2014年-IMF国际货币组织全球_United_Republic_of_Tanzania_Selected_Issues_24页_508kb

Summary of the Selected Issues Paper on the United Republic of Tanzania

Core Content

This document outlines the fiscal implications and macro-fiscal management challenges associated with the potential development of offshore natural gas in Tanzania. It emphasizes the importance of designing a fiscal regime that maximizes government revenue while ensuring the financial viability of the project and promoting long-term economic development.

Main Views

• Natural Gas Discoveries: Tanzania has made significant offshore natural gas discoveries, with estimates of recoverable resources reaching 24–26 trillion cubic feet (tcf). These discoveries are spread over a large area, increasing development costs and requiring extensive infrastructure such as pipelines.

• Fiscal Regime: The fiscal regime for natural gas in Tanzania is a hybrid model that combines production sharing and income tax/royalty. The Petroleum Act governs all petroleum activities, and the Tanzania Petroleum Development Corporation (TPDC) issues exploration and development licenses. Production Sharing Agreements (PSAs) are used to allocate revenue between the government and private investors.

• Revenue Sharing Mechanism: Under the current fiscal regime, the government receives a share of production through royalties, income taxes, and state equity. The cost recovery limit is set at 70% of the production value, and the government equity is typically 20% on a carried interest basis. This allows the government to benefit from profits without direct upfront investment.

• Fiscal Simulations: The paper presents simulations for two illustrative LNG projects: a two-train LNG plant (10 mmtpa, 12 tcf gas reserves) and a four-train LNG plant (20 mmtpa, 24 tcf gas reserves). The simulations show that government take of pre-tax cash flows is expected to be around 69–72% for the two-train project and 72–73% for the four-train project. However, downstream revenue shares can be negative under certain assumptions due to the tolling fee mechanism.

• Investment Impact: The development of a large-scale LNG project would require substantial capital investment, estimated at around US$20–40 billion over a decade. This investment would significantly increase the current account deficit and have a temporary impact on the economy. The government is likely to focus on equity participation in the upstream segment to maximize fiscal benefits.

• Revenue Profile: The revenue from a large-scale gas project is expected to be substantial in the short to medium term but temporary due to the exhaustibility of gas reserves. The revenue is projected to reach up to 6–7% of GDP at peak production, which could play a key role in offsetting long-term declines in grants and concessional loans.

• Macro-Fiscal Policy Framework: The paper suggests that a macro-fiscal policy framework should be designed to manage the temporary influx of gas revenue. The framework should aim to preserve macro-fiscal stability, allocate funds for future generations, and finance development spending. A rule based on the permanent income hypothesis (PIH) is proposed, which would allow for gradual spending and investment scaling, incorporating new information and ensuring operational simplicity.

Key Information

• Project Uncertainty: No final investment decision has been made yet, and project negotiations are ongoing. The fiscal regime and project design are still subject to change.

• Revenue Streams: The main revenue streams include royalties, income tax, production sharing, and state equity. The effective tax rate on upstream revenue is estimated at 74–77%, while downstream is lower (42–51%) or even negative in some cases.

• Fiscal Policy Rule: The proposed fiscal policy rule should be operationally simple, integrated into the annual budget process, and allow for flexibility in frontloading investment spending while maintaining long-term fiscal sustainability.

• Government Equity: Government equity in the upstream segment is more beneficial than in the downstream, as it is more profitable and easier to finance through carried interest. Downstream equity, if any, would require significant upfront financing.

• Long-Term Implications: The fiscal benefits of natural gas are expected to be temporary, and the government should ensure that these revenues are used to support long-term development and not just short-term spending.

Conclusion

The paper concludes that while Tanzania has the potential to benefit significantly from its offshore natural gas resources, careful fiscal management is essential. The government should design a regime that balances the need for investment with the goal of maximizing public benefit. The macro-fiscal policy framework should be flexible, transparent, and operationally sound to ensure sustainable use of gas revenue for development.