Tanzania as a Future Petro-State

=Introduction= This project site, whose partners are the Research on Poverty Alleviation (REPOA), the National Bureau of Statistics (NBS) and the Chr. Michelsen Institute, carries basic information, researches and opinions about Tanzania’s future – its problems and potentials – as the country enters an era of exploitation of its major hydrocarbon resources.

=Research Focus= The project research aims at generating knowledge that will enhance the empirical understanding of key prospects and challenges facing Tanzania as a new petro-state. The main purpose is to provide contextualised and evidence-based policy analysis to help the country avoid a road to resource curse.

To achieve this objective, the project research activities focus on the following components:


 * Data for policymaking and public engagement


 * Lessons from mining and onshore gas to inform policies on petroleum


 * Revenue and expenditure management in the petro-state


 * Local content for the petroleum industry in Tanzania


 * Governance in the petro-state.

=Selected Research Work=

Among the research and programme reports that have been produced in this project include:

Strategic Significance of National Oil Companies: Lessons for Tanzania
The paper examines the genesis of National Oil Companies (NOCs) and the political economy underpinning the diverse forms in which they are structured and operate. It also examines how they contribute to the development needs of the countries that have established them. The paper draws mainly from a desk review of relevant literature, institutional records and interviews from selected experts, and it aims to promote informed dialogue on this subject that has caught the attention of stakeholders in Tanzania in recent years following the discovery of a substantial amount of natural gas in the deep sea. The underlying proposition is that the benefits of hydrocarbon to the country can be maximized when a NOC exists, but it must operate within a robust institutional framework. As the case studies demonstrate, the robustness of the institutional framework, in turn, depends on the historical trajectory, broader institutional landscape and political economy underpinning the country’s development path. The authors argue that the Tanzanian NOC has vast potential for contributing to economic transformation in the country given the vast hydrocarbon resources, provided that the proper institutional and policy conditions are put in place.

Local content requirements in the petroleum sector in Tanzania: A thorny road from inception to implementation?
The paper examines the processes around the development of Local Content Policies (LCPs) following the huge discovery of natural gas in the country. It states that although there is a “positive view among domestic stakeholders of imposing such policies, there is much suspicion–to such a degree that it shapes their recommendations of which policies to include in the LCP.” One reason, the paper notes is that the “Government monopolized the policy development process and abstained from conducting a consultative process. [the] findings suggest that future Tanzanian policy development should include in-depth consultations to maximize the decision maker’s knowledge base, add to the transparency of the process and manage expectations. This would also contribute to effective implementation and lessen tensions, conflicts and suspicion among stakeholders”.

Not so great expectations: Gas revenue, corruption and willingness to pay tax in Tanzania
Following the discovery of huge deposits of natural gas in the country, it resulted to the high expectations. This brief presents results from a survey experiment of 3000 respondents in Dar es Salaam and Mtwara and notes that gas revenue causally increases expectations about corruption, but it has no effect on willingness to pay tax. Authors argue that “successful handling of the gas discoveries should include strategies to keep people’s expectations about future gas revenues realistic and to strengthen the control of corruption”.

Governance in the petro-state
This research focuses on the role that public expectations play in successful petroleum sector management, and the way that interest groups work to influence policy in an emerging petroleum economy. The research suggests that the “likelihood of experiencing a resource curse is correlated with the quality of a country’s institutions”. It focuses on how institutions that have been put in place to regulate lobbyism and for public communication and expectation management matter for two specific, negative effects of the resource curse:


 * “The potential for conflict, at times violent, within societies. The governance challenges created by a growing divide between the ambitions and expectations of the people and the government when it comes to revenues and expenditures.


 * The increased risks of corruption and manipulation of the political system for private gain”.

=References=