$245m delays Tanzania projects

News 

Tuesday, April 22, 2014 

EAST AFRICAN BUSINESS WEEK, KAMPALA, UGANDA

BY KENAN KALAGHO

DAR ES SALAAM, Tanzania – Contractors in Tanzania say delays in completion of contracts is due to the government not paying them their money which has accumulated to $245 million.
Speaking in Dar es Salaam last week, the Contractors Association of Tanzania (CATA) Vice Chairman Lawrence Mwakyambiki said the government needed to settle the outstanding bills of Tsh400billion ($245million) for the financial year 2012/13 it owes CATA in order to ensure the smooth implementation of the projects.
Mwakyambiki said such a delay was creating misunderstandings between the banks and contractors who had to apply for loans for the implementation of many projects.
“We usually get loans from the bank and repay after the government issues the funds for the projects but there have been delays from the government in issuing such funds and thereby making contractors to incur penalties from banks resulting from the delays in paying the loans,” Mwakyambiki said.
He pointed out that the delays from the government in paying them have also caused delays in paying their workers which later create a negative impact to both the workers and contractors including the implementation of such projects.
He also pointed out for the need to use of qualified consultants in order to ensure that their projects attain the required standards.
He said: “The government needs to ensure that consultants are used in all its infrastructure projects that are be implemented in order to ensure that these roads and other projects have the required durability thereby reducing unnecessary maintenance expenses”
The governments has recently been implementing different infrastructure projects aimed at connecting the whole regions in the country to tarmac roads that is seen a major tool in speeding up the country’s economic development.

Tanzania cancels 174 mining licenses

Resources 

Monday, April 07, 2014 

BY KENAN KALAGHO, EAST AFRICAN BUSINESS WEEK, KAMPALA, UGANDA

DAR ES SALAAM, TANZANIA - Tanzania government has cancelled a total of 174 licenses issued to small, medium and large scale miners in the country citing failure of the said companies to abide by the country’s Mining Act of 2010.
According to the information that was availed to East African Business Week last week, the Commissioner of Minerals at the Ministry of Energy and Minerals, Engineer Mr. Paul Masanja said companies licensed to undertake mineral exploration and extraction in the country have been evading paying fees, taxes as well as royalty to the government on time.
Eng. Masanja said despite the fact that the country has around 40,060 licensed large scale miners, most of them were not adhering to the laws of the land and the majority of them ended up occupying large areas for themselves.
He said such a trend by large scale miners of neglecting their very work of exploration and or extraction of minerals in such areas of their occupancy, was halting the development and growth of mineral sector in the country.
“The government is losing a lot in tax resulting from few unfaithful mineral exploration companies holding onto their license without doing the exploration and or extraction of minerals as per the requirements of their license,” Mr. Masanja explained.
He also noted that the government is intending to ensure that all speculators stop their operation in all the areas they occupy and allow new mineral investors to take over.
The Minister of Energy and Minerals Prof. Sospeter Muhongo warned the owners of minerals license in his 2013/14 financial budget to ensure that they honor the laws guiding minerals in the country to avoid them being revoked of their license.
So far Tanzania government has found different faults and given notice to some 289 companies licensed to conduct mineral exploration in the country between 2013 and2014 of which 211 license were for large scale mineral exploration whereas 78 were for medium scale extraction and one was for the large scale iron ore extraction.

By Kenan Kalagho, Monday, April 07th, 2014

Ophir oil sells blocks to rival Pavillion

Resources 

Monday, March 31, 2014

BY KENAN KALAGHO, EAST AFRICAN BUSINESS WEEK, KAMPALA, UGANDA

DAR ES SALAAM, Tanzania - Ophir Energy and Pavillion are undergoing oil and gas exploration in Tanzania have finally concluded a deal worth millions of dollars that will see Pavilion acquiring a 20% stake in Ophir energy.
The completion of the sale of Ophir’s energy Tanzania’s offshore blocks, 1, 3 and 4 worth more than $1,255 million signifies another new era of Pavillion investment in the country meaning the two giant firms retains a 20% stake each with BG Group, remaining with its 60 shares.
A statement that was availed to East African Business Week last week said the transaction that was reported on 14th November 2013 to sell a 20% interest in Blocks 1, 3 and 4, Tanzania to Pavilion Energy has now been completed.
The CEO of Ophir Energy Mr. Nick Cooper said his firm was “delighted to welcome Pavilion Energy into Tanzania Liquefied Natural Gas (LNG) development across blocks 1, 3, and 4.”
Mr. Cooper said that the partial monetization of their interests is in keeping with Ophir’s strategy of minimizing exposure to development capex and realizing the value created from exploration success at the appropriate time.
The company has received a cash injection of $1,255 million and a completion adjustment of $5 million to reflect interest and working capital movements since the effective date of the transaction of 1 January 2014.
He said a further $38 million is payable following the final investment decision in respect of the development of Blocks 1, 3 and 4, currently expected in 2016.
According to him, the proceeds from this transaction will support Ophir forward plans which include investing in a number of new opportunities that are under consideration by the listed company.
He also noted that a tax liability will be incurred on the transaction in Tanzania and that the timing of the payment will be finalized after discussion with the relevant tax authorities.
“Net proceeds after tax from the transaction are expected to be $1.0bn based on Management estimates,” Cooper said.
The Permanent Secretary in the Ministry of Energy and Minerals Eliakim Mawsi told East African Business Week that the government welcomes the sale of the shares provided the proper procedure is followed so that the essential government tax is paid up in terms of capital gains.
Meanwhile the company also said that Tanzania’s first planned liquefied natural gas export terminal could be expanded after the project partners – BG Group, Exxon Mobile and Statoil - discovered more gas than expected.
The terminal is expected to start shipping gas by 2020, with a final investment decision expected in 2016.
Ophir Energy plc is African focused, upstream oil and gas Exploration Company listed on the London Stock Exchange and has an extensive deep water acreage position in West and East Africa acquired since its foundation in 2004.

Pilots in Tanzania decry unemployment

Travel 

Monday, March 31, 2014 

BY KENAN KALAGHO, EAST AFRICAN BUSINESS WEEK, KAMPALA, UGANDA

Pilots, flight operators and flight engineers may not be able to take on domestic flight in the country

DAR ES SALAAM, Tanzania - The government of Tanzania has said it will do all it can to ensure local pilots, flight operators as well as flight engineers are given the priority over job opportunities for domestic flight in the country.
This will ensure that local pilots get the required expertise and experience for the good of the nation and the future of aviation industry in the country.
Speaking recently during the meeting with the Professional Association of Tanzanian Pilots (PATP) in Dar es Salaam, the Minister of Transport Dr. Harrison Mwakyembe said there were more young foreign pilots employed in the country’s domestic flights and this needed to be reversed.
“We have few older pilots aged 50yrs and above in the country while the majority of young domestic pilots between the ages of 20 to 49 are foreigners, this is a problem for the country,” Mwakyembe said.
He said the country needed to change this system in order to train more Tanzanians to become future captains in both local and regional flights, while insisting for the association to be more aggressive in fighting for their rights.
According to the Secretary General of PATP Capt. Khalil Iqbal Tanzania local pilots were being segregated with regards to job opportunities and his association is also being sidelined in all issues regarding aviation regulations in the country.
Iqbal said foreign pilots are being favored by issuing them with temporary Visas which are then used to secure flight jobs intended for Tanzania local pilots.
He wondered whether the country has law enforcers to ensure that these illegal foreign pilots have no access to jobs in the country just like it is with other countries like Kenya, and South Africa where it is hard for a foreign pilot to secure jobs.
“We have had experiences where South Africans and Canadians pilots have used the 90 days being given by the Civil Aviation Authority upon their arrival with a flight in the country as an opportunity to make money by flying domestic flights in the country and upon reporting this to relevant authorities we only saw corruption elements and nothing has been done so far,” Iqbar said.
Iqbar said around 40 young local pilots in the country do not have jobs while local airlines are giving temporary passes to foreign pilots from Kenyans, South Africans and Canada to fly domestic flights.
He said local pilots who have been trained oversee in South Africa, Canada and the USA are now back in the country to fly their domestic flights but are being frustrated by TCAA.
He said: “Local pilots are required to do a test in order to be approved of their expertise and experience but TCAA tests take time to be released and they do fail students deliberately. The 70% pass multiple choice test may take more than 3 weeks to be released while in other countries it is a single day exercise.”
He said local pilot students are being failed deliberately without being told which subjects they have failed and they sometimes are not given even the chance to see such tests results.
“We have a lot of local pilots, flight operators and flight engineers with very good qualifications in the country who are without jobs while a lot of foreigners have been employed taking the space of these local youngsters who have spent a lot of money in their studies” Iqbar said.
According to the Chairman of the PATP Capt. Aziz Abdhallah, almost $50,000 is used to train each pilot and leaving them without a job is a sad experience.
Abdhallah said Tanzania flight operators need to change their mindset and start employing local pilots, flight operators and engineers that will allow the country to have both experienced and expertise flight operators.
He said the international law on flights requires that every flight with nine passengers and with a scheduled flight should have circular pilots (2 pilots) but this is not being done in Tanzania.
“If we could allow this to happen as per the international law requirements a lot more young Tanzania pilots and flight operators will secure jobs and we will manage to train more future captain of this nation,” he said.
He said experience shows that a lot of Tanzania flight accidents were as a result of having only one pilot on the flight which is dangerous if the pilot gets sick abruptly and fails to manage the flight.
However, according to Mr. Elias Moshi from Tanzania Air Operators Association, local pilots in Tanzania lacked the required qualifications in order to secure jobs with both local and regional flights.
He said local pilots have Commercial Pilots License (CPL) which is an initial certificate with less experience as opposed to Airline Transport Pilot License (ATPL) which is required in order to prove that they are more experienced with more flight hours.

Tanzania keen for Israeli expertise

Agri-Business 

Monday, March 24, 2014 

BY KENAN KALAGHO, EAST AFRICAN BUSINESS WEEK, KAMPALA, UGANDA

IRRIGATION: Israel is renowned for transforming deserts.

DAR ES SALAAM, Tanzania -  Tanzania’s green revolution is now coming up for the better after the country invited the state of Israel and its business men with an aim exploiting the expertise in the agriculture sector.
Speaking in Dar es Salaam last week during the just concluded Tanzania Israel Business and Investment Forum, the Vice President Dr. Gharib Bilal said the green revolution would only be realized through the exchange of experiences, expertise, technology and knowledge from countries that have recorded success in the sector.
Dr. Bilal said the country is willing to attract committed investors with the techno-know-how, just like that of Israel which have managed to transform a desert land into an agricultural productive land, able to feed itself and the world at large.
“We want to have sound investors with the knowledge, technology and capital who will be able to benefit the country and our people at large” Dr Bilal said.
Tanzania believes agriculture is likely to turn for the better after by inviting and working closely with the state of Israel to ensure that it imparts the technology, knowledge and expertise of agriculture to the local Tanzania citizens who depend heavily on agriculture.
These initiatives have been taken following the achievements in agriculture that has been recorded by the state of Israel through the production and exportation of agriculture products throughout the world despite its country’s experiences of dryness with few sources of water for agriculture irrigation.
This would mean creating job opportunities for the majority citizens in the country who are famers and boosting agro-processing industries.
 Israel representative, Gilad Millo said Tanzania needs to be keen on how it market itself to the world to ensure it  attract investors .

By Kenan Kalagho, Monday, March 24th, 2014

Smart starts regional services

BY KENAN KALAGHO & BAZ WAISWA, EAST AFRICAN BUSINESS WEEK, KAMPALA, UGANDA March 24th, 2014

THIS IS IT: Bouziani said their company is here to stay and they want to offer a different level of service across the region. (PHOTO BY BAZ WAISWA)

The East African countries of Uganda, Tanzania and Burundi, last week saw a new telecommunication service provider enter their respective markets offering voice and data services.
The new company, Smart East Africa (Smart Telecom), is partly owned by Industrial Promotions Services (IPS), a subsidiary of the Aga Khan Fund for Economic Development (AKFED). The firm, officials say, will focus on innovation and customer care.
Speaking at the Kampala launch, Abdellatif Bouziani, Smart Telecom Group CEO said the new telecom firm will expand its unique and proven social enterprise business model in the three countries.
The launch in Uganda was followed by a similar one in Tanzania last Wednesday and Burundi will be this week.
Speaking in Dar es Salaam, Bouziani said Tanzania had a good environment for conducting business.
He said, “We discovered in our market survey that the telecom project investment in the region will have more value and will attain the required growth.”
Already in Uganda Smart has indicated that it is braced for the competition by launching with the lowest price anyone can encounter in the country.
For example a Smart customer in Uganda will only pay Ush74 per each call without time limitation, this is the lowest when you compare to the existing billing of Ush4 per second which adds to Ush240 a minute or unit.
Bouziani said in Dar es Salaam, their company wants to offer a new telecommunication service to serve the people of East Africa region at a very competitive rate of Tsh79 ($0.048) per call.
He said their firm had been involved in survey to determine both the market and sustainability of their investment and found out that the region had more value for their investment.
“We discovered in our market survey that the telecomm project investment in the region will have more value and will attain the required growth,” Bouziani said, adding that lower costs of their services will likely attract many customers.
Bouziani told his Kampala audience their expeditions in Afghanistan with Roshan, a 40% shareholding in Tcell in Tajikistan and their investment adventures in SEACOM submarine gives them the necessary experience to grow a commendable telco in the region.
He said: “We are here for the long term. There will be a product for every segment, we are listening to people and designing what they need.”

Tanzania export zones attract $1b

News 

Sunday, March 16, 2014 

JOBS: Meru said in 2013 they were expecting 25 big investors and instead got 31.

Dr. Aldehelm Meru, the Director General of the Tanzania Export Processing Zones Authority (EPZA), recently highlighted the success of the government’s policy during the past 10 years to attract investment both in processing and manufacturing.  Some $1.02 billion has already been spent in setting up various enterprises. Last week, he spoke to East African Business Week’s Kenan Kalagho. Below are excerpts. 

Question: It’s now over 10 years since the inception of the EPZA, do you think the idea was appropriate and have you been able to achieve the anticipated goals?

 

Answer: The idea of introducing the Export Processing Zones Authority in the country was very right, because the country has been able to create more than 27,000 direct jobs and over 80,000 indirect jobs, attracting some $1.02 billion in capital investment for 98 companies. These companies with EPZ schemes are involved in both processing and manufacturing processing.

Have you then been able to surpass your set targets in terms of job creation and industry investment and if yes, what have been the reasons behind this success?

 

Yes, we have been able to surpass the targets in both job creation and industry investments.

Last year alone, we managed to attract 31 big investors while our target was only 25. These achievements have been due to community’s good understanding on EPZ in-terms of available opportunities and benefits to investors. 

We have also managed to create a lot of awareness on EPZ and the commitments of our team in promoting EPZ both locally and internationally as well as the governments political will in supporting the infrastructure especially electricity, that has helped the scheme to be attractive and get more investors. 

There is the issue of tax exemptions offered by the government to investors; do you think this is appropriate considering the conducive environment the country is endowed with?

 

The public need to understand that it is very important and appropriate for a country to offer tax incentives to investors. There is a perception that giving incentives to new investments is loss of government revenue. 

You give incentives to new investments which means that revenue is not there in the first place. 

 

How can you lose something that you did not have in the first place and you cannot claim to lose revenue to a company where there was no tax at all? 

 

For example, in mining sector you can talk of losing revenue if incentives are offered because we have the resources on the ground, but with industries it’s a different story because sometimes investors go to a place where there is no industry at all and therefore you cannot claim to lose revenue in such circumstances. These incentives are given even in other countries like Kenya, Ghana, China, Namibia, Malaysia, Nigeria and so on.

What countries have invested the most in the EPZ in Tanzania and in what capacity?

 

The countries that are investing much in EPZ in Tanzania include, India, seconded by China, South Africa, Thailand and the USA. Most of these investors are mainly investing in agro-processing industries followed by mineral processing and engineering.

Apart from the current EPZ areas of Dar es Salaam, Bagamoyo and Mtwara, Are there any plans to scatter these projects to other regions?

We have set aside land to be able to scatter the program throughout the country in mainly 20 regions in the country. 

We want to work with regional authorities to locate us land for EPZ between 500 hectares to 2,000 hectares of land which will be used for the projects in such regions

In your own view, is it appropriate for Tanzania as a country to join forces with other East African countries and sign the Economic Partnership Agreement (EPA) with the European Union countries?

 

I do not have a problem with the EPA, because it makes us closer to European countries and it will help us trade direct as a bloc with EU countries. It enables us to get markets in European countries. It would increase trade and it is good to have partners in business as it helps us to trade duty-free with the EU.

Our countries rely entirely on exports, because we need foreign currency to be able to balance foreign payments whenever we import oil, machinery, medicines and so on.

The problem is the conditions which favour one side (EU) and as an East African bloc we are not pleased with the conditions that have so far been set, because we need a partnership that would be solely a win-win situation.  

Any advice to Tanzanian’s with regards to EPZ?

 

We need take the advantage of the EPZ and Special Economic Zones (SEZ) schemes which have a lot of opportunities and benefits. They provide lucrative incentives that enable investors to get back their investment capital at the best earliest time. Tanzanians should not lean back and wait for foreigners to come and take advantage of opportunities which exist, on the contrary they should stand forward and grab the opportunities to make sure that its we Tanzanians who are developing our economy.