Workers protest BP exit in Tanzania

| Tuesday December 7, 2010 00:00

'There are three phases involved in the sale; first being the sorting out of legal issues, followed by a transition period and finally the takeover. As far as I know, they are now in the transition stage,' said a source.

The source further said that the government has formed a team comprising experts - from the Consolidated Holdings Corporation (CHC), Tanzania Petroleum Development Corporation (TPDC), Treasury Registrar and the Ministry of Energy and Minerals - who are supposed to recommend the best way forward before and after BP Africa sells its 50 per cent shareholding in BP Tanzania.

Consolidated Holdings Corporation is the custodian of the Tanzania government shares in BP Tanzania and it is these that Puma Energy is set to acquire after the deal is sealed.

Puma Energy International is a subsidiary of Trafigura, a London-based multinational company trading in base metals and energy, which is currently in negotiations to buy BP Africa's interests in Botswana, Zambia and Malawi, having recently acquired those in Namibia.

In Malawi and Tanzania, BP Africa is selling 50 per cent shareholding while in neighbouring Zambia its local stake is 75 per cent.

In Namibia and Botswana, the companies were wholly-owned by BP Africa.

'Our case is similar to that in Malawi where the government too owns a 50 per cent stake, meaning the process is a bit more complex, unlike in the other countries where BP Africa owns the majority of shares,' said the source.

However, Minister for Energy and Minerals William Ngeleja, who has retained his portfolio in the new Cabinet, told The EastAfrican that the government was waiting for recommendations from the team of experts before making a final decision.

'As far as I know, the final decision will come after the Cabinet receives these recommendations, which will give us a clear picture as to where we go from here,' said Ngeleja.

He said he needed more time to be briefed by the permanent secretary in his ministry on the latest position as regards BP Africa's pullout from Tanzania.

The Treasury Registrar of the United Republic of Tanzania and BP Africa Ltd, jointly own BP Tanzania Ltd.

BP Tanzania's report for the year ended December 31, 2008 showed that the company made a profit after tax of Tsh6,879 million ($4.6 million), down from Tsh8,476 million ($5.7 million) it made in 2007, when it made a profit.

The reduced profits were attributed mainly to an increase in finance costs due to enhanced short-term borrowings.

BP Tanzania's revenues from sales of JET A 1 fuel for the year ending December 2008 stood at Tsh158,972 million ($8,593 million), up from Tsh101,594 million ($5,491 million) the previous year.

In 1970, the government of Tanzania bought a 50 per cent interest in what was then Shell and BP Tanzania Ltd.

In March 1982, BP bought out Shell's interest and the company became BP Tanzania Ltd.-(The EastAfrican)