Tanzania Laws Would Allow Govt to Tear Up Mining Deals

Dar Es Salaam: The Tanzanian government submitted three bills to parliament on Thursday that would allow it to force mining and energy companies to renegotiate their contracts, the latest in a string of moves that have alarmed foreign investors.

It was not immediately clear how the proposed renegotiation of contracts would affect a planned $30 billion gas project, or the troubled mining sector, which generates about 3.5 percent of Tanzania's gross domestic product.

Businesses have complained that they feel President John Magufuli is unfairly squeezing them through a strict interpretation of tax laws, increased fines and demands they rapidly list on the local stock exchange.

Magufuli says the reforms will increase transparency and revenues and that the companies have not been paying their fair share of taxes, charges they strongly deny.

The three bills, expected to be fast-tracked, cover natural resources contracts, sovereignty and amend existing laws and would allow the government to renegotiate or dissolve contracts.

"This is unprecedented in terms of an escalation and an assault on the mining sector," said Ahmed Salim, vice president of global advisory firm Teneo Intelligence.

"There hasn’t been much dialogue between the private sector and government. Major companies in Tanzania, both foreign and domestic, mostly wake up to news about major changes in legislation and regulation alterations … This will have very severe consequences in terms of foreign investment."

  • Tanzania Laws Would Allow Govt to Tear Up Mining Deals