most vehicles imported into Tanzania are meant for petrol or diesel, the government could also consider reducing the amount that one spends to convert his or her vehicle from petroleum products to natural gas. Currently, one spends about Sh2 million for the purpose.

“Besides, the government should itself start importing vehicles that use natural gas as a way of promoting the use of such vehicles and reducing consumption of petroleum products,” he said.

The committee wants Tanzania to emulate India, where the government is the major shareholder in the petroleum and natural gas value chains.

The committee conducted a five-day tour of India in November 2023, where it learnt that most of the natural gas processing facilities there were largely owned by the government.

“We learnt that all gas cylinders are manufactured in India. India imports 80 percent of the gas it consumes, but the country has the capacity to refuel over five million vehicles with natural gas per day, and the target is to raise the number to 16 million per day by 2030,” said Dr Mathayo.

Special Seats MP Martha Mariki said parliamentarians visited India in November last year, where they underscored the progress made by the Asian country in gas utilisation for firing motor vehicles.

“I trust the Deputy Prime Minister. He will push for this matter, something that will significantly lead to the progress of citizens, especially the youth who have employed themselves in transportation services,” he said. Kigoma Urban legislator Kilumbe Ng’enda said the number of vehicles converted to the use of Compressed Natural Gas (CNG) has increased from 1,139 to over 3,000, noting that further transformation is required.

“Not only conversion will reduce fuel importation pressure and price inflation but also costs incurred for a certain distance,” he said.

For instance, he said Sh16,000 in gas was required for a saloon car to cover a distance of 200 kilometres, while Sh60,000 would be required for fuel procurement for a similar distance, accounting for the Sh40,000 difference.

Mr Ng’enda said the country was supposed to increase natural gas production as well as the number of filling stations.

“Conversion costs should be reduced to increase affordability. The price of accessories used for conversion should also be decreased if possible through tax reduction,” he said.

“In the 2024/25 fiscal year, the government should start purchasing vehicles that use gas, especially after the lesson of India, where 65 percent of all vehicles use gas and 35 percent use fuel,” he added.

Hanang Constituency lawmaker Samweli Hhayuma said special strategies were required for the timely execution of strategic projects, including the $42 billion (Sh107 trillion) Liquefied Natural Gas (LNG) project slated to be implemented in Likong’o Area, Lindi Region.

“The project will not only generate income for the country but also create jobs and stimulate the growth of other sectors,” he said.