Will acclaimed Mtwara Gas & Oil Special Zone Project Ever Be realized?
Tanzania set aside over 110 hectares for the construction of the Mtwara Free Port Zone over a decade ago but since then, only 10 hectares have been put to use. Special Seats Member of Parliament Anastazia Wambura raised the concern recently in the August House citing that the project was very promising yet little groundwork has actually been done.
Tanzania set aside over 110 hectares for the construction of the Mtwara Free Port Zone over a decade ago (2009) but since then, only 10 hectares have been put to use. Now Tanzania’s parliament wants answers as to why the project is lagging behind.
Special Seats Member of Parliament (CCM) Anastazia Wambura raised the concern recently in the August House citing that the project was very promising yet little groundwork has actually been done.
Responding the Deputy Minister of Agriculture Hussein Bashe acknowledged the slow pace of investment in the Mtwara Free Port Zone but blamed it on the overall drop in global economies that have affected the oil (and gas) industry gravely.
However, as to the MP’s suggestion that the government reassign the remaining 100 hectares to some other economic activity, Minister Bashe who was addressing the House on behalf of the Minister of Industry and Trade, said the government has no such intention and intends to pursue the original purpose.
He maintained that the energy industry tends to fluctuate and while it may be down now, it will get back up again and so;
“The idea of redistributing the area for other uses is until now not justifiable,” he said.
The ambitious project goes in line with an executive order issued by president Samia Suluhu Hassan who ordered streamlining and easing investment regulations for both local and foreign investors in the extractive industries.
By placing the oil and gas investment zone within the free port area allows for investors in the sector to acquire the materials they need at affordable prices.
The project is being developed in phases and already phase one of the project, which involves set up of some ten hectares of land is already complete. It encompasses several offsite and onsite infrastructure including tarmac roads as well as electricity and water supply systems.
The said 10 hectares are been developed into what is called the Oil Field Supply Base, where investor companies are to set up infrastructure and afford complimentary services the oil and gas exploration firms.
The Oil Field Supply Base is the first of its kind across East and Southern Africa and bares considerable economic potential for the region and country. However, stakeholders have raised concerns at what they describe as ‘snail paced’ speed of the project.
While stakeholders were informed that ‘several multinational companies are ready to invest in the area,’ few of the supposed investors have showed up. In fact even with completion of the first phase of the 10 phase project, only three major companies have set up shop and begun production and supply activities to the oil and gas investors in the region.
Among the companies that were purportedly ready to invest in the 10 hectres Oil Field Supply Base are Schlumberger, Weatherford and Halliburton International Inc from the United States of America; Lena, FFF (T), Alpha group and Queensway from Dubai and the United Kingdom; Altus Tanzania Ltd from Singapore; Tans Ocean Industries & Services Ltd from Dubai and Intershore Tanzania Ltd from South Africa.
Management of the Export Processing Zones Authority (EPZA) and the Tanzania Ports Authority (TPA) invited bids for leasing plots of between 6,200 square metres and 15,900 square metres a few years back and the EPZA research and planning manager James Maziku had at that time described investor response to the invitation as positive.
“Many companies have shown interest to invest in the (Mtwara Freeport) zone — it’s an indication that investors are eager to operate in the area,” he told press.
However, to date, only the said three companies have actually materialized. While it has not been specified as to the type of production they are engaged in, the Special Economic Zone Act 2006 and the EAC Customs Union (Freeport Operations Regulations) stipulates that operations in the EPZA should be limited to warehousing and storage, as well as labeling, packaging and repacking; sorting, grading, cleaning and mixing, breaking bulky, simple assembly and grouping of packages.
The 6th administration under Presdient Samia Suluhu Hassan is expected to push the agenda for Export Processing Zones (EPZ) as well as Special Economic Zones (SPZ) as key to attracting both foreign and local investors. The President has made it clear that her administration will prioritize regaining investor confidence and part of that means to promote the perks of EPZ and SEZ.
•Exemption from payment of VAT and custom duties for raw materials, machinery, equipment, heavy duty vehicles, buildings, construction materials and any other goods of capital nature to be used for purposes of development of the EPZ and SEZ infrastructure.
•Exemption from withholding tax on rent, dividends and interest for 10years v Exemption from taxes and levies imposed by Local Government authorities on products produced in EPZs.
•Exemption from VAT on utility and whalfage charges
•Exemption from pre-shipment inspection requirement
•Exemption from payment of withholding tax on interest on foreign sourced loan
•Exemption on VAT and custom duties on one administrative vehicle fire fighting equipment, two staff buses and ambulance
•Unconditional transferability of profits dividends, royalties
•Privilege procedure on work permit and visa
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