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Tanzania is to set up a sovereign wealth fund to ring fence future earnings from its major gas discoveries in the southern parts of the country along the Indian Ocean coastline, its president said. The east African nation of 42 million people tripled its estimated gas reserves in June after offshore finds by Norway's Statoil, U.S. group ExxonMobil and Britain's BG Group and its partner Ophir Energy. President Jakaya Kikwete told the nation that his government was studying various models for managing revenues from gas production, adding they were focusing on those that have sovereign wealth funds.
"We want to learn from them by setting up our own fund to ensure we similarly benefit," he said in a televised address. When the country eventually sets up the fund it will join other African countries like Nigeria and Ghana, who are also moving towards the establishment of state-owned investment funds for revenues generated from the energy sector. Kikwete said the government's intention was to ensure natural gas revenues were used to speed up development.
"Since 1954 some 61 wells have been drilled. Out of those, natural gas was found in 22 wells ... We haven't been lucky yet to find oil but we have discovered gas in both onshore and offshore areas," he said. Tanzania's recoverable gas reserves stood at 28.9 trillion cubic feet, Kikwete added. "Offshore oil and gas exploration started in 2004 with just one company but we now have 18 companies. Gas exploration has escalated since the first gas discovery in 2010 ... I believe that a lot more gas will be discovered," he said.
Tanzania, which is east Africa's second-biggest economy could see an increase in revenue of up to $3 billion a year from gas exports, according to the World Bank. Kikwete said cheap access to gas would encourage construction of fertiliser plants and boost power generation. "Some 350 megawatts of electricity in the national power grid currently comes from natural gas and our target of generating 3,500MW by 2015 largely depends on natural gas," he said. Kikwete said the government was working on a new national gas policy, gas utilisation master plan and legislation to regulate the fast-growing industry.
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