Summary Notes:

• Submission of Local Content Plan.
• Submission of Annual Performance Report.
• Local Content Plan Details.
• Annual Local Content Performance Report

In a bid to bolster local participation and ensure a fair distribution of benefits in the petroleum sector, stringent local content requirements have been laid out by the Petroleum Legislation. The Petroleum (Local Content) Regulations, G.N. No. 197 of 2017 (as amended) (the “Regulations”) cover various aspects, ranging from shareholding to management, with specific focus on entities serving oil, gas, or mining companies. According to the Petroleum Legislation, entities licensed for petroleum activities by the Energy and Water Utilities Regulatory Authority (EWURA) can retain 100% foreign shareholding, provided they comply with ongoing compliances. These compliances include submitting a local content plan and an annual local content performance report.

Submission of Local Content Plan:

Entities intending to engage in petroleum activities are mandated to submit a local content plan to EWURA for approval. This plan, as per Regulation 11 of the Regulations, encompasses crucial details such as employment, training, succession planning, financial services, procurement, technology transfer, and any other information deemed necessary by EWURA. It is obligatory to submit this plan before commencing activities and annually thereafter.

Submission of Annual Performance Report:

Regulations 34 and 35 of the Regulations require licensees, contractors, subcontractors, or any relevant person to submit an annual performance report to EWURA within 60 days of each calendar year. This report should comprehensively outline expenditure, employment details, training initiatives, procurement practices, changes to the local content plan, and any additional information as per EWURA’s request.

Local Content Plan Details:

1. Employment and Training: Regulation 14(1) of the Regulations specifies that entities engaged in petroleum activities should prioritize the employment of Tanzanians for semi-skilled and unskilled jobs. However, exemptions can be granted by EWURA under certain circumstances.
2. Minimum Local Content Levels and Succession Plan: Regulation 29 of the Regulations outlines minimum local content levels for different categories of staff engaged in upstream, midstream, and downstream activities. Additionally, Regulation 13 of the Regulations emphasizes the importance of a detailed succession plan to maintain local content levels, especially for positions occupied by foreigners.
3. Use of Financial, Banking, Insurance, Engineering, and Legal Services: Regulations 26, 28, 21, and 22 of the Regulations, stress the importance of prioritizing Tanzanian institutions and firms in financial transactions, insurance, and legal services. Additionally, Regulation 24 of the Regulations emphasizes the utilization of Tanzanian engineering firms for petroleum-related services.
4. Research, Development, and Innovation: Entities are required to submit a detailed annual program for research, development, and innovation, as per Regulation 17 of the Regulations. This program should include budgetary allocations and plans for collaboration with relevant stakeholders.
5. Procurement of Goods and Services: The Regulations mandate license holders, contractors, and subcontractors to give preference to goods produced or available in Tanzania and services rendered by Tanzanian citizens or local companies.
6. Technology Transfer: Regulation 17 of the Regulations underscores the importance of implementing technology transfer and supplier development programs to promote technology transfer within Tanzania’s petroleum industry.

Annual Local Content Performance Report:

Entities are required to submit an annual local content performance report covering all activities for the year under review. This report, as per Regulation 34(2) of the Regulations, should include details on expenditure, employment achievements, training initiatives, procurement, changes to the local content plan, and any additional information requested by EWURA. In essence, these local content requirements aim to foster economic growth, enhance skills development, and promote technological advancement within Tanzania’s petroleum sector, ultimately benefiting the local economy and its citizens. Compliance with these regulations is vital for entities operating in this sector to ensure sustainable and inclusive development.

Disclaimer: This article is authored by Ruwaida Manji, Associate from Rive & Co, a new and innovating law firm as a result of the partnership between ABC Attorneys, Stallion Attorneys and Sepia Attorneys, built on the foundation of trust, credibility, and novelty, offering expert legal solutions. This Article is for informational purposes only and should not be construed as legal advice. It is recommended to consult with a qualified legal professional for advice specific to your situation.