Tax body shelves plans to review mining, gas contracts

Tanzania’s tax authority has scrapped plans to review mining and gas contracts, after its announcement of the move rattled investors in the east African country’s rich gold and natural gas resources.

The Tanzania Revenue Authority (TRA) said it was seeking technical assistance to renegotiate mining development agreements (MSAs) and energy production sharing agreements (PSAs). This threatened to duplicate work by the Energy and Minerals Ministry, which earlier this year said it was in talks with miners to alter deals to give the state more revenue. In the tender advertisement posted on its website, the TRA said the main objective of the contract review was “to secure for the country an enhanced and fair share from the extraction of non-renewable natural resource.”

“After our internal consultations with stakeholders, we found that there is no need to do any renegotiations and as such we have withdrawn the tender for expression of interest,” the tax authority’s commissioner general, Rished Bade said.

Investors in Tanzania, Africa’s fourth biggest gold miner which has plans to develop huge new gas finds, have complained of shifting goal posts in contracts with the state.

Mining and energy companies in Tanzania said they have come under increased regulatory pressure in the past few years as the government seeks to increase its share of revenues.

Experts say the government, which last year tightened terms on new gas contracts, is under popular pressure to spread wealth swiftly from recent gas finds made in the poor east African country, even though it remains years away from big gas exports.

In May, Tanzania received five bids for just half of the eight oil and gas blocks it offered in its latest bidding round. The country has 46.5 trillion cubic feet (tcf) of proven natural gas reserves, and expects exploration off its southern coast will result in more finds.

Tanzania has so far signed at least 25 PSAs with about 17 international energy companies, including BG Group, Statoil, Brazil’s Petrobras, Royal Dutch Shell , Exxon Mobil and Mubadala Petroleum.