Owing to the embryonic state of both Tanzania and Mozambique’s energy sectors, the laws and regulations governing the oil and gas sector remain unclear.

Nonetheless, despite the apparent lack of clarity, members of the legal community in both nations are optimistic that the regulatory frameworks being developed will be conducive to the growth and the development of the respective oil and gas sectors.

The Mozambican government is aiming to complete its general petroleum law by year’s end. In addition to the World Bank, the Norwegian and United States governments are advising INP, Mozambique’s national hydrocarbon’s regulator, in the effort to write the bill.

According to Pedro Couto, of CGA, “the government’s approach has been to get proper consultants and hear what people have to say; it is producing good pieces of legislation that are very well received by the private sector.

“The new petroleum law will not contain surprises, and I am sure most companies will be happy with it. The government is making a real effort to create a trusted legal system and please international investors, whose fears about African political risk disappear once they have been in the country for six or eight months.”

The case of Tanzania remains very similar to that of Mozambique. The government’s Gas Act, which will encompass all stages of natural gas development, is expected to be introduced as law by November 2012. “The Gas Act is a draft for a bill that is still sitting with the parliamentary draftsmen, so it has not even reached parliament.

EALC cannot put too much weight in this draft just yet because it will go through many changes between now and when or if it is passed.

“The government has been under pressure to expedite the process as much as possible due to the amount of investors waiting on the outcome,” said Stella Ndikimi, partner at East Africa Law Chambers, member of Bowman Gilfillan Africa Group.

The end result of this process will be of paramount importance to the futures of both Tanzania and Mozambique. Although law has yet to be finalized, parastatal companies like the Tanzanian Petroleum Development Corp. (TPDC) already have plans to modify its role in the industry over the next five years.

“As Tanzania proven gas reserves continue to increase with each subsequent discovery, and TPDC’s revenues climb with production, there will be a need to cease TPDC’s role as regulator in the industry,” said Elias Kilembe, acting managing director for TPDC at the time of our visit.

“TPDC will have its focus strictly on oil and gas production and exploration; we will become the national hydrocarbons company, adopting the same model found throughout most gas-producing states. In conjunction, a separate government entity should be created to play the role of regulator for the industry.”

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