New legislation could cripple Tanzanian LNG

By Leigh Elston 6 July 2017
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The Discoverer Americas drillship off Tanzania. (Paul Joynson-Hicks/AP/Staoil) The Discoverer Americas drillship off Tanzania. (Paul Joynson-Hicks/AP/Staoil)

Two new laws in Tanzania give the government sweeping control over the country’s natural resources – including the power to renegotiate contracts in favour of the state at any time, a move that could seriously affect LNG projects in the country. 

President John Magufuli has said that the legislation will bring greater transparency to the extractive industries and lead to fairer distribution of the country’s resource wealth. However, the uncertainty they create – and the fact that they forbid the arbitration of disputes in international courts – could kill off private sector investment in Tanzania altogether.

Tanzania’s parliament passed the laws on Monday. The first, the Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Act, allows the government to renegotiate all mining or petroleum contracts to ensure they “protect the interests” of the Tanzanian people. The second, the Natural Wealth and Resources (Permanent Sovereignty) Act, bans the export of raw minerals and rules that all disputes should be settled in Tanzanian courts.

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