Tanzania has six months to settle dispute with Orca Energy, says Solicitor General
What you need to know:
- The dispute with Orca Energy centers on TPDC's rejection of PanAfrican Energy Tanzania’s (PAET) proposed commercial terms for Additional Gas (AG) and a new gas sales agreement, despite the expiration of Protected Gas (PG) entitlements.
Dar es Salaam. Two days after Toronto-listed Orca Energy filed a $1.2 billion (Sh3.2 trillion) claim against the Tanzanian government for breach of investment treaty and obligations, the Solicitor General has provided insight into the next steps in this impending legal battle.
Speaking to The Citizen, Solicitor General Boni Luhede stated that the parties now have six months to resolve the dispute amicably.
"If not settled, arbitration proceedings will be instituted," he said.
This response follows several high-profile investment disputes that the Tanzanian government has faced, often involving substantial sums and issues related to expropriation, some of which have been settled out of court or contested in the courtroom.
The dispute with Orca Energy centers on TPDC's rejection of PanAfrican Energy Tanzania’s (PAET) proposed commercial terms for Additional Gas (AG) and a new gas sales agreement, despite the expiration of Protected Gas (PG) entitlements.
PAET argues that these actions breach their contractual rights and is seeking compensation exceeding $1.2 billion (Sh3.2 trillion).
The Notice of Dispute calls for negotiations with the Tanzanian government and TPDC, with arbitration proceedings expected if a resolution is not reached within the specified timeframes.
Tensions escalated when PAET requested TPDC to apply for an extension of the Songo Songo Development License in April 2023.
Despite repeated requests, TPDC failed to act, citing flawed legal arguments about the continuation of PG.
This reluctance, coupled with unsubstantiated allegations against PAET, led to a breakdown in negotiations.
The central issue involves the Songo Songo Development License, granted to TPDC in 2001 for the development of the Songo Songo Field.
The agreement, which includes the Production Sharing Agreement (PSA) and the Gas Agreement (GA), was set to deliver Protected Gas (PG) until July 31, 2024, primarily for power generation at the Ubungo complex in Dar es Salaam.
