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Tanzania: Mtwara-Acid Test in Resource Conflicts? Print E-mail
Tuesday, 05 February 2013
On 25 January 2013, the Tanzanian government faced a first acid test in handling resource-related conflicts when Mtwara residents demonstrated against the construction of a 532km natural gas pipeline to Dar es Salaam and instead insisted that a power plant be built in the area. In protests against police and government offices, seven people were killed. 53 residents were charged with conspiring to destroy property.

Background

The USD1.2bn project commissioned in November 2012 is being undertaken by three Chinese firms, China Petroleum Technology Development Corporation, Petroleum Pipeline Engineering Bureau and China Petroleum Pipeline Engineering Corporation, after the government obtained financing on non-concessional terms from China Export-Import Bank.

The gas is primarily intended for electricity production as the country aims to eliminate perennial deficits in the power sector. However, reports indicate that the region’s residents feel they have been neglected for long and insist the new power plant be built in their area instead of Dar es Salaam as currently scheduled.

The resistance has been festering for some time and although the government still insists that the project will go on, some politicians and religious leaders are urging the government to engage the residents in meaningful dialogue to avoid further conflict. They argue that the residents have not been informed of any benefits the area will receive from the gas exploitation. The government has now adopted a more conciliatory tone and reassured residents that the bulk of the gas produced will be used in the region. However, Tanzania is likely to face more such challenges.

Perspectives
Ideally, legislation is used to guide resource revenue allocation with the source area receiving some part. However, as in Kenya and Uganda, Tanzania has insufficient and outdated legislation for the gas sector: the country is currently the (slow and delayed) process of reviewing the new gas policy and legislation. A draft policy for the sector has finally been published, but progress with the legislation has been sluggish, not just because the government argued that the bill must follow the policy. Public consultation on the policy has been underwhelming.

Host community relations will be a critical issue for investors in extractive industries – mining, oil, gas  , but also in large-scale agricultural ventures across the region, and basically any investment that requires large tracts of land (also see Tanzania: Land Incursions in Arusha Area - Implications for Investors ). This affects both rights to land as well as the allocation of revenues to the local community.

A Regional Problem
In newer industries like mining, oil and gas, the governments in Kenya, Uganda and Tanzania are still developing the legal and regulatory framework. In Kenya, this will be additionally complicated by the transition to the new constitution and the establishment of county governments after the March 2013 elections.

A similarly significant challenge is that governments across the region have not been very adept at managing the process of creating a balance between host community and investor interests. Tanzania is one of the largest gold producers in Africa, but the industry is often criticised for the limited positive impact it has for ordinary citizens. Foreign mining firms are easy scapegoats, but entrenched corruption in government also plays a key role (Tanzania Mining Industry: Revenues, Resentment and Overregulation?). This creates a toxic combination: the absence of a legal framework that satisfactorily addresses the rights and demands of local communities is exacerbated by corruption and limited technical competence on government level.

Whether decentralisation can really change this is questionable: In Uganda, for example, the creation of ever more districts just means that public finances are stretched further and further without any genuine capacity to address the issues of local communities being built. In Kenya, there are concerns that its notorious corruption will merely be decentralised to the new county governments.

The Zanzibar Challenge
Tanzania faces another, broader conflict in this context: The semi-autonomous Zanzibar island and the mainland government disagree over the revenue share model for offshore oil and gas production. Relations between both entities have long been tense, despite some improvements after a power-sharing agreement. Both parties on Zanzibar claim that the laws creating the Tanzania Petroleum Development Corporation (TPDC) and the groundwork for oil exploration activities were not ratified by the island’s parliament and are therefore not binding.

Zanzibar argues that the island government should form its own equivalent of TPDC and that any exploration in Economic Excusive Zones (EEZ) be carried out jointly. Due to this stand off, for example, Shell’s exploration of blocks awarded in 2002 has stalled and the company cannot sell its assets either. The dispute may feed into the recent resurgence of separatist sentiments.



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