The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Scandal in Tanzania: A little context and 3 lessons

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Corruption charges show need for reform in oil and gas sector.

James Morrissey is a researcher on extractive industries and governance at Oxfam America.

I was in Tanzania last month as what may turn out to be a major corruption scandal in the country’s history was coming to light. Contained in these events and international headlines are lessons about the importance of a broad good governance agenda in managing the oil and gas industries.

Two senior members of Tanzania’s Petroleum Development Corporation were arrested for failing to meet a deadline imposed by Parliament for releasing the details of all 26 of the contracts, or Production Sharing Agreements, that Tanzania has signed with oil and gas companies, including: ExxonMobil, Shell, Norway’s Statoil and the UK’s BG Group and Ophir. While the arrests made international headlines, the two were released hours later on grounds that their arrests were not suitably authorized.

How about a little context?

With policies and laws still being formulated, Tanzania’s emerging oil and gas industry is largely governed by the 26 Production Sharing Agreements, signed by a range of companies that, to date, have not been released to the public.

Public concern over the fairness of these agreements was ignited in July this year when a 2012 addendum to a 2007 Production Sharing Agreement between Statoil and the Tanzanian government was leaked to the public. Its revelations included the fact that the split of “profit gas” between the Tanzanian government and Statoil was between 20% and 30% lower than what was described in model contracts.

Parliament didn’t respond to the leak, but public interest ballooned when a blogger translated the implications of the addendum into understandable terms for citizens in Tanzania: This 20-30% difference could result in Tanzania losing hundreds of millions of dollars. Put another way, the increased revenue to the Norwegian government from this deal could be more than twice the total of Norwegian aid given to Tanzanian since independence. (The Natural Resource Governance Institute’s analysis of the leaked contract concluded that the contract was “not out of line with international standards for a country that had no proven offshore reserves of natural gas at the time when the original contract was signed” but acknowledged that there were limitations to their review, including “continued secrecy around the full PSA itself.” NRGI also did not disclose its own economic model.)

Momentum around this issue built quickly. With the public raising questions about both the fairness of the other 25 agreements, and about the capacity of the Tanzania Petroleum Development Corporation (TPDC) to negotiate such deals. Lurking in the background were concerns about political will and the possibility of corruption.

Public outcry finally sparked a political reaction. The National Assembly’s Clerk ordered that TPDC disclose all 26 contracts to the Parliamentary Oversight Panel by November 3. TPDC resisted this directive, saying that the contracts could not be made public as they were governed by confidentiality clauses. When the November 3 deadline came and went, the Parliamentary Committee on Public Accounts ordered the arrest of both the acting Director General and the board chairman of TPDC.

While many people may feel outraged at the ongoing lack of transparency and the impunity of TPDC officials, this entire process has ignited calls from politicians, the general public and civil society , for increased transparency in Tanzania’s oil and gas sector.

The drama contains 3 important lessons

The following lessons pertain to the importance of a broader approach to good governance, including the maintenance of space for civil society.

Transparency is fundamental: A clear message from Tanzania’s recent experience is that transparency is fundamental to ensuring that natural resources are managed in the public interest. At the moment it remains unclear whether the deal between Statoil and the Tanzanian government is a fair one. Without access to the original profit sharing agreement, the economic modeling on which the oil contract is based, as well as documentation detailing the bidding process, we simply cannot answer that question. But without transparent access to similar information for the other 25 contracts, there can be no public discussion at all on whether those deals are fair. There growing international momentum for “open contracting”. Many countries, such as Peru, disclose all of their oil and gas agreements, and the World Bank’s private sector lending arm, the IFC, requires contract disclosure for extractive projects it finances. One oil company, Kosmos Energy, has disclosed its contracts wherever it operates, while Tullow has disclosed its agreements in Ghana and has stated its preference to disclose wherever it does business. Many mining companies also support contract disclosure. Finally, Oxfam, the World Bank, Transparency International and others back the new Open Contracting Partnership.

The public is interested: Despite the complexity and large amounts of technical content in the debates on managing oil and gas revenues, the Tanzanian public is hungry for information on the topic. Arguments that there is no need to publish these technical documents because the public is not interested are clearly wrong. Tanzania remains one of the poorest countries in the world, ranking 159th out of 187 countries in the Human Development Index. If managed well and invested in pro-poor growth related to agriculture, education and health, people certainly understand that future gas revenues could support inclusive development and poverty reduction.

Space for civil society is crucial: Despite the fact that parliamentary actors in Tanzania eventually acted to demand access to the profit sharing agreements, the initial leak generated almost no political response. It was only after an active member of civil society published a story that public attention flared up. It was after this that politicians decided to respond, and the global media picked up the story. Space for civil society groups is therefore fundamental for ensuring that issues of natural resource management are effectively policed and for enabling the public to engage around this topic. This process cannot be left solely to elected politicians, appointed officials and the established media.

These events in Tanzania illustrate the importance of civil society, transparency, and active citizenship and the need for companies, such as Statoil, to take public and proactive steps to encourage contract disclosure. Countries like Tanzania, as well as neighbors Kenya, Uganda and Mozambique,  have the potential to become major energy producers, but also face poverty and inequality, need these structures in place even more – millions of people are depending on governments, activists and institutions to get it right.

Editor’s Note: Two of the hyperlinks originally included in this blog post referred to another case in Tanzania. These have been corrected. 

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    Corruption in Tanzania has been endemic for decades.

    For all the words and show, Tanzania must return the properties seized from its Asian citizens in the 1970′s. Until it does so, Tanzania will sadly continue to be widely regarded as a kleptocracy or “rule by thieves”.

    Kleptocracy is unfortunately common in developing countries. Kleptocracy by the state in Tanzania has negatively affected foreign investment, drastically weakened its domestic market, and limited cross-border trade.

    In 2010, at the Tanzania Diaspora Conference in London, Hon. Bernard Membe, the Tanzanian Minister for Foreign Affairs lamented the very low amounts of financial remittances sent by Tanzanians working abroad.
    In 2009, the remittances sent to Kenya by Kenyans working abroad was US$1,572 million and the remittances sent to Uganda by Ugandans working abroad was US$514 million. In sad contrast,the 2009 remittances sent to Tanzania by its citizens working abroad was a paltry US$18 million.

    While Tanzania has made many great strides and is successful in attracting charity dollars, it still has a long way to go to gain the confidence of foreign investors.


    I would not invest in a country sank from its president to the last public figure into corruption and bribery.
    The corruption in Tanzania is greater that that of Kenya, Uganda and any other country in Africa I think of. The only difference is that Tanzania is the darling of the west.

  3.'Pernille Bærendtsen

    Dear James,

    I’m sorry to say but your context analysis is confused..

    Not that I myself claim that I understand it, but I’d know who to ask. And most Tanzanians who read papers, are on Twitter and watch TV know the basic differences of what has happened in Tanzania since about July this year regarding politics, transparency, corruption and interest from media and citizens.

    Here, you mix up the socalled ‘Statoil’ case (…/a-leaked-document-casts-a-shadow-o…) and another case which on social media has been dubbed ‪#‎TegetaEscrow‬. The two things should firstly be understood seperately, as they have played different roles polticially etc., but are also of different character. They do have something in common, but that doesn’t stand clearly in your blogpost.

    I also wonder how you are so certain about the order of events and actors? The events listed can only be assumptions, based on what it looks like from your perspective. Part of the lobby and advocacy on these levels are often not clear to even minor part of public for many different reasons.

    Somehow, it seems as if the ‘3 important lessons’ just had to fit into Oxfam’s work, no matter what. That doesn’t come out well.


    1.'James Morrissey

      Hi Pernile,

      Thanks for the comment.

      You are correct to point out some confusion in the blog post. There were a couple of hyperlinks at the start of the post that were incorrectly pasted in. These have now been corrected and the story should now read clearly.

  4.'Peter Bofin

    The issue here is more than just a rogue link I’m afraid. The original version (is it cached anywhere?) opened with reference to “possibly the biggest corruption scandal in the country” and linked to a report on the Public Accounts Committee recommendations on the Tegeta Escrow scandal. This wasn’t just a rogue link – TE is “possibly the biggest corruption scandal in the country’s history”. Then it discussed the PSA issue, without making any obvious link. So far, so confusing.

    Now the corrected version talks about “what may turn out to be a major corruption scandal”. Is Oxfam now implying that corruption may have been involved in the Statoil PSA or addendum? Or is it referring to some other corruption scandal? Either way, it would be good to be specific. Activists working on the PSA issue would benefit from Oxfam’s knowledge here, if indeed there is a scandal lurking in the PSA.

    But beyond this, what’s more important is that this confusion reflects a failure to understand what is going on here. There are two things here, one a corruption scandal, the other an issue. There are connections between them, but they are very much of a secondary order.

    What this confusion suggests is a failure or unwillingness on Oxfam’s part to understand the context that it seeks to explain.

    1.'James Morrissey

      Thanks for the ongoing interest in this post, however I am not sure I see the confusion here.

      The blog is referring to the PSA issue. The concern over corruption is because the *potential* losses in revenue, revealed by the leaked addendum, *could* be due to maladministration or corruption. However the point is well made that the deal may well be fair and that there might be no problem.

      The argument is that in order to determine whether the deal is fair, and whether corruption is an issue, the PSA contracts need to be transparently available. Translating transparency into some form of accountability, however, will require a broader array of good governance institutions and practices, going beyond just transparency.

  5.'Mteule Nkomo

    was trying to make reference to this paper while doing analysis of my other readings and I am just wondering how the debate between James and Peter ended? Did you issue revised final version incorporating some of these valuable comments given?

    1. Rebecca Rewald

      Hi Mteule, thanks for your comment. This was the final version that was posted. As was mentioned in the comments, the problem pointed out by Peter was due to an incorrect hyperlink added during the editorial process which made it seem like the article was referencing the Tegeta Escrow scandal. This was amended in the post as you see it here. To this end this post only refers to the PSA issue. In this respect the claim of the blog is simply that “potential” losses “could” be caused by maladministration/corruption, however, the deal could also be fine. The point is that without access to the contracts it is not possible to determine the answer

      -James Morrissey


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