IMPRESSED by the performance of state owned oil and gas conglomerates in Algeria and Malaysia , Energy and Minerals Minister, Prof. Sospeter Muhongo is touting Tanzania Petroleum Development Corporation (TPDC)'s domination of the country's oil and gas subsector. "There are several economic models which countries can follow, some thought the government should not engage in economic activities, evidence is there we have seen what has happened to our industries after privatization," Prof Muhongo said after holding bilateral talks with his visiting Algerian counterpart, Youcef Yousfi last week. Touting Algeria's state controlled energy and minerals conglomerate, Sonatrach, Prof Muhongo said time for talking was up and was now time for action by learning from the Algerians who won independence from France in 1962 with about 10 per cent of the population accessing electricity but now 98 per cent of the people have access to power. "This is a huge country of 2.3m square kilometres and 38 million people but have managed to connect so many people to the national grid, let's stop the debate and move on with implementation of development work," Prof Muhongo said. Sonatrach which was established in 1962 is the largest oil and gas company in Africa and operates in exploration, production, pipeline transportation and marketing of hydrocarbons and by products. With a turnover nearing 56.1 billion US dollars in 2010, Sonatrach is ranked number 12 in the world in terms of turnover, 4th world largest Liquefied Natural Gas (LNG) exporter, third world Liquefied Petroleum Gas exporter and 5th world natural gas exporter. "I have come with the man in charge of Sonatrach," said Mr Yousfi who also formerly worked at the giant company prior to joining politics. Yousfi said oil and gas contributes more than 50 per cent of GDP, employs the bulk of the country's youth with Sonatrach employing a whopping 150,000 people. The Algerian company has over 100 subsidiaries dealing with oil and gas business. "That's where we want to take TPDC, it should be a major player in the country's oil and gas sector," said Prof Muhongo who leads government plans to empower TPDC to engage in upstream oil and gas investments. He told Parliament last month that capital gains tax of at least 258 million US dollars which the country will earn on the proposed $1.3 billion asset sale of Ophir Energy's natural gas fields in the country to a unit of Singapore's Temasek Holdings will go to TPDC to enable the state owned company engage in upstream oil and gas investment. Prof Muhongo said the government had reserved two gas-rich blocks near the border with Mozambique in the offshore region for the state-run Tanzania Petroleum Development Corporation (TPDC). Tanzania is estimated to have more than 40 trillion cubic feet (TCF) of gas, which it said could rise five-fold over the next five years, putting it on par with some Middle East producers. One of Prof Muhongo strongest critic is CEOs Roundtable Chairman, Ali Mufuruki . Mr Mufuruki is not amused with the idea of having TPDC only dominate the oil and gas subsector. He however supports the idea of TPDC's active participation in the sector but doubted the mechanism available so far. "What mechanism will enable TPDC play a leading role in this sector and why should we leave the whole of such a huge industry to TPDC alone?" Mufuruki argued saying mistakes done in the mining sector where multinationals are making windfall profits, may be repeated here. Malaysia like Algeria were at the same levels of development with Tanzania in 1960s when they also became independent but today the difference is glaring. Petroliam Nasional Berhad (Petronas) was incorporated in August 1974 as the national oil company of Malaysia and today contributes about 45 per cent of government revenue. It has since grown from merely being the manager and regulator of Malaysia's upstream sector into a fully integrated oil and gas corporation, ranked among the FORTUNE Global 500® largest corporations in the world In 2012, the economy of Malaysia was the 3rd largest in South East Asia behind more populous Indonesia and Thailand and 29th largest economy in the world by purchasing power parity with gross domestic product (GDP) of 492.4 billion US dollars and per capita 16,922 US dollars while Tanzania's GDP is about 33 billion US dollars and per capital income of 600 US dollars . "Including taxes, export duties and the dividend, Petronas estimates its total payments to the Malaysian government added up to 65.7 billion Malaysian ringgit ( $21.10 billion ) in that fiscal year," a 2012 annual report for the company said. Prof Muhongo is convinced that TPDC's future should match Petronas and Sonatrech prowess and not leave the lucrative oil and gas subsector dominated by multinational corporations many of which cheat the state on tax payment. "They (Algerians) have four million students enrolled at universities and their income per capita is equivalent to 1m/- while we have 70,000 students at universities and income per head is 100,000/-, we need to learn from them because we were at the same level of development at independence," he charged. The minister who signed a memorandum of understanding with his Algerian counterpart during a visit to the North African state last month, said scholarships provided to local students are neglected for reasons best know by the concerned. "In 1964 we built our first LNG plant in Africa and now we have three and 1,000 kilometres of gas pipelines to supply consumers," Yousfi said saying Sonatrach accounts for 90 per cent of all oil and gas activities in the North African state which exports the same to Europe and other parts of the world. Under the MoU signed between Prof Muhongo and Mr Yousfi , bilateral cooperation in the fields of exploration, appraisal, production and marketing of oil and gas products will be jointly undertaken while rural electrification will also be included. The Petronas, Sonatrech and Norwegian Statoil success stories as state controlled enterprises should convince opponents of Prof Muhongo's philosophy that the future of this sector belongs to state enterprises. Statoil's success in managing Norway's oil and gas assets led to all of the country's 5.01 million people becoming millionaires, at least theoretically, in the country's currency, kroner terms after a sovereign fund appreciated tenfold. "The ticker on the website of Norway's national bank, which tracks the approximate value of the fund, this week passed 5.019 trillion kroner ( $810bn ), meaning the fund holds a million kroner ( $161,000 ), for each and every one of the country's 5.019m people," newspapers reported in the Scandinavian country last week.
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