Tanzanian authorities consider a gas revenue fund as one of the essential pillars of the gas policy. The country’s central bank is expected to play a major role if the policy is implemented.
Tanzania has witnessed discoveries of over 30 Trillion Cubic feet of gas in the last four years. The government is concerned that, as a gas industry takes off, its revenues are properly managed for the benefit of Tanzanians. “The government wants to ensure a transparent and accountable system towards natural gas revenue management and development of the natural gas industry”, says the 45 page midstream-downstream gas policy approved by the country’s cabinet in October 2013.
“A Natural Gas Revenue Fund will be established and managed to ensure transparency and accountability over collection, allocation, expenditure and management of all natural gas revenues. Clear guidelines shall be developed transparently or through national dialogue on the optimum short-term and long-term use of the fund”, the policy document states. “The primary responsibility of the Central Bank is to establish monetary conditions conducive to price stability over time. It is expected that the natural gas industry may fuel inflation in the country if conducive conditions are not put in place timely. In this case, the roles of BoT shall include:
(i) To ensure that natural gas activities do not cause negative impact on monetary policy and macro-economic stability; (ii) To provide advice to the Government on the impact of the natural gas sub-sector, as it evolves, on the national economy; and (iii) To manage and administer the Natural Gas Revenue Fund.
Following significant discoveries of natural gas in Tanzania, natural gas industry is set to grow rapidly. As a result, there will be tremendous increase of upstream activities, mid- and down-stream activities. This requires strengthening of fiscal, legal and regulatory framework to comprehensively address the governance of the natural gas industry. Therefore, enactment and amendment of specific legislations to address the situation is inevitable including Natural Gas Act, Natural Gas Revenue Management Act, Income Tax Act (Cap. 332) and EWURA Act (Cap. 414).