By world standards, Tanzania is not such a major oil consumer. Should it, for any reason, fail to import oil, world trade would not be affected at all — it would not send a shiver down the spine of world trade.
According to Bank of Tanzania, the country’s petroleum imports bill for the year to February 2008 was $1.46 billion out of a total bill of $5.53 billion.
Considering that imported oil accounts for less than 4 per cent of the country’s fuel consumption, expending 26.4 per cent of the imports budget on oil alone is socio-economically indecent.
Wood-related fuel accounts for over 80 per cent of national consumption, and increased use of petroleum would reduce the ongoing havoc caused to the environment through tree-felling for fuel.
But imported fuel is costly, invariably playing havoc with Tanzania’s scarce foreign reserves. It’s a tough choice: should Tanzanians spare their meagre forex and spoil the environment or the other way around?
It does not end there. Does Tanzania have commercial-grade oil deposits or not? And, if yes, will the oil come with the feared resource curse whereby its exploitation would bring greater ills upon Tanzanians than positive gains?
Angola, Nigeria, Gabon are oil-rich countries.
But, that hasn’t kept a myriad afflictions characteristic of Africa off their backs — including internecine conflict/strife, human displacement, and the legendary wolf at the door! What assurance, then, that Tanzania won’t succumb to the curse?
The conundrum’s being deepened and compounded by the burgeoning global financial crisis heralding the great recession.
But, even before this crisis, Tanzania had already entangled itself in a mass of indecisions and counterproductive decisions.
In 1991, it succumbed to IMF pressure to abandon the Tanzania-Italy Petroleum Refinery (Tiper).
In one of its one-size-fits-all economic cure-all recovery programmes, IMF argued that Tiper, operating at 60 per cent capacity, was a drag on the economy.
Dar was also coerced into liberalising the petroleum trade.
This sidelined the Tanzania Petroleum Development Corporation (TPDC) which had proved adept at regulating and shepherding the nation’s petroleum business.
In hindsight, the merit of those decisions is unprintable. Today, Dar is wavering between having a refinery and principally importing crude. [One of the reasons for escalating world oil prices is unprecedented shortage of refineries].
The government is also wavering on restoring the business to TPDC.
Testimony to all that’s in the undue dilly-dallying by Dar in concretising its wishful thinking — and also publishing the entire truth on domestic oil deposits... And the way forward thereafter.
Indeed, with global credit crunch, it’s going to be difficult to find foreign direct investment for a refinery today.
The Qatar-based Noor Oil Consortium for a refinery and Dar-Mwanza/Kigoma oil-pipeline last year is still a long shot.
That’s where IMF should re-enter and undo the damage it did Tanzania especially Tiper and wholesale market liberalisation by helping Dar acquire a refinery.
The Fund has in recent times made some noises about swimming (or sinking) with Africa in these stormy economic times; it’s about time it lived up to its new-found image.
Either it is truly with us this time round, or the alternative to that is unprintable.
Karl Lyimo is a freelance journalist based in Dar. Email: [email protected]