on July 29, 2013 by admin in Insurance Industry, Comments (0)

Local insurance companies want 10 pc in gas deals

Local insurance companies want 10 pc in gas deals

THE local insurance industry is pushing the government to put in place a legal framework that obliges oil and gas companies to give 10 per cent of the insurance cover in the industry’s deals to local companies.

Sources say a proposal is already with the government with the justification that “local capacity should first be fully utilised” before covers are taken outside.

Tanzania’s insurance annual gross premium market is estimated at around 400bn/-, but with massive natural gas discoveries that figure could reach 2tri/- within a decade, according to industry sources.

It is understood that a committee under Association of Tanzania Insurers is in talks with the Finance Ministry over how to move this forward to conclusion.

They are asking that while they don’t have capacity to handle 100 per cent of the multibillion insurance deals of the multinationals in the country, they should be accorded 10 per cent of it. “To be frank, we are worried.

We don’t want all these companies in the gas industry to insure outside,” a source in the insurance industry told ‘Sunday News’ at the Tanzania Oil and Gas Suppliers Conference which ended in Dar es Salaam.

He said there are steps in the industry including exploration (downstream and hydrocarbon production), shipping, production, transportation, storage and marketing and that each of these steps are usually insured. “Not all these insurance covers should be taken outside,” he said.

Recently, the government was advised to ensure the energy policy being formulated contains a clause that demands oil and gas businesses to be insured by firms registered in Tanzania. The Commissioner of Insurance, Mr Israel Kamuzora, told this paper at the time in that the strategic clause was crucial to ensure national interests were vigilantly protected.

The government is currently formulating the national energy policy following recent discoveries of new on-shore and off-shore natural gas fields. Tanzania is estimated to have about 42 trillion cubic feet (tcf) of recoverable natural gas reserves.

The draft policy is reportedly proposing gas companies to list on the Dar es Salaam Stock Exchange (DSE), creation of a gas revenue fund and a national oil and gas company, as well as locating plants onshore to liquefy the gas from the offshore fields.

The 2013 draft natural gas policy also plans to “ensure that the domestic market is given first priority over the export market in gas supply. All insurances pursuant to this contract shall be obtained from registered Tanzanian insurers in accordance with Tanzania Insurance Law in so far as the coverage is available and can be reinsured as appropriate with “A” rated reinsurers or better or as may be specifically agreed by TPDC.

Such insurances shall be for such amounts and on such terms and conditions as may be approved by TPDC.”

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Article source: http://dailynews.co.tz/index.php/local-news/20440-local-insurance-companies-want-10-pc-in-gas-deals

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