Governance of Tanzania's Mining, Oil and Gas Sectors Has Improved, But Remains 'Weak'
13 July 2021
DAR ES SALAAM—Both Tanzania’s oil and gas and mining sectors have been classified as “weakly governed” in a new assessment. The 2021 Resource Governance Index (RGI) rates mining as slightly better governed than oil and gas. Researchers scored both sectors slightly higher than in the last edition of the index, in 2017.
Natural Resource Governance Institute (NRGI) experts found that Tanzania’s oil and gas sector, with an overall score of 55 points out of a possible 100, lags its mining sector, with 58 points. The slight difference in governance scores is due in part to the absence of a centralized cadaster for oil and gas, as well as a less-established legal framework relating to both pre- and post-licensing round rules.
Experts found evidence of strong financial reporting and production disclosures from the state-owned oil and gas company, the Tanzania Petroleum Development Corporation (TPDC). This led them to conclude that it is better governed than state-owned mining enterprise STAMICO, for which NRGI says governance is “poor.”
“While governance of Tanzania’s extractive industries has improved over time, our assessment shows that there is much more work to be done,” said Sophia Rwegellera, Tanzania senior officer for NRGI. “President Samia has signaled that the government is open to change in this regard, which we welcome. With the world hastening the transition from fossil fuels to renewable energy, now is a critical moment to retool both oil and gas and mining sectors to be fit for purpose.”
The overall performance of Tanzania’s mining resource governance remains weak, however NRGI has classified the country’s ability to realize value from minerals as satisfactory due to good governance of taxation. NRGI suggested that management of local impacts of mining requires improvement, saying that Tanzania should review the section the Environmental Management Act 2004, which requires the authorities to direct the National Environment Management Council to publish environmental and social impact assessments in full.
STAMICO should disclose commodity sales information, and details about joint venture projects and subsidiary information, NRGI said. The recommendations are especially relevant as the government aims to almost double the mining sector’s contributions to GDP by 2025.
On oil and gas governance, researchers said that Tanzanian authorities should address issues pertaining to licensing, contract disclosures, establishment of a cadaster, rules and disclosures related to environmental and social impact assessments and mitigation plans.
“If Tanzania is to achieve its vision of becoming a major producer and exporter of natural gas, and improve the lives of citizens with the proceeds, then the many governance fundamentals highlighted in the RGI assessment require attention,” Rwegellera said.
Notes to editors:
The Resource Governance Index (RGI) serves as key point indicators in the extractive sector governance in resource producing countries around the world. It also serves as a global benchmark, country and sector diagnostic tool, and a roadmap for policy and practice reform.
The 2021 Resource Governance Index assesses how 18 resource-rich countries are managing their oil, gas and mineral wealth. The composite index has three components. Two measure essential characteristics of the extractive sector, namely value realization and revenue management, and the third analyses the overall governance framework. These three overall dimensions of governance comprise 14 subcomponents with 51 indicators, which are calculated using 136 questions.