Going by the November 2012 edition of Ventures Africa, a monthly Pan-African business magazine, Said Salim Bakhresa, Gulam Dewji, Rostam Aziz, Reginald Mengi and Ali Mufuruki have a combined fortune of $2 billion (about Sh3.2 trillion).
Anyone listening to the debate that preceded the auctioning of natural gas blocks a few days ago probably came away with the impression that Tanzania’s local investors are just as poor as the average Tom, Dick and Harry. Their money, it seems, is only enough for trading in low-profile products such as rice fritters (vitumbua).
Going by the November 2012 edition of Ventures Africa, a monthly Pan-African business magazine, Said Salim Bakhresa, Gulam Dewji, Rostam Aziz, Reginald Mengi and Ali Mufuruki have a combined fortune of $2 billion (about Sh3.2 trillion).
But the government apparently believes they are too poor to make any meaningful investment in such heavyweight ventures as natural gas exploration.
That is the government’s official position, for the time being at least, and the best local investors can do is wait until it floats the shares of the state-owned Tanzania Petroleum Development Corporation.
When Energy and Minerals minister Sospeter Muhongo and his Permanent Secretary, Eliakim Maswi, said so at a two-day oil and gas Conference in Dar es Salaam, some in the audience mistakenly thought they were airing their personal views.
But any doubts about the government’s position were put to rest when President Jakaya Kikwete officially declared, at the official launch of the fourth deep offshore and Lake Tanganyika North Licensing Round 2013, that local investors could not possibly afford the cost of oil and natural gas exploration.
Mr Mengi, who is the chairman of the Tanzania Private Sector Foundation, spoke at some length about how local investors could take part in the ventures. Mr Mufuruki delivered his speech in his capacity as chairman of the CEO Roundtable. There was only one problem with this scenario: Their remarks meant nothing for the simple reason that a decision had already been reached long before they had said a single word. Frankly speaking, we never expected that those on Tanzania’s rich list—which is longer than the five mentioned earlier—would use their net wealth to invest in oil and natural gas exploration. They would surely use other means to source the capital.
All these arguments notwithstanding, the government had legitimate reasons for taking this step. It might have learnt a thing or two from the way local investors treated their mineral prospecting licences in the past decade or so. It probably learnt a lesson or two from the success of major oil and gas firms elsewhere. The fact is that successful oil and gas firms tend to be those where the state has interests or where it has a stake.
In Shell Oil, for example, the government of Saudi Arabia has a stake through its state-owned oil company, Saudi Aramco, in Motiva Enterprises. The Government of Norway owns a 67 per cent stake in Statoil while the remaining shares are owned by the public through the stock market. And the Brazilian government directly owns 54 per cent of shares in Petrobras.
British Gas may have been privatised, but the fact is that it was once a state-owned company before it went solo in 1986—when its shares were floated on London Stock Exchange. Ophir Energy is a public limited company listed on the London Stock Exchange since July 2011. Here’s the million-dollar question: Is there any other way for local investors to get a piece of the pie from Tanzania’s natural gas reserves besides owning an exploration block?
The answer is definitely yes. Entrepreneurs turn problems into opportunities. There is no reason why they should not turn their being locked out of the process of owning natural gas exploration blocks into an opportunity.
With eight new licences slated for mid-2014, local investors can still do good business with their foreign counterparts. Certainly, these foreign companies will need to be in a cordial relationship with their internal and external publics. If local investors form public relations firms, as some are already doing, those of us who studied mass communication can work for them and benefit from monthly retainer allowances. People working in exploration ships will need to eat.
A catering company is yet another avenue for local investors. This food will need to be transported to where the ships are—sometimes up to 80 kilometres away from the shore—creating yet another opportunity to be exploited. With such huge investments coming, the wise would be rushing to build in Mtwara, Kigoma and Rukwa. Considering that people working in exploration ships live far from the shore for weeks, it goes without saying that they will need uniforms, clothes, spare parts for their ships and exploration equipment—even entertainment when they come ashore.
We may not have the billions of dollars the government speaks of, but we can still invest in activities related to oil and natural gas.
