Dar es Salaam. Tanzanian businessman Reginald Mengi is to invest $30 million (Sh67.5 billion) in Swala Oil and Gas Tanzania PLC, which is now awaiting approval to start drilling from next year.
Mr Mengi’s Energy Tanzania Limited has entered into a definitive agreement with Swala for the initial investment for the company to develop its current projects, Swala said in a statement released yesterday.
The tycoon’s entry into Swala is the latest of a string of multi-million dollar investments that he has been signing to add to his industrial investment footprint in the country. Mr Mengi is popularly known for the IPP Group, which operates a line of businesses, including across media channels. Swala is the operator of the Kilosa-Kilombero licence with 75 per cent participating interest and 100 per cent operator of the Block D in Burundi.
The company is also a shareholder in PanAfrican Energy Corporation, a Mauritius-registered company that owns PanAfrican Energy Tanzania Limited, which produces natural gas in Songo Songo.
Swala is waiting for government permits to allow safe drilling of Kito-1 in 2019. Kito-1 was assessed to potentially contain up to 185 million barrels of oil worth over $10 billion (over Sh22.5 trillion) at current prices.
Mr Mengi’s planned investment, which is contemplated to close in two tranches, consists of a $30 million “Convertible Note” that must be converted into ordinary shares of the company at the earliest within 90 days from the date of subscription or a cross-listing of Swala ordinary shares on another stock exchange under one year from the date of subscription.”
Upon conversion, Energy Tanzania Ltd will own approximately 46 per cent of Swala, according to the statement.
“We are pleased to have secured a significant strategic investment by Energy Tanzania Limited, which has been a supportive shareholder since the company’s listing on the Dar es Salaam Stock Exchange four years ago. Mr Mengi has identified the Tanzanian energy sector as a strategically important one with significant opportunity for Tanzanians and Swala is privileged that he has chosen our company as his investment vehicle of choice,” said Swala chief executive officer, Dr David Mestres Ridge.
The tycoon recently signed a deal with a South Korean firm to establish a vehicle assembly plant in Dar es Salaam. The $10 million (Sh22.5bn) plant will be a joint venture between IPP Automobile Company Ltd, a new subsidiary of IPP Group, and Youngsan Glonet Corporation.
In October, he launched a new company called IPP Touchmate Ltd that will deal with production of electronic devices, including mobile phones. The investment worth $5 million was expected to start in three months.
Mr Mengi was recently reported to be in discussions with Chinese investors on how they could partner to revive the Arusha-based General Tyre East Africa, which was recently taken over by the government after remaining dormant since 2009.
He was also quoted as saying that he was looking for partnerships to play a role in the planned construction of a government-sponsored gas pipeline to Kampala and also establish a cashew nut processing plant in Mtwara. All these are happening at a time when Tanzania is implementing its much touted industrialisation drive.