Responding to domestic needs of natural gas

  • Feb 01, 2020
  • Guardian on Sunday

For domestic users, life has become simple and cheap; using natural gas for cooking, for example, it is more convenient that using charcoal, firewood or electricity. The cost incurred is also low.

While initially the gas was used mainly in Mtwara, Kilwa and Lindi towns, construction and subsequent commission of the Mtwara-Dar gas pipeline in 2015 opened up new demands for the resource in Dar es Salaam and Coast Regions.

Currently the natural gas sector enjoys a fair share of the domestic market with about 50 consumers, mainly factories, using the resource. These also include hotels and other facilities.

In addition, 380 houses in Mtwara and Dar es Salaam are supplied with natural gas which residents use for cooking while over 300 vehicles use natural gas instead of petroleum as fuel.

All the natural gas currently used in the country is extracted from Songo songo and Mnazi Bay gas field. “About half of the 12 gas wells in Songosongo are not operational for various reasons while gas is being extracted from all five wells at Mnazi Bay. TPDC has contracted Pan Africa Energy Tanzania and Maurel et Prom to manage the resources in Songo songo and Mnazi Bay respectively.

The companies sell the gas to various consumers,” says TPDC’s Development and Production Manager, Modestus Lumato adding that the Corporation now strives to supply natural gas to many users because it is available and cheap.

“Families are replacing charcoal and electricity with natural gas. Many factories have also switched over to gas-powered electricity instead of diesel or industrial oil. The demand for natural gas in the country is growing.”

According to Tanzania Invest, in 2016 the country’s total power installed capacity was 1,357.69 MW composed of hydro 566.79 MW (42%), natural gas 607 MW (45%) and liquid fuel 173.40 MW (13%).

“Today, natural gas accounts for 57 percent of Tanzania’s electricity,” notes Lumato.

Recently TPDC Director General Dr James Matarajio said that natural gas production for domestic use has risen in line with increased domestic demand.

“In 2004 average production stood at 100mcf but currently production stands at 200mcf,” Dr Matarajio was quoted by the media as saying.

He was speaking at a recent event to inaugurate natural gas installations in four restaurants at the University of Dar es Salaam.

As part of its drive for economic growth, Tanzania has plans to expand its domestic gas pipeline network through its Natural Gas Utilization Master Plan that would deliver supplies to five regions: Morogoro, Tanga, Dodoma, Kilimanjaro and Arusha.

“This follows a feasibility study conducted by JICA and the next stage is implementation of this plan, phase by phase. The ultimate aim is to supply all mainland regions with natural gas,” said Deputy Minister for Energy Subira Mgalu during a stakeholders meeting in January this year.

The Natural Gas Utilisation Master Plan indicates that government has drawn a network of pipelines through which the onshore blocks will supply the domestic market.

The proposed network will be basis for distribution of natural gas in the domestic market, bearing in mind that about two-thirds of the available area in Tanzania is yet to be explored and there is great probability that companies are likely to discover more gas in onshore blocks.

According to “A snapshot of Tanzania natural gas” published by Norton Rose Fulbright in 2014, private sector involvement in natural gas has been slow and uncertain.

“The private sector was not strong enough, not well-prepared to participate in the natural gas economy. Only after offshore gas deposits in 2010 did the government begins to build local foundations that would prop up the sector as well as create private sector space in the gas economy,” reads part of the publication.

However, the assertion is no longer valid now as in July last year, TPDC called for investors in compressed natural gas (CNG) to establish fueling stations for vehicles.

Construction of the fueling stations is part of implementation of the Corporation’s plan to build two large stations in Dar es Salaam and investors would support trucking of CNG to retail stations located in various places.

“This is an opportunity for businesses in the natural gas value chain to buy CNG from TPDC at wholesale price and resell it to end-users specifically vehicle owners. It is also an opportunity to enable scaling up of the gas utilisation potential in the transport sector by replacing costly and environmentally unfriendly diesel and petrol which are wholly imported,” the corporation said.

However, there has been a significant shift of interest by government, from gas powered electricity to hydro-power electrify. The change of focus and interest has sent a bad signal to investors and domestic users of natural gas in general.

“It is true; we are now redirecting our efforts to hydropower, particularly the MW2115 Mwalimu Nyerere hydropower scheme,” said an official with TANESCO.

Industry watchers have, however, different views regarding the government’s shift of interest.

“Government should wise up and go for a balanced energy mix in a bid to not only creates energy safety net but also to tap huge revenue from the natural gas resource which is important for the country’s economic development. We should also have in mind the effects of climate change on availability of water,” notes Dr Donald Kasogi, a Policy Analyst and Board Chairman of Haki Rasilimali.

A social worker and Executive Director of FAWOPA, an NGO based in Mtwara town, Baltazar Komba said that neglecting natural gas as a source of electricity is a misplaced agenda. “In fact, developing the natural gas sector is not just about generating cheap electricity but it is also about raising the country’s revenue. We are grounding our industrialization drive on expensive and unreliable source of electricity instead of natural gas which is cheap and abundant,” he says.

However, in a bid to meet the increasing demand of natural gas in 2020 by various consumers PanAfrican Energy (PAET) in May 2019 signed a long-term Gas Sales Agreement for 20 MMscf/d with TPDC, subsequently increasing to 30 MMscf/d depending on rise in demand.

Apart from being primarily used for increased power generation, gas will also be sold to power and industrial customers in Dar es Salaam.

“PAET expects further increases in gas demand in 2020, across the power and industrial sectors, and potentially through the expansion of its ongoing compressed natural to vehicles project. Additional power generation is expected to be installed at Kinyerezi Thermal Power Station in Dar es Salaam, commencing in the third quarter of 2020,” reads part of the company’s operations report for 2019 published recently.

The report notes further that alongside gas for power generation, PAET is actively seeking to further accelerate industrial expansion in Dar es Salaam and has recently restructured and lowered gas prices to industries to ensure gas remains a cheaper and cleaner alternative to more expensive and far more fossil fuels such as diesel or coal.