VenturesNow

Partners ‘willing to walk away,’ US warns Tanzania over gas project delays

Published

2 months ago

March 3, 2024

Tanzania’s much-awaited, multimillion-dollar liquefied natural gas project is facing impending investor withdrawals from the United States, if delays caused by negotiating technicalities persist, the country has warned.

Companies like Exxon Mobil, who have been pushing the deal with Tanzanian authorities, have reached a point where they are now “willing to walk away,” US Deputy Assistant Secretary of State Joy Basu told journalists.

Basu, whose portfolio in the Joe Biden administration includes overseeing economic and regional affairs in Sub-Saharan Africa cautioned that “there is LNG in lots of places around the world now, and for Tanzania the window for this particular investment is closing fast. Such windows do not remain open forever.”

In meetings with Tanzanian government officials during the week to monitor the development of a US-Tanzania commercial dialogue that was initiated in October of last year, she stated that the project’s status was a top priority.

One of many international companies involved in the LNG project in southern Tanzania is Exxon Mobil, headquartered in Houston, Texas. The project’s estimated cost increased from $30 billion in 2014 to $42 billion by the previous year.

The project’s other partners include the state-owned Tanzania Petroleum Development Corporation, Exxon Mobil, Pavilion Energy (Singapore), Medco Energi (Indonesia), and Britain’s Shell and Norway’s Equinor, which have been designated as joint main operators.

She said that the project’s status was a major priority during meetings with Tanzanian government representatives this week to track the progress of a US-Tanzania commercial dialogue that was started in October of last year.

In order to expedite the development of its natural resources, the government intends to work with China’s Cnooc Ltd. to jointly explore for oil and gas in two offshore blocks that are owned by Tanzania Petroleum Development Corp., a state-owned company.

Since a downturn in 2020 when it 57.1 billion cubic feet of natural gas, a decline from 63.8 billion cubic feet the year before, the continent’s search for hydrocarbons has increased gradually as European countries look to diversify their energy sources and reduce their reliance on Russian gas.

Apart from the established main gas producing countries like Nigeria, Algeria, and Egypt, other African nations like Tanzania have been rising as potential players in the natural gas industry.

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VenturesNow

Nigerian govt proposes VAT increase, new sharing formula

Published

5 hours ago

May 9, 2024

Ifeoluwa Dada

Nigeria’s presidential committee on fiscal policy and tax has argued for the necessity of raising the value-added tax (VAT) rate.

Taiwo Oyedele, the chairman of the committee, revealed during the policy exposure and impact assessment session that the VAT revenue-sharing formula will be reassessed.

Oyedele stated that the committee has suggested increasing the allocation of VAT money to state and local governments from the existing 85% to 90%. As to section 40 of the VAT Act, the federal government receives 15% of the tax revenue, while states receive 50% and local governments receive the remaining 35%.

According to him, the suggested new sharing arrangement implies that the committee is suggesting a decrease in the federal government’s portion from 15% to 10%.

“We are proposing that the federal government’s portion should be reduced from 15% to 10%. States’ portion will be increased but they would share 90% with local governments,” he said.

He explained that the new sharing formula for VAT is in favour of the lower tier of government because it is a tax generated at the state level.

“In 1986, we had sales tax collected by states. The military came up with VAT in 1993 and stopped sales tax so they said it would collect VAT and return 15 per cent as cost of collection and that is the 15 per cent charged today came about. But we think it is too much,” he said.

The tax expert added that the burden of VAT should be on the ultimate consumer.

“So we must make it transparent and neutral and this is what over 100 countries where they have VAT are doing,” Oyedele said.

He stated: “Nigeria’s economy is more than 50% in services and if I just stop at this, many states will be broke because VAT collection will go down by more than 50% and it won’t even fly.

“So we therefore need to adjust the VAT rate upward. We would ensure that it doesn’t affect businesses. The only thing is to look at basic consumption from food, education, medical services and accommodation will carry zero percent VAT. So for the poor and small businesses, no VAT.”

Oyedele said other consumers will pay a bit more.

“We have spoken to businesses about it and they won’t increase the product price. We want to make sure when we do VAT reform, no one will increase the price of commodities. We will work the mathematics with the private sector,” he explained.

Oyedele also said each state should not be granted exclusive custodianship of their collections– because it would likely result in chaos.

The Nigerian government has been undertaking comprehensive reforms of the nation’s monetary and fiscal policies since the inception of the Bola Tinubu administration. As a consequence, the central bank and the tax advisory council led by Oyedele have implemented audacious new policies.

VenturesNow

Best-to-Worst: Zambian currency hits record low

Published

6 hours ago

May 9, 2024

Ifeoluwa Dada

A shortage of hard cash and a severe drought that has caused power outages in copper-producing Zambia have made its currency, the kwacha, fall to a record low against the US dollar as of Wednesday, reaching 27.30 to the dollar.

Based on LSEG data, the value of the kwacha relative to the US dollar has decreased by over 5% this year and 17% in the last six months. The previous low, on February 6, was 27.23.

The latest profile of the Kwacha is an anti-climax from an earlier position this year, in February, following consistent drastic monetary policy interventions by its central bank, Zambia’s currency became Africa’s best-performing currency against the US dollar.

This year, the US dollar index, which measures the value of the dollar relative to a basket of currencies, has increased by 4% to 105.58. However, the MSCI International Emerging Market Currency Index, which opens in a new tab, has only declined by 1%, indicating that the kwacha is not keeping up with the currencies of larger emerging nations.

The southern African country went into default in 2020 due to the COVID-19 pandemic. Its attempts to restructure its debt have been plagued by delays, but in March they made progress when the government and a group of bondholders agreed in principle.

“There is too much demand for dollars, mainly to meet imports of petroleum products and we have very scanty supply. It appears we are heading towards 30 per dollar,” a trader at a commercial bank in Zambia said.

Global monetary tightening cycle caused serious problems for African currencies in 2023. The official currency rates for the Nigerian naira, Kenyan shilling, and South African rand saw considerable swings in December 2023, with an average decline of 27% from 25% in November.