With recent discoveries of off-shore natural gas, Tanzania hopes to boost its economic development by entering into the energy market. However, amid allegations of corruption donors have frozen nearly 500 million dollars of aid to the country, adding to the long list of obstacles the country faces in order to receive any gains from its natural gas reserves.”
The country hopes to be a net exporter of liquefied natural gas (LNG) in the future, but is this even feasible in a country with such rampant corruption in its energy sector? Perhaps this will give the country the opportunity to properly address problems with corruption. The chair of Tanzania’s Public Accounts Committee, Zitto Kabwe, seems to think so stating “This is the right time to fight and set very strong deterrent measures against corruption, because if we don’t do this now, the moment we start to receive a lot of gas revenues… we are going to have a big problem.”
Even before they start to receive gas revenues, corruption will create problems for the country. The country largely lacks infrastructure to get the natural gas out of the country for export. The Mnzai Bay reserve where the natural gas is located is in the far southern part of the country, a place that lacks access and infrastructure. Roads will need to be built because currently the southern region is one of the most remote areas of Tanzania. While there is a paved road around the area, there is no paved road from the main population center of Dar-es-Salaam to the region. This means that a trip to Mnazi Bay could take days, even longer by bus, which is what most local laborers can afford to take. The gas itself will be moved to Dar-es-Salaam via a pipeline that is currently being built from Mnzai Bay, but again this will take some time to complete and at a significant cost. Once the gas reaches Dar-es-Salaam, Tanzania’s primary port, it may take a long time before it is able to be exported since the port is notoriously inefficient. While the port is the fourth largest port on Africa’s eastern coast, the delays and monetary costs of are equivalent to a 22% tariff on imported goods. Overcoming the infrastructure problems to get the industry off the ground is a huge financial burden.
All of these infrastructure projects mean large amounts of funds are passing through the hands of the Tanzania government. With large amounts of money flowing in, the opportunity for corruption is widespread. Money siphoned away from major infrastructure projects is time added to the completion of these projects.
This is time Tanzania does not have. Natural gas prices are decreasing, due to increased supply from the United States, which already has the needed infrastructure to produce LNG and a stable political climate. This makes East African energy less appealing and less profitable overall.
Kabwe is correct. Now is the time for Tanzania to get its corruption problem under control. Where he is incorrect is why. The problem shouldn’t be addressed for the possible influx of gas revenue, but rather because without fixing corruption, there will be no gas revenue.
Featured Photo from Wikipedia Commons.
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