GOVERNMENT TO TABLE TWO BILLS TO CHANGE MINING AND NATURAL RESOURCES LAWS.

The Government of Tanzania is set to table two Bills in the Parliament early next week as it seeks to come up with the major changes in the exploitation of Tanzania’s natural resources. The two Bills include The Natural Wealth and Resources Contracts (Review and Renegotiation of Unconscionable Terms) Act, 2017 and The Natural Wealth and Resources (Permanent Sovereignty) Act, 2017, which will be endorsed to the Parliament under the Certificate of Urgency.

The National Assembly through the Natural Wealth and Resources Contracts (Review and Renegotiation of Unconscionable Terms) Act, 2017 will be empowered to review all arrangements and agreements both existing and prospective agreements entered by the government on the exploitation of natural resources and where necessary direct the government to renegotiate any unconscionable terms identified on the agreements.

The latter Bill states that the government will submit the arrangements and agreements it has entered to the National Assembly and the National Assembly will have powers to direct the government to instigate renegotiation for the arrangement or agreement with a purpose of rectifying any term bearing doubtful arrangements.

Part II of the proposed law vested the National Assembly with powers to review contracts, whereas proposed Section 5(3) reads:

“Where the National Assembly considers that certain terms of arrangement or agreement on natural wealth and resources or the entire arrangement or agreement on natural wealth and resources made before coming into force of this Act are prejudicial to the interests of the People and the United Republic by reason of unconscionable terms it may, by resolution, direct the Government to initiate renegotiation of the agreement or arrangement with a view to rectifying the terms”

Upon being directed by the National Assembly to renegotiate the arrangement, the government shall within thirty (30) days, serve the other party to the arrangement or agreement a notice of intention to renegotiate the terms which the National Assembly found to be unconscionable.

The terms of the arrangement or agreement shall be deemed to be unconscionable and treated as such if they contain any provision or requirement inter alia include:

1. Aim at restricting the right of the State to exercise full permanent sovereignty over its wealth, natural resources and economic activity;
2. Are restricting the right of the State to regulate activities of transnational corporations within the country and to take measures to ensure that such activities comply with the laws of the land;
3. Are depriving the people of Tanzania of the economic benefits derived from subjecting natural wealth and resources to beneficiation in the country;
4. Are by nature empowering transnational corporations to intervene in the internal affairs of Tanzania;
5. Are subjecting the State to the jurisdiction of foreign laws and forum;
6. Restricts periodic review of arrangement or agreement which purports to last for life time the mining; and
7. Securing preferential treatment designed to create a separate legal regime to be applied discriminatorily for the benefit of a particular investor.

Further the proposed law stipulates; where the government has served notice of intention to renegotiate the arrangement or agreement and the other party fails to agree to renegotiate the unconscionable terms or no agreement is reached with regards to unconscionable such terms shall cease to have effect to the extent of unconscionable terms and shall, by operation of this Act, be treated as having been expunged, the latter proposed section shall have over-riding effect over any other law governing administration and management of natural wealth and resources.

Comparably, the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017 stipulates under Part II of the proposed law the permanent sovereignty over natural wealth and resources where the People of the United Republic shall have permanent sovereignty over all natural wealth and resources, the ownership and control over natural wealth and resources shall be exercised by, and through the Government on behalf of the People and the United Republic, the natural wealth and resources shall be inalienable in any manner whatsoever and shall always remain the property of the People of the United Republic, the natural wealth and resources shall be held in trust by the President on behalf of the People of the United Republic and all activities and undertakings relating to exploration of natural wealth and resources shall be conducted by the government of the People of the United Republic.

The proposed law under the proposed Section 6 (1) reads:

“Where the National Assembly considers that certain terms of arrangement or agreement on natural wealth and resources or the entire arrangement or agreement on natural wealth and resources made before coming into force of this Act are prejudicial to the interests of the People and the United Republic by reason of unconscionable terms it may, by resolution, direct the Government to initiate renegotiation of the agreement or arrangement with a view to rectifying the terms”

The proposed law further provides that in any arrangement or agreement for extraction, exploitation or acquisition and use of natural wealth and resources, there shall be guaranteed returns into the Tanzanian economy from the earnings accrued or derived from such extraction, exploitation or acquisition and use. It goes further to state that any authorization granted for the extraction, exploitation or acquisition and use of natural wealth and resources, arrangements shall be made or given to ensure that the Government obtains an equitable stake in the venture and the People who are citizens of the United Republic may acquire stakes in the venture.

Further the proposed law state that any arrangement or agreement for extraction, exploitation or acquisition and use of natural wealth and resources shall require that earnings from disposal or dealings be retained in the banks and financial institutions established in the United Republic, it shall be unlawful to keep such earnings in banks or financial institutions outside the United Republic except where distributed profits are repatriated in accordance with the laws of Tanzania.

The proposed law prohibits proceedings in foreign courts whereas pursuant to Article 27 (1) of the Constitution, permanent sovereignty over natural wealth and resources shall not be a subject of proceedings in any foreign court or tribunal, disputes relating from extraction, exploitation or acquisition and use of natural wealth and resources shall be adjudicated by judicial bodies or other organs established in the United Republic and in accordance with the laws of Tanzania.

Upon enactment of these two bills into laws, a number of laws dealing with natural resources will also be subject to amendments in order to be in conformity with the new laws.

FURTHER INFORMATION:

This editorial is intended to give you a general over view of the Law. If you would like further information on any issue raised in this column, please contact.

Patrick Sanga
Partner
E: p.sanga@vemmaattorneys.co.tz
M: +255 686 999 993

Haika-Belinda Macha
Partner
E: hb.macha@vemmaattorneys.co.tz
M: +255 688 305 999