Tanzania gets gain tax from gas block sales
FOR the first time in history,Tanzania is set to receive capital gain tax from sale proceeds of three gas blocks.
The Singaporean firm, Pavilion Energy,
owned by Temasek Holdings, entered an agreement with Ophir Energy to
take 20 per cent stake of UK’s Ophir Energy offering 1.3 billion US
dollars (about 2tri/-).
The Minister for Energy and Minerals,
Prof Sospeter Muhongo, told the National Assembly last week
The Minister for Energy and Minerals, Prof Sospeter Muhongo |
“We are proposing that the proceeds to
be used as capital to enable TPDC (Tanzania Petroleum Development
Corporation) to acquire two gas blocks at the border of Tanzania and
Mozambique,” Prof Muhongo said.
He added: “we have written to the
treasury to ask them to release the funds for TPDC I think the treasury
will take note of our letter.” According to the statement circulated to
media houses by Pavilion, the transaction is scheduled to be completed
in the first quarter of 2014.
The minister said TPDC will in the
future sell shares in production-sharing agreements through the Dar es
Salaam Stock Exchange (DSE) to enable more Tanzanians to participate in
the oil and gas industry. TPDC would take a stake off up to 75 per cent
of a new production-sharing contracts on the behalf of the Treasury.
“The production-sharing formula will
either be 35 per cent to investors and 65 per cent to the government or
25 per cent to the remaining 75 per cent to us,” President Jakaya
Kikwete said when launching the country’s fourth licensing round.
Mr Kikwete said the government would
consider selling stakes held by the state-run TPDC in production-
sharing agreements to Tanzanians through initial public offerings
(IPOs). The investment helps Pavilion Energy diversify its supply of LNG
to meet Asian demand as Singapore vies to become a gas-trading hub.
The first deliveries from Tanzania are
scheduled to start in 2020. “The natural gas developments in Tanzania
hold tremendous potential, not just for Pavilion Energy but for
Singapore and Asia,” Chairman Tan Sri Mohd Hassan Marican said in
today’s statement.
Temasek set up Pavilion in April to
supply LNG in Asia, the company said at the time. Pavilion Gas, the unit
that manages operations and LNG distribution, started trading and plans
to complete its first delivery to Asia by February, Chief Executive
Seah Moon Ming said in a speech last month.
The Singaporean state firm has increased
its capital to 6.9 billion US dollars from the initial 1.0 billion US
dollars earlier this year.
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