Tanzania to Increase Royalties and Fees

An increase in royalties and signature bonuses are on Tanzania’s agenda. The East African country plans to initiate the two on energy contracts as it tries to make the most of the sector.

The country’s energy and minerals minister Sospeter Muhongo said royalties on gas production would rise from the current 12.5%, although he did not say to what level. A new signing fee would also be introduced under a new gas policy, master plan, and law that is now in the drafting stage.

In a presentation to parliament, he said it would take effect in 2012/13.

In the past few years the country’s estimated recoverable reserves have risen significantly. In June Tanzania raised its recoverable reserves from 10 Tcf to 28.74 Tcf.

Muhongo also revealed that the government would be launching a new licensing round in Houston during September.

"The government will review existing contracts and conduct a detailed evaluation before entering into new PSAs for oil and gas to ensure national interests are upheld," he said.