Tag Archives: deep sea

From Queensway to Mtwara: what does Terminal 3 tell us about Tanzania?

Entering and leaving the airport in Dar es Salaam, it’s hard to miss the massive fence around a piece of ground that the Tanzanian government hopes will become Terminal III. On the fence in bold letters one can read “Investor: China International Fund, Ltd.” But peek behind the fence, as I did earlier this month, and you will see … nothing:  an empty piece of land without a hint of construction or machinery. Another example of the “talks big but doesn’t deliver” style that frequently characterizes the deals signed by this sleazy Hong Kong company.

Deborah Brautigam’s suspicions are confirmed today in Dar’s Guardian on Sunday, [site down today: link  when available] which reports a breakdown in talks between China International Fund (CIF) and the Ministry of Transport, and that European firm (Dutch?) Interbeton BV is now favoured. The mooted deal with CIF – Terminal 3, in return for mining rights for an unspecified mineral – was crude, if not unprecedented in other parts of the continent.

CIF as well, as its related companies (“the 88 Queensway Group”, named for an address they share in Hong Kong’s CBD), is the bogey man of Chinese efforts to source African natural resources. Based in Hong Kong they made their name, for better or worse, by cornering Angola’s oil exports to China. Further deals in Zimbabwe and Guinea, with coup leader Moussa Camara, cemented a reputation for dodgy dealing – questionable contract terms, conflicts of interest and unfulfilled commitments. See The Economist for a punchy summary or for more detail check this U.S.-China Economic and Security Review Commission report.

So if the Terminal 3 contract is not to be granted to CIF, is there any call for concern?

Probably yes. 88 Queensway firms has been sniffing around Tanzania since at least 2007. That was the year that Sonangol International was granted an option on oil exploration blocks in Rukwa Region – an  option that the Tanzania Petroleum Development Corporation said they never took up. Why they were offered them in the first place is not clear, though it is speculated that it was in return for a promised investment in state owned Air Tanzania Ltd. Like Terminal 3, that lead to nothing despite years of negotiation.

These are issues that go back some years. But one must question why CIF and related firms are still considered as potential business partners in Tanzania? This is of particular interest given the likely auction next year of deep sea oil and gas exploration blocks in Tanzanian waters on the back of considerable reserves being found by Ophir-BG and excited exploration from Petrobras and Statoil.

And there are few angels in the oil game. The potential for questionable contract terms, conflicts of interest and unfulfilled commitments. is not confined to Hong Kong based outfits. Italy’s ENI was implicated in bribing Ugandan ministers in the most recent wikileaks cables dump while Anglo-Irish outfit Tullow has been similarly accused in the Ugandan parliament more recently while the terms of its agreements with the Ugandan government remain sub rosa. ENI incidentally, last week announced the largest gas discovery to date in East African waters, in Mozambique. One can be forgiven for speculating as to how they got the licence.

Tanzania has committed itself at the highest level to the Extractive Industries Transparency Initiative’s (EITI) “principles, standards and values“. Since that commitment  was originally made in 2009, Tanzania has been unable to meet EITI’s benchmarks for transparency around company payments and government revenues.  The first attempt to do so last year, and published earlier this year, found over 30 million dollars unaccounted for – and that’s US, not Hong Kong.  So there are reasonable concerns as to how revenues may be managed.

The transformative potential of Tanzania’s gas reserves is considerable – it will certainly transform the southern port town of Mtwara, base for many of the deep sea operations. Dealing with that potential will be Tanzania’s biggest challenge so far this century.

As for Terminal 3, we’ll just have to keep waiting. Bitter news for the thousands evicted to make way for it.