Govt approves BP exit 'in principle' workers protest

Tanzania has in principle agreed to let BP Africa Ltd exit the country by selling off its $80 million stake in BP Tanzania to Puma Energy International.

The exit of the multinational oil giant from the Tanzania market met with stiff opposition from its workers, who wanted to know their fate before any transactions to transfer assets were made.

“There are three phases involved in the sale; first being the sorting out of legal issues, followed by a transition period and finally the takeover. As far as I know, they are now in the transition stage,” said a source.

The source further said that the government has formed a team comprising of experts — from the Consolidated Holdings Corporation (CHC), Tanzania Petroleum Development Corporation (TPDC), Treasury Registrar and the Ministry of Energy and Minerals — who are supposed to recommend the best way forward before and after BP Africa sells its 50 per cent shareholding in BP Tanzania.

Consolidated Holdings Corporation is the custodian of the Tanzania government shares in BP Tanzania and it is these that Puma Energy is set to acquire after the deal is sealed.

Puma Energy International is a subsidiary of Trafigura, a London-based multinational company trading in base metals and energy, which is currently in negotiations to buy BP Africa’s interests in Botswana, Zambia and Malawi, having recently acquired those in Namibia.

In Malawi and Tanzania, BP Africa is selling 50 per cent shareholding while in neighbouring Zambia its local stake is 75 per cent.

In Namibia and Botswana, the companies were wholly owned by BP Africa.
“Our case is similar to that in Malawi where the government too owns a 50 per cent stake, meaning the process is a bit more complex, unlike in the other countries where BP Africa owns the majority of shares,” said the source.

However, Minister for Energy and Minerals William Ngeleja, who has retained his portfolio in the new Cabinet, told The EastAfrican that the government was waiting for recommendations from the team of ecperts before making a final decision.

“As far as I know, the final decision will come after the Cabinet receives these recommendations, which will give us a clear picture as to where we go from here,” said Mr Ngeleja.

He said he needed more time to be briefed by the permanent secretary in his ministry on the latest position as regards BP Africa’s pullout from Tanzania.

The Treasury Registrar of the United Republic of Tanzania and BP Africa Ltd, jointly own BP Tanzania Ltd.
BP Tanzania’s report for the year ended December 31, 2008 showed that the company made a profit after tax of Tsh6,879 million ($4.6 million), down from Tsh8,476 million ($5.7 million) it made in 2007, when it made a profit.

The reduced profits were attributed mainly to an increase in finance costs due to enhanced short term borrowings.

BP Tanzania’s revenues from sales of JET A 1 fuel for the year ending December 2008 stood at Tsh158,972 million ($8,593 million), up from Tsh101,594 million ($5,491 million) the previous year.

In 1970, the government of Tanzania bought a 50 per cent interest in what was then Shell and BP Tanzania Ltd. In March 1982, BP bought out Shell’s interest and the company became BP Tanzania Ltd.

Today, BP’s commercial customers include Portland cement, Coca-Cola, Trans Africa Railways Corporation Ltd, the breweries, sisal and wattle estates, the cotton industry, shipping and the spice trade in Zanzibar.

The company has a 38 percent market share and, since market liberalisation in 2000, it can offer its own prices at the fuel pumps.

In the retail or service station sector, BP Tanzania holds approximately 35 per cent market share. It holds about 35 per cent in the commercial sector and 70 per cent in aviation.

The issue of workers has now been referred to the Treasury Registrar and it will need to be settled before the government enters into any form of agreement to let BP Africa Ltd dispose of its 50 shareholding.