Zanzibar will start issuing oil and gas exploration licences following a law amendment that gives the island autonomy in natural resource management.
President Jakaya Kikwete assented to the Petroleum Act 2015 in July but regulations to operationalise the law are likely to be in place next year.
Control of natural resources is a hot campaign issue in the run-up to the general elections, with Zanzibar’s leaders across the political divide pushing for autonomy. The opposition Chadema’s presidential candidate Edward Lowassa has pledged to review the petroleum law if he is elected president.
Despite having exploration licences for blocks in Zanzibar, companies such as Royal Dutch Shell are yet to begin work due to political wrangling. But Dr Ali Mohammed Shein, President of Zanzibar and Chama cha Mapinduzi’s (CCM) flag bearer, told a political rally last weekend that the island had started talks with Shell to begin oil and gas exploration.
“We have already prepared the policy and we are in the early process of passing a law, but we are waiting for other government procedures,” President Shein said.
Political analysts say CCM may have passed the law to appease voters since the main opposition party, Civic United Front (CUF), has been using it as a campaign agenda. CUF recently called for Zanzibar’s full autonomy, saying control of resources by Dar es Salaam was undermining its economy.
President Shein however cautioned Zanzibaris that it would take up to seven years of exploration activities for Zanzibar to start benefitting from the oil and gas.
The Tanzania Petroleum Development Corporation has been the only organ with a mandate to conduct deep sea exploration and issue licences to exploration firms since independence in 1961. Since oil and gas issues fell under the Union, Zanzibar could not issue licences since 1964.
Failure to remove oil and gas issues from the first draft constitution were among the issues that triggered the walkout by Umoja wa Katiba ya Wananchi (Ukawa), a coalition of opposition parties, from the Constituent Assembly.
But, although the controversial issues were removed from the list of Union matters in the final draft last October, the referendum, which was expected to pave the way for the constitution to be passed, was not held.
In May, the government tabled three Bills on the extractive sector under a certificate of urgency — the Tanzania Extractive Industries (Transparency and Accountability) Act 2015, the Oil and Gas Revenue Management Act 2015 and the Petroleum Act 2015. That attracted criticism from the civil society.
However, the biggest challenge Zanzibar faces in the quest to manage its natural resources is earning the confidence of investors, who may be wary of investing in the archipelago without the mainland controlling the licensing process, according to industry observers.