Africa energy and utilities - Tax guide 2018

Brief overview of Oil and Gas sector 

Although there is a long history of oil and gas exploration in Tanzania, hydrocarbon exploration activity intensified in 2000 with the number of active production sharing agreements (PSAs) increasing significantly. This interest accelerated in particular in the period from 2010 following significant discoveries of commercial quantities of gas in the deep water offshore. The most recent offshore licencing round, which was based on a new 2013 model PSA, was completed in 2014 but had a muted response. No new offshore licences have been announced since January 2012. 

Power plant pipes

Recent years have seen significant regulatory change including: 

  • 2015: The Petroleum Act (“PA”) 2015; The Oil and Gas Revenues Management Act 2015; The Tanzania Extractive Industries (Transparency and Accountability) Act 2015; 
  • 2016: New income tax regime for the extractive sector (including the oil and gas sector effective from 1 July 2016 (introduced under Finance Act 2016); 
  • 2017: The Natural Wealth and Resources (Permanent Sovereignty) Act, 2017; The Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Act, 2017; The Written Laws (Miscellaneous Amendments) Act.

 

Brief overview of the Power and Utilities Sector   

Tanzania has abundant and diverse unexploited energy sources placing the country among the countries with highest potential in power generation in Africa. The energy sources in Tanzania range from biomass, natural gas, hydro, uranium, coal, geothermal, solar and wind. 

Although hydropower remains a significant component of electricity capacity, in recent years its proportion of the mix has reduced as a consequence both of climatic changes as well as increased nonhydro generation capacity. Following discoveries of significant volume of natural gas and geothermal reserves, the supply mix is expected to continue to change. The most significant recent addition to capacity is the Kinyerezi gas to power project. Currently two plants (Kinyerezi I and Kinyerezi II) are operational, and a further two plants (Kinyerezi III and Kinyerezi IV) are expected to become operational in the future. In addition, the Government has stated its commitment to develop Stiegler's Gorge 2,100 MW hydroelectric project.  

If you wish to have a deeper conversation around the information and developments presented in this publication, please contact us.  

 

Contact us

Vincent Nalwendela

Manager, PwC Tanzania

Tel: +255 (0) 22 219 2000

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