Tanzania Petroleum [Local Content Regulation] Requirements: How Effective Is this Regulatory Tool?
Local Content (LC) is defined as the quantum of composite value added to, or created in, the economy of Tanzania through deliberate utilization of Tanzanian human and material resources and services in petroleum operations in order to stimulate the development of capabilities indigenous of Tanzania and to encourage local investment and participation1.
It can also be referred to as the policy directives imposed by the host Government on investors to procure and support the growth of petroleum industry through effective expansion of local participation in petroleum operations by creating local jobs, and the use of locally manufactured goods, works and services to enhance building of local industries. The rationale for this regulatory intervention is mainly to secure socio-economic benefits that ameliorate the lives of citizens, which in turn upgrades the economy of the country in varying perspectives.
Achieving the LC objective regulation through the use of local content is often accomplished when thorough assessment and identification of gaps is carried-out. The gaps may encompass skills shortage, financial deficiency, shortage in sectoral technical knowledge, infrastructure or even legal skills, and, in turn, dealing with the said identified gaps through incorporating joint ventures for i international oil companies to work with local personnel and companies2. If this positive output is successfully implemented, and its effectiveness is regularly checked, it can play an important role in accelerating the process of economic growth and sustainable development in oil-producing countries, as was the case in Norway3 .
1 The Petroleum (Local Content) Regulations, 2017 The Petroleum Act (CAP. 392)
2 Nikièma, S.H. Performance Requirements in Investment Treaties Best Practices Series; International Institute for Sustainable Development (IISD): Winnipeg, MB, Canada, 2014.
3 Asiago C.B; Rules of Engagement: A Review of Regulatory Instruments Designed to Promote and Secure Local Content Requirements in the Oil and Gas Sector Centre of Climate Change, Environmental and Energy, University of Eastern Finland (UEF) FI-80100 Joensuu, Finland; September 2017.