TPDC, fertiliser producers yet to strike gas price pact

Monday September 24 2018


By Alfred Zacharia @azacharia3

Dar es Salaam. The Tanzania Petroleum Development Corporation (TPDC) and fertiliser manufacturers are yet to agree on the price of natural gas.

The natural gas is a key component in the production of fertilisers. The assistant commissioner for Petroleum Development at the ministry of Energy, Ms Joyce Kisamo, told The Citizen that in 2016, the Energy and Water Utilities Regulatory Authority (Ewura) proposed an indicative price of $2.60 (about Sh5,900) per unit of natural gas to factories producing fertilisers.

However, she said, the government was worried that the proposed price may have been based on the price of the fertiliser in the international market, with little consideration of what the government may have spent on natural gas infrastructure.

“Natural gas is not a free service. It is business that’s why we are taking precautions to ensure that the government also benefits,” she noted.

She said in countries like India where natural gas is being used to manufacture fertilisers, the government does not issue subsidies to the manufacturers. “We are still evaluating other issues related to natural gas prices to ensure that the business benefits both parties,” she said.

At least three companies including Helm AG of Germany, Ferrostal Industries Project GmbH of Germany and Capital DW Fertiliser Company of Egypt are waiting for a consensus on the price of natural gas before they can start operations. As of 2016, Helm AG was setting up a $1.5 billion (about Sh3.3 trillion) fertiliser plant in Tanzania, allocating 400 hectares for the project in Mtwara. It is expected to produce 2,200 tonnes of ammonia and 3,850 tonnes of urea.

Similarly, Ferrostal Industries Project GmbH, has registered a $1.9 billion (about Sh4.2 trillion) fertiliser project at Tanzania Investment Centre (TIC), but things have been moving at a snail’s pace.

The TPDC acting manager for Gas Business, Ms Dora Ernest, told The Citizen that the authorities including Tanzania Revenue Authority (TRA), Tanzania Investment Centre (TIC) Ewura and TPDC were still working on the right price with investors.

According to her, fertiliser plants require a huge volume of natural gas as it will be used as energy to power the factories and as raw materials to produce fertilisers especially Urea.

So far, Tanzania has more than 57.41 trillion cubic feet of natural gas reserve, but only one per cent of it has been tapped.

According to her, at the moment, the natural gas is used mainly to generate electricity and heating uses in industries while the smallest portion is consumed in cars and cooking.