8 February 2012, Bloomberg News
Tanzania's Controller and Auditor-General will investigate accusations by lawmakers that Orca Exploration Group Inc.'s domestic unit failed to make payments to the East African nation's Treasury.
The probe is expected to establish whether PanAfrican Energy Tanzania Ltd. failed to pay as much as $55 million to the Treasury and advise what action should be taken, Energy Minister William Ngeleja told lawmakers today in Dodoma, the capital, in remarks broadcast on state television. PanAfrican is "happy to receive" auditors to help clear up the matter, said Andrew Brown, general manager of PanAfrican.
PanAfrican has production-sharing agreement with the state-owned Tanzania Petroleum Development Corp. to produce gas from the offshore Songo Songo field, about 200 kilometers (124 miles) south of Dar es Salaam, the commercial capital. The company sells most of the gas it produces to the state-owned Tanzania Electric Supply Co. for power generation. To date, it has paid TPDC more than $35 million, Orca said Nov. 21.
The issue surrounding the funds "supposedly in question" relates to an accounting error in 2009, PanAfrican General Manager Andrew Brown said in a phone interview today.
"There was a miss-booking of $28 million to the cost-tool instead of operational costs," he said. "We realized it and corrected, and explained to TPDC. We didn't benefit from the correction, but some people continue to think we took money."
Sharing
According to the company's revenue-sharing arrangement with TPDC, investment is to be recovered in the early stages of production and until that is done "any sharing will be in favor of the developer, but PanAfrican has not taken anything that it is not entitled to," Brown said.
On Feb. 6, the company said it started a $133 million investment plan to last over 12 to 18 months in which it will drill production and exploration wells.
Tanzania, East Africa's second-biggest economy after Kenya, may have as much as 10 trillion cubic feet of gas reserves, Ngeleja said in September.
- David Malingha Doya