Tanzania govt submits Bills to renegotiate mining, gas contracts

Thursday June 29 2017

President John Pombe Magufuli has been on his crusade that mining companies that have been working in Tanzania have been ripping off the country, mainly by under-declaring the true worth of what they take out of the country. PHOTO | FILE


The Tanzanian government submitted three Bills to Parliament on Thursday which would allow it to force mining and energy companies to renegotiate the terms of their contracts as part of a presidential drive to increase revenue.

The Bills, expected to be fast-tracked, will affect multinationals and follow the recommendations of a committee probing the country's gold industry.

The committee called for an urgent overhaul of the country's mining, gas and fiscal codes.

READ: Scepticism greets findings on Tanzania mining

The three Bills, which cover natural resources contracts, sovereignty and amend existing laws, would allow the government to renegotiate or dissolve contracts.

International companies plan to build a $30 billion liquefied natural gas (LNG) export terminal in partnership with state-run Tanzania Petroleum Development Corporation.


They include BG Group, part of Royal Dutch Shell, Exxon Mobil, Statoil and Ophir Energy.

READ: Firms complete drilling two offshore gas wells in Tanzania

The Bill on natural wealth and resources reads: "Where the government has served notice of intention to re-negotiate the arrangement or agreement ...and the other party fails to agree to re-negotiate the unconscionable terms or no agreement is reached ...such terms shall cease to have effect and shall by treated as having been expunged."

It defines "unconscionable terms" as anything that is "contrary to good conscience and the enforceability of which jeopardises the interests of the people" of Tanzania.

The parliamentary session has been extended for several days to allow lawmakers to study the Bills and approve them, National Assembly Speaker Job Ndugai said.

Tanzania is Africa's fourth-largest gold producer and has made vast natural gas discoveries but remains one of the poorest countries in the world.

READ: Is Tanzania getting a raw deal for its mineral wealth?

ALSO READ: Tanzania may have lost $30b in mining revenue

Mining companies that could be affected by the proposed law changes include AngloGold Ashanti, Acacia Mining Plc and Petra Diamonds. 

READ: Magufuli fight for mineral revenue splits Parliament