Why government chose UK firm for LNG project

Dar es Salaam. Energy minister January Makamba yesterday elaborated government’s decision to hire a UK-based firm as a transaction advisor on the multi-trillion shilling Liquefied Natural Gas (LNG) plant project, saying the company was picked after a rigorous and competitive tendering process.

The government – through Tanzania Petroleum Development Corporation (TPDC) -- and Baker Botts LLP inked an agreement on Tuesday in which the multinational law firm -- that boasts of around 725 lawyers -- will be an adviser to help conclude Tanzania’s talks with international oil companies over a long-delayed $30 billion LNG plant.

However, the decision has attracted criticism from some pundits who question the rationale behind the appointing a foreign firm while a number of other past deals, including the one with Barrick Gold were concluded by indigenous legal experts and led by former Constitution and Legal Affairs minister Palamagamba Kabudi.

Pundits have also been quick to question the role of the office of the Attorney General in the negotiations and whether there was no local company to conduct the services that the foreign firm will do.

But Mr Makamba told Mwananchi yesterday that Baker Botts was picked after a competitive tendering process that attracted the participation 64 applicants.

Mr Makamba said what was being sought was not legal advice but rather a consultant in LNG discussions who had the ability and experience to do a job better.

“If you look at the terms of reference, there are four types of skills needed. They are financial, commercial, technical and legal. This is the expertise that TPDC was looking for in a process that ended yesterday and which started in 2018,” he said, adding that the African Development Bank (AfDB) was the one that funded the process.

He said the government negotiation team was on track and Baker Botts’ job was to equip the team with more expertise that will allow them (team members) to negotiate a better deal for Tanzania in the LNG negotiations.

“Globally, discussions like this for countries that have never implemented a project like the LNG always look for additional expertise to advise them in the negotiating process. The country has its own position on what it wants to achieve in the project and then the firm supports strategy and advice,” he said.

He said the government was looking for a consulting company that has an experience in undertaking such kind of tasks and that the company should have the capacity and expertise to put those things together and help negotiators get a better deal.

According to Mr Makamba, Tanzania had its own regulations that compel a foreign company to strike partnerships deals with a local firm, noting that that was precisely why Baker Botts will work in partnership with a Tanzanian firm, Apex Attorneys in legal matters.

He said the government had the mandate of ensuring that the project got implemented swiftly but in the best interests of the country.

That, he said, called for broad understanding and advice from the people with expertise in the execution of its mandate.

“The main thing to know is what we want to get in the project, negotiations are going well and will be of great benefit in this project and it is good that people are preparing for procurement deals that will be availed. We will explain these opportunities to Tanzanians at the right time,” he said.

The executive director of HakiRasilimali, which strives for indigenous participation in natural resources projects, Ms Racheal Chagonja, said there was no problem with the firm being offered the job but stressed the need for transparency in all processes including on members forming the negotiation team.

“The experience we have had in negotiating mining contracts since 2017 is that they were shrouded in secrecy. Things need to be different as we now negotiate natural gas deals,” she said.

Association of Petroleum and Petroleum Providers (ATOGS) chairman Abdulsamad Abdulrahim said due to lack of expertise in the oil and gas issues, it was important to use foreign experts in such major contracts.