Trade Zone Highlights Construction Benefits Of Hydrocarbons

The potential for Tanzania's nascent hydrocarbons industry to provide a boon for the country's construction sector is beginning to play out, with the Export Processing Zones Authority (EPZA) and Tanzania Ports Authority (TPA) having agreed to begin the first-phase development of the Mtwara Freeport zone. The project aims to attract international investors keen on capitalising on the growing hydrocarbons industry - which is proving to be an increasingly important driver of growth within the construction sector. We forecast real growth of 5.9% year-on-year (y-o-y) in 2014, which will be supported by the development of the Mtwara site - in readiness to welcome a number of international firms that have expressed interest in establishing operations at the site.

The agreement between the two authorities will see an initial 10 hectare site transformed into an Oil Field Supply Base, which is the first phase of the total 110 hectare Freeport zone. The zone is to act as a logistical base for companies servicing the growing number of businesses looking to capitalise on Tanzania's oil and gas riches, including majors such as Statoil and ExxonMobil. Among the six investors who were granted licences for the Freeport zone in November 2013, parties interested in the initial development include Schlumberger, Weatherford and Halliburton from the US; Lena, FFF, Alpha Group and Queensway from Dubai and the UK; Altus Tanzania Ltd from Singapore; Tans Ocean Industries & Services from Dubai and Intershore Tanzania from South Africa.

This project has full governmental support. Not only will the development make the Tanzanian hydrocarbons industry more attractive to major oil and gas players, but it should create employment opportunities for local people. The development of the region's gas resources has met with strong and sometimes violent opposition on account of local people feeling they are not reaping any of the benefits of Tanzania's gas wealth. The impact of the monetisation of Tanzania's natural gas will be significant for the country's economy. Gas is already boosting investment and we expect the country to register even more significant gains as progress towards a liquefied natural gas (LNG) project draws closer ( see, 'Gas Investment To Boost Growth,' November 22 2013). However, the local communities which have to make room for the development of the industry are yet to really see tangible benefits, which the advance of the Freeport zone should yield. Not only will the construction of the warehousing and infrastructure surrounding the zone create direct benefits, but it is also likely that regional demand for hotels, better transportation and commercial real estate will also increase as a direct consequence of the demand from those companies who set up at Mtwara - creating much-needed jobs.

Hydrocarbon Developments Support Growth
Construction Industry Value (US$bn) and Real Growth (% Change year-on-year)

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This article is tagged to:
Sector: Infrastructure
Geography: Tanzania

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