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The East African : Mar 16th 2015
The EastAfrican 42 TRANSPARENCY Dar bows to pressure, makes details of gas contracts public P≥oduction sha≥ing ag≥eements will be available fo≥ public sc≥utiny befo≥e elections slated fo≥ Octobe≥ By COSTANTINE MUGANYIZI Special Correspondent T he Tanzanian government has finally agreed to make public details of production-sharing agreements (PSAs) it signs with investors in the natural resources sector. Tanzania Petroleum Develop- ment Corporation (TPDC) officials said the PSAs will be accessed in the next few months before the general election slated for October. According to TPDC, the publish- ing of the contracts will be made in phases starting with the 26 PSAs of 18 international oil companies (IOCs), which have so far discovered over 50 trillion cubic feet of natural gas in the country. The decision to make the con- tracts public was made last month after a consensus on the matter between TPDC and the Public Accounts Committee (PAC) was endorsed by the government. “The decision to make details of the 26 PSAs signed with oil companies public was made in February during the meeting between TPDC and PAC. We have started submitting those PSAs available through the Parliament Office,” director general of TPDC Dr James Mataragio, told The EastAfrican. Last year, the PAC and TPDC were involved in a tug-of-war over the matter, with the former ordering the arrest of board chairman Michael Mwanda and then acting head of TPDC James Andilile. The two officials were on Novem- ber 2 last year detained for hours by police after defying a PAC order to deliver the agreements to parliament. TPDC had for two years declined to present the contracts to the PAC. According to acting Permanent Secretary for Energy and Minerals Ngosi Mwihava, making the contracts public was sanctioned after the Attorney General’s office gave Led by Zitto Kabwe, PAC pushed for the release of the agreement for scrutiny by the public. BUSINESS MARCH 14-20,2015 IMPLICATION Some companies are not happy with the government’s decision to make the PSAs public, saying civil society groups and opposition critics will put pressure on the government to review any contracts that are not in line with the terms of the 2004 model PSA. However, Norway Statoil, which is among multinational companies that have made huge gas discoveries in Tanzania welcomed the move. the President Jakaya Kikwete-led administration has not managed exploration of natural resources transparently. The timing of the government’s decision to pull the lid off the contracts is seen as a tactic geared at winning votes in the forthcoming general election. Political analyst Emmanuel Kis- umo doubts the government’s commitment to making the contracts public. “It is political. There were many Gass pipeline from Songo Songo to Dar es Salaam. Picture: File the process the nod. Dr Mataragio said all parties were consulted before decision to make the documents public was reached. “The Attorney-General gave di- rectives on how the issues should be handled, therefore the contracts will soon be available for the public. These will be PSAs without any controversies while those with the confidentiality clauses will wait until other parties involved have been consulted,” he said. One of the conditions oil compa- nies have given the government for their PSAs to be publicised is to en- sure the public is first educated on the nature and structure of the technical aspects of the deals. The education programme, which will include TV and radio programmes and commentaries, newspaper articles and brochures explaining PSAs, was supposed to start two months ago. For years now, the government had resisted calls to make the documents public. Keeping details of the agreements close to its chest gave the opposition enough reason to call for change of government in the forthcoming general election on grounds that opportunities in the past for the government to do the right thing but instead it gave conflicting responses. Why now? What has changed? The government is pre-empting what was definitely going to be an election issue. The opposition has been caught on the back foot,” he said. However, other leaders believe that the government succumbed to relentless pressure from the PAC, which for many years has pushed for release of the crucial documents. Led by its chairman Zitto Kabwe, who this week was stripped of his membership by leading opposition party Chadema, PAC pushed for the release of the agreement for Tanzanians to scrutinise them. This was after a leak part of a contract between the government and Norway’s Statoil and ExxonMobil of the US showed that Tanzania was given a raw deal on how proceeds will be shared. B≥ali≥wa seeks $25m loan to boost p≥oduction capacity, ≥evenue By BERNA NAMATA The EastAfrican RWANDA STOCK Exchange-listed brewer Bralirwa Ltd plans to borrow $25 million from the International Finance Corporation in coming months to expand its capacity as it seeks to shore up its faltering revenues. While the exact details are yet to be made public, The EastAfrican has learnt that the company is planning to raise $50 million to fund its expansion programme as it eyes the regional market. Bralirwa’s revenues have recently dropped due to tough regulatory rules introduced in its previously biggest export market — the Democratic Republic of Congo (DRC) — in April last year, following complaints from a Congolese company producing the same products. As a result, the company stopped exports to eastern DRC, which has hit its balance sheet, given that total revenues from export of beer from Rwanda to DRC were between approximately Rwf27 billion ($37 million) and Rwf40.8 billion ($56 million) two years. This has left Burundi, as its major export market since volumes to other countries in East Africa are still low. While competition has been growing on the local beer market with the entry of Belgium-based brewery- Unibra, Kenya-based EABL and Uganda’s Nile Breweries Ltd, Bralirwa’s exports to the regional market remain limited. However, Rwanda’s beer demand at 1.2 mil- lion hectolitres remains largely dominated by Bralirwa beer brands in particular —Primus, Mützig, Legend Extra Stout, Amstel and Turbo King. In addition, it sells Heineken, which is imported from the Netherlands. It also has a contract with Coca-Cola Com- pany to manufacture soft drinks such as Coca-Cola, Fanta Orange, Fanta Citrus, Fanta Fiesta, Sprite, Krest Tonic and the company’s own brand, Vital’O. “Competition has become stiff and it is expected to continue. This coupled with the challenges in the DRC export market will have an impact on the company’s performance. “But the company is in the process of ex- in the past panding capacity. This is why they decided to offer a bonus share last year,” an industry expert told The EastAfrican on condition of anonymity. “Their strategic advantage is that they pro- duce both beer and soft drinks unlike most breweries in the region, which produce only Bralirwa processing plant. Picture: File alcohol — this will help balance the profits in the face of competition. But they need to compete effectively by increasing efficiency and cutting costs. Introducing new brands will not have an immediate impact on the balance sheet,” he added. Bralirwa has shed half of its value, with the counter now trading at Rwf380 ($0.52) from a peak of Rwf860 ($1.28) at the beginning of last year though this is attributed to the bonus share issued by the company last year. Bralirwa, whcih is 75 per cent-owned by Heineken, profits eased to Rwf8.22 billion ($12 million) in the first half of 2014 from Rwf10.36 billion ($141.9 million) in the first half of 2013 on account of rising costs of materials, negative foreign exchange effects and rising depreciation charges. The company said it anticipates a similar trend in the second half of 2014. Since the establishment of a brewery in Goma in early 2013, DRC has raised the import tariff on beer from $2.9 to $5.74 per crate and introduced a higher charge for quality standard verification, from $0.48 to $0.91 per bottle rack. These increases and the end of Bralirwa’s licence to produce and sell Guinness Foreign Extra Stout produced by EABL in 2013, have also affected its revenue, forcing it to recently launch its own Stout brand — Legend Extra at competitive prices, whereby a 30CL bottle goes for Rwf500 ($0.69) while an ordinary Guinness bottle costs Rwf1,000 ($1.39). Analysts said the company’s future earn- ings will depend on expanding capacity beyond the Rwandan market in the face of growing competition from the region. “They may want to enter into other mar- kets — Bralirwa has to attack their (regional breweries) their market share,” said Eric Rutabana, chief investment officer, Business Partners International Rwanda.
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