Strengths, weaknesses, and opportunities of local content policy, legal, and institutional framework in the upstream natural gas sector in Tanzania. (March 2023)

• Record Type: Journal Article
• Authors: Chuwa, Lazaro; Perfect-Mrema, Joseph
• Is Part Of: Resources policy. Volume 81(2023)
• Publication Date: 2023-03
• Subjects: Local content policy -- Natural gas sector -- Resources curse -- Governance -- Institutional framework -- Legal framework; Mines and mineral resources -- Periodicals; Ressources minérales -- Périodiques; Ressources naturelles -- Gestion -- Périodiques; Environnement -- Politique gouvernementale -- Périodiques; 333.8
• DOI: 10.1016/j.resourpol.2023.103304
• Languages: English
• ISSNs: 0301-4207

Abstract

Abstract: Tanzania is expected to become a major exporter of liquefied natural gas (LNG) in the future, following the discovery of natural gas reserves totalling 57.25 trillion normal cubic feet (TCF). In Lindi, Tanzania, a proposal is being made to export two-train LNG, a US$ 30 billion liquefied natural gas (LNG) project. However, it's unclear whether the existing LCP will be enough to prevent Tanzania from following in the footsteps of other resource-rich African countries, such as Algeria, Egypt, Angola, the Democratic Republic of the Congo, and Somalia, which have all experienced resource-related wars, disputes, crises, and conflicts. Therefore, this paper critically assesses the strengths, weaknesses, and opportunities in the Tanzanian upstream natural gas sector's local content policy, legal, and institutional framework. A qualitative study was conducted utilising a SWOT analysis on local content policy, legal, and institutional framework on the national level. The authors used the SWOT (strengths, weaknesses, opportunities, and threats) analysis to conduct a narrative document review and literature review. The SWOT approach is well-structured and enables both descriptive and cross-sectional qualitative studies. In addition, the SWOT analysis helps draw a portrait of how challenging it is to establish and implement suitable policies, institutional frameworks, and regulations adapted to local needs. The study finds that Tanzania's legal, policy, and institutional framework for local content in the upstream natural gas industry offers various strengths and opportunities; it also has several weaknesses and threats that must be addressed. First, Tanzania's local content policy, regulatory, and institutional frameworks failed to consider the actual state of Tanzanian industry or indigenous Tanzanian firms' preparedness and industrial capacity. Second, Tanzania's local content is limited by a lack of government coordination with other oil and gas government agencies and other stakeholders. Prioritising local suppliers is part of the local content policy, which also eases evaluation criteria for local firms. The fundamental institutions at stake are the rule of law, bureaucratic quality, government corruption, and the risk of expropriation and contract repudiation. Finally, unregulated lobbying can lead to regulatory capture by special interests or limited policy options. These findings apply to any context and can be utilised by decision-makers, managers, experts, and other stakeholders to focus on significant concerns and identify areas that need to be addressed. Highlights: Tanzania might become a significant LNG exporter after discovering 57.25 trillion normal cubic feet of natural gas (TCF). It's unclear if Tanzania's local content policy will be adequate to avoid resource-related wars, crises, and conflicts. The authors used the SWOT analysis to conduct a narrative document and literature review. Tanzania's local content lacks government coordination with other oil and gas agencies and stakeholders. Unregulated lobbying can lead to regulatory capture by special interests or limited policy options.