Investor ordered to surrender oil block

ZANZIBAR’s sole active oil and gas investor–RAK Gas–has failed to perform as per the agreement, President Hussein Mwinyi announced on Saturday, noting that the government has issued an ultimatum to the investor to surrender the Pemba-Zanzibar block.

Dr Mwinyi dismissed as malicious claims that the government abhors its agreement with the investor. “RAK Gas have failed themselves; it’s not true that the government is against the agreement,” the President said, adding: “If they relinquish the area that they control, we will divide it into small blocks and invite serious investors.”

President Mwinyi said the government has received verbal communication over the investor’s failure to implement the project, “But, we have asked them to communicate in writing for future reference.”

Fielding questions during his routine monthly meetings with journalists, Dr Mwinyi explained that the investor signed a contract with the government on oil and gas exploration in Zanzibar, with the major goal of producing oil and gas.

“We had big hopes of striking oil and gas, especially after a 2D seismic survey that indicated petroleum system elements. The survey indicated existence of rock structures with an estimated reserve of 3.8 trillion cubic feet,” Dr Mwinyi said at the Vuga-based State House hosted press conference.

Unfortunately, the investor failed to proceed with other activities–3D Seismic survey and drilling of a research well as prescribed under the agreement, said President Mwinyi. “They instead came to us demanding alteration of the contract terms,” he said, adding that the government accommodated four out of the investor’s five demands.

The investor had, among others, demanded adjustment of revenue sharing ratio to 80 and 20 per cent by the investor and government, respectively, until they recoup their investment and full tax exemption. “We objected their proposal for total tax exemption in favour of tax deferment,” explained President Mwinyi.

He added: “If the government is indeed against the investor, it would not have entertained adjustments of the agreement. They are themselves to blame, they have failed.”

Prior to fielding questions, President Mwinyi gave clarifications on the envisaged Kilimani city investment project and outsourcing of some services at public health facilities.

He said the government has given Kilimani residents three options to choose. “They can opt for relocation; construction of high rise buildings at the same area; or just to remain as they are–the government will look for another area to execute the tourist project.”

Dr Mwinyi said the government intends to invest in meetings, incentives, conferences and exhibitions (MICE) tourism, which remains virgin in Zanzibar. He said South Korea has agreed to support construction of modern conference facilities, and that Kilimani area, which faces the ocean is the most suitable location for the project.

“Tourism is the heart of Zanzibar economy. Currently, we rely on beach tourism but we have to diversify the sector. We have no reason to have low tourism seasons in Zanzibar,” he said.

President Mwinyi defended the outsourcing of some services at public health facilities, saying the aim is to improve the standard of services to wananchi. He said the outsourcing doesn’t mean that people have to pay for the services, “The aim is to improve the services but nobody is required to pay for them…health services remain free in Zanzibar.”

Mnazi Mmoja National Referral hospital has already outsourced the laboratory services from private operators and the goal is to widen the outsourcing to other services like pharmacy, food, cleanness, X-ray and MRI.

“Once we have private operators at all our regional and district hospitals, wananchi will get good services but the government will pay for them,” said the president.


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