The Petroleum General Regulations provide the general rules that licensees should abide by when engaging in petroleum and natural gas midstream and downstream activities in Mainland Tanzania. In this article, we discuss the key provisions of the Regulations and what this means for companies in the energy sector.
The Petroleum (Natural Gas Midstream and Downstream) General Regulations (the Regulations) are made under the Petroleum Act No.21 of 2015 (the Act).1 The Regulations directly affect a number of Licensees (defined in the Act as a holder of a licence granted by the Energy and Water Utilities Regulatory Authority (EWURA)) including natural gas service workers, transportation and distribution licence holders, persons operating Compressed Natural Gas (CNG) facilities as well as those with a licence to import, transit and export natural gas.
EWURA has also been granted certain additional functions including but not limited to:
- protecting the public from dangers arising from the processing, transportation, storage, conveyance, shipping, supply or use of natural gas;
- promoting efficient use of natural gas by consumers;
- promoting fair competition in the supply of natural gas; and
- advising the Government on all matters relating to importation, exportation, processing, storage, transportation, conveyance, shipping, supply or use of gas.
Natural gas service workers
It is now a requirement for all gas service workers to have a licence; the Regulations provide the following key points:
- a person shall only carry out gas service work if he is qualified, registered and holds a valid licence from EWURA;
- the licence issued shall be in respect of the specific class of work being carried out/to be carried out and may be issued conditionally or unconditionally; and
- according to regulation 7, a person intending to be a licensed gas service worker shall apply to EWURA and pay the prescribed fees in a manner and according to the procedure provided in the EWURA Act No.11 of 2001 (the EWURA Act).
Holders of a transportation licence
According to the Regulations, anyone with a licence to transport gas will among other things be required to enter into an arrangement with any person to ensure:
- the conveyance of gas through a gas pipeline, mini Liquefied Natural Gas (LNG)/gas pipeline network owned by another licensee;
- provide third party access; and
- other purposes as may be specified in the licence and approved by EWURA.
Holders of a distribution licence
The Regulations require anyone with a licence to distribute gas to, among others, carry out the following:
- act as a supplier in the event of failure/default of another supplier;
- secure such rights for the conveyance of gas through a gas pipeline, mini LNG/gas pipeline network owned by another licensee; and
- ensure safe, reliable, affordable and sufficient supply of natural gas to end users.
Licence to import, transit and export natural gas
Any person who intends to import, transit/export natural gas shall apply to EWURA for a valid licence and the application shall be accompanied by the following information and documents:
- details of the shareholders;
- a local content plan in accordance with applicable law;
- proof of financial and technical capability to carry out the activity;
- certified copy of tax identification number(TIN) certificate;
- certified copy of tax clearance certificate;
- certified copy of certificate of registration for value added tax (VAT);
- an environmental and social impact assessment certificate/environment audit certificate;
- a business plan describing the scope of the activity;
- an anticipated use and location of the natural gas within Mainland Tanzania;
- details of the source(s) and destination(s) of natural gas for import, transit/export;
- details of the means by which natural gas shall be imported, transited/exported;
- details of volumes by which natural gas shall be imported, transited/exported.
- a list and description of facilities proposed to be used for the activity; and
- any other document and information EWURA may require.
*The application shall be accompanied by a non-refundable application fee as prescribed by the Rules made by EWURA and in accordance to section 259 of the Act.
Additionally, any person who has sought approval from EWURA to import, transit/export natural gas shall not later than thirty (30) days make a declaration to EWURA through the National Petroleum and Gas Information System (NPGIS) and shall within seven (7) days be required to verify the details contained in the declaration.
Holders of a CNG facility licence
Regulation 23 provides that a person shall only own/operate a CNG facility if he is so licenced by EWURA and in accordance to the Rules made by EWURA.
CNG facility is defined in the Regulations as any activity used for compression, transportation and storage of CNG and it includes CNG cylinders, CNG refuelling stations, receiving stations and meters.
It is important to note that the Tanzania Petroleum Development Corporation (the TPDC) has exclusive rights when it comes to undertaking natural gas midstream and downstream value chain regulated activity that is transportation/distribution of gas, supply of gas to end users, storage, compression of gas, importation and transit operations. However, the TPDC may other than through competitive tendering allow other persons to undertake similar work and any person intending to do so shall apply for consent to the TPDC setting out:
- their name, address and nationality;
- type and business location of the intended activity;
- description of the project outlining the type of regulated activity, geographical location, location conditions, lifetime of the project and major risks;
- proof of financial and technical capacity to undertake the activity; and
- any other particulars the TPDC may require.
The applicant must also submit a copy of the application to EWURA and shall after having received consent from the TPDC apply for a licence from EWURA. The licence issued by EWURA may include certain terms and conditions, among them requiring the licensee to have a place of business in Mainland Tanzania.
There are a number of acts/omissions which will constitute an offence under the Regulations including, but not limited to, the following:
Offences and penalties
Regulation 6 – Licensing of natural gas service worker
A person who carries out any natural gas service work without a licence will have committed an offence and upon conviction be liable to pay a fine of not less than TZS 20 million/serve a prison term of not less than 5 years/to both.
Regulation 22 – Construction approval
It shall be an offence to construct a CNG facility without a construction approval from EWURA. Any person who contravenes this provision shall upon conviction be liable to pay a fine of not less than TZS 20 million/imprisonment for a term of not less than 3 years/to both.
Regulation 23 – Application for licence
Any person who owns/operates a CNG facility without a licence from EWURA shall have committed an offence and upon conviction be liable to pay a fine of not less than TZS 20 million/imprisonment for a term of not less 2 years but not more than 5 years/to both.
Regulation 28 – Requirement for approval
A licensee who imports, transmits/exports natural gas without first obtaining approval from EWURA shall have committed an offence and upon conviction be liable to pay a fine of not less than TZS 10 million/imprisonment for a term of not less 2 years/to both.
Regulation 54 – General penalty
A person who commits an offence for which no specific penalty is provided in the Regulations shall be liable on conviction to a fine of not less than TZS 10 million/imprisonment for a term of not less than 2 years/to both.
Regulation 55 - Compounding of offences
A person who admits an offence under the Regulations will where EWURA is satisfied with the admission pay a sum of money not exceeding TZS 100 million.
1. The Regulations came into force on 17 April 2020 and are made under the Act and published in Government notice number 270 of 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.