CTI_Newsletter_140 - Confederation of Tanzania Industries

www.cti.co.tzMonthly Newsletter of the Confederation of Tanzania Industriessuch as CTI, TPSF, TCT, TCMEand TCCIA – should be consultedin future when nominating membersto the Sectoral Wage Boards that areintended to advise the relevantminister on minimum wages.The study also recommended thatthe new statutory minimum wage befixed at the single rate of TZS80,000 per month for private sectoremployees in urban areas, andanother single rate of TZS65, 000for rural employees. Any paymentsabove those two minimum levels,the study says, should be subjectedto collective bargaining and mutualagreement between employers andworkers’ representatives.It was also recommended thatstatutory minimum wages should bereviewed at intervals of a maximumof three years so as to take intoaccount the time-value of moneyand other regularly changing factorsin the statutory minimum wagestakes.Author: Adrian Njau -Policy Specialist Sectors (PSS)Stakeholders Reject Tariff Changesin Gas IndustrySTAKEHOLDERS in theenergy sector have rejectedthe change in tariff rates fornatural gas. In July this year,Pan-African Energy TanzaniaLimited (PAT) and the TanzaniaPetroleum DevelopmentCorporation (TPDC) submitted ajoint application to the Energy andWater Utilities RegulatoryAuthority (EWURA) on natural gasdistribution, marketing, meteringand connection tariffs.In their application, PAT and TPDCrequested EWURA to, among otherthings, approve the formula andmethodology for the various gasdistribution and marketing tariffs, tobe valid up to the year 2025!Secondly, they requested approvalfor downstream gas tariff levels forthe period 1 st September 2008 to31 st December 2009. The gas tariffswhich were submitted forconsideration are DT-1 (which isUSD0.139/mmbtu), DT-2(USD0.639/GJ), and DT3, which isUSD0.402/GJ.PAT and TPDC also requestedEWURA to agree that thedownstream tariff level for 2010 beset using data provided by them –loosely known as ‘Gas Developers’ –and approved by EWURA inSeptember 2009… And that thetariff levels for each subsequent yearwould be set in September of thepreceding year.Lastly the applicants wantedEWURA to approve a project returnof 11.075 per cent.In an effort to collect the views ofstakeholders in the sub-sectorregarding the proposed tariffs thatwould be applicable to natural gassold to industries, including electricpower generation plants, EWURAorganised a public hearing in Dar esSalaam. In the event, most of thestakeholders who turned up to beheard and rejected the PAT-TPDCrequests.According to the Confederation ofTanzania Industries (CTI), theproposed power generation tariffwould rise from USD0.082652 permmbtu to USD0139 per mmbtu – a68.17 per cent increase.This may cause Tanesco to increasetariffs in turn – assuming thecompany chooses to use gas in thegeneration of electricity. As a result,industries would be adverselyaffected, as they are the main users ofTanesco-produced electricity.For its part, the GovernmentConsultative Council (GCC)rejected the PAT-TPDC request forapproval of a return of 11.075 percent on investment. The rejectionwas founded upon the fact that theaudited accounts submitted insupport of the application indicatedthat no equity contributions weremade, indicating that the applicantsrelied entirely on loans.In that regard, GCC proposed thatthe rate of return be calculated on100 percent loan, and should beeight per cent, instead of 11.075 percent.GCC also proposed that EWURAshould seriously look into theThe Voice of Industry 6

www.cti.co.tzMonthly Newsletter of the Confederation of Tanzania Industriesformula being proposed by PAT andTPDC. This is largely because theformula may encourage customers toguarantee profits even when theapplicants fail to meet theirobligations, are inefficient or if thereare changes resulting from changesin the market.On its side, Tanesco counselledEWURA to reject the gas developers’application because of the followingreasons. One: the applicants are notproviding a regulated service. Two:they are seeking to generate aroundUSD40 million in revenues frominvestments of about USD4 milliononly!A third reason which promptedTanesco to ask EWURA to reject thegas developers’ application was thatapproval of the DT-1 tariff wouldundermine the sanctity of contractsMusoma Dairy Faces NTBs WhenExporting to Kenyaby allowing for retroactive ratemaking.Tanesco further argued that the gasdevelopers should recover theiroperating costs out of gas revenuesunder the relevant ProductionSharing Agreement.Author: Adrian Njau –Policy Specialist Sectors (PSS)THE Tanzania-basedMusoma Dairy Ltd isfinding it extremelydifficult to export themilk it processes to Kenya, a fellowmember country of the East AfricanCommunity, due to the stringentnon-tariff barriers (NTBs) beingapplied by the Kenya RevenueAuthority (KRA), the KenyaBureau of Standards (KeBS) andthe Kenya Dairy Board (KDB).While under the extant EACCommon External Tariffsarrangements (CET), Tanzania isallowed to export the commodityduty-free to Kenya, KRA claims thatits ‘Simba Customs System’ does nothave tariff on milk products fromTanzania. As a result, the authorityregards processed milk importedfrom Tanzania as any other productthat is imported from outside the EAA group photograph of the Symposium participants and the Guest of Honour.The Voice of Industry7

www.cti.co.tzMonthly Newsletter of the Confederation of Tanzania IndustriesCommunity – and insists oncollecting 60 per cent tariff on theitem from its next-door neighbour!For its part, Tanzania charges onlyten per cent tariff on milk importedfrom Kenya. This is in terms of theCTE arrangements!Under the EAC tariff reductionproposition, Tanzania is required tocharge zero (0) per cent duty onmilk imported from Kenya when theCustoms Union is fullyimplemented by the year2010/2011.Other NTBs which Musoma DairyLtd must overcome in its bid toenter the Kenya market in full forceare stringent regulations applied byKeBS and KDB.For example, while Musoma Dairyrequested its export batches be of theorder of 30,000 litres, KDB requiresone batch to be of not more than10,000 litres. This has proveduneconomical, taking intoconsideration that the cost oftransporting only 10,000 litres ofmilk using a 30,000-litre tanker iscounterproductive.Furthermore, the Tanzaniancompany is required by KDB toapply for permits for each and everybatch it intends to send to Kenya.This is an unduly long andcumbersome process involving,among other requirements, thesending of a sample of the proposedbatch to Nairobi for approval by theBoard.Musoma Dairy is being subjected toall these stringent conditions despitethe fact that its products areroutinely certified by the TanzaniaBureau of Standards (TBS) andTanzania Food and Drugs Authority(TFDA).EAC member states have agreed toformally accredit and recognise eachother’s Bureaux of Standards.Even as Musoma Dairy is facingvarious NTBs when exporting toKenya, the Government in Dar esSalaam claims that the Kenya-basedBrookside Dairy Ltd has virtuallyturned Brookside Dairy TanzaniaLtd into a mere milk collectioncentre for the Kenya plant!Brookside Dairy Ltd of Kenyaacquired the former Arushaplant, Tanzania Dairy Ltd,ostensibly with the aim ofsetting up an ultra-high treated(UHT) milk processing line inthe EAC capital. But the planthas reportedly been not muchmore than a collection centre forits Kenyan counterpart, wherebymilk is collected and sent toKenya duty-free, where it isfurther processed – and then reexported to Tanzania duty-free!Author: Adrian Njau -Policy Specialist Sectors (PSS)SADC Launch FTA AmidConsiderable Lack of AwarenessTHE Southern AfricaDevelopmentCommunity (SADC)launched its Free TradeArea (FTA) this month amid poorawareness among members of theprivate sector within its memberstates. The FTA provides duty-freeaccess to more than 85 per cent ofTanzania’s trade volume with theother SADC countries. The tariffreduction is bound to poseunprecedented stiff competition toprivate sector operators in Tanzania– especially those in the industrialsector.The launch of the SADC-FTA isrooted in the SADC Summitdecision to fast-track the regionalintegration processes – whereby themember states are also expected tolaunch a SADC-Customs Union in2010, a Common Market by 2015,and SADC-Economic Union come2018.In order to qualify for the SADC-FTA, Tanzania was compelled toliberalise through a tariff phasedown more than 85 per cent of itstrade volume with the other SADCmembers.Before the decision to fast-track theintegration was agreed, Tanzania –by virtue of being among the LeastDeveloped Countries of the world(LDC) – was allowed to implementtariff phase down over a period of 11years, beginning from 2001 to 2012.In the event, the Government in DarThe Voice of Industry 8

www.cti.co.tzMonthly Newsletter of the Confederation of Tanzania IndustriesMore than 130 District Councils inTanzania mainland are expected toparticipate in this important event.Furthermore, members of the businesscommunity from Zanzibar, Kenya,Uganda, Rwanda and Burundi will takepart in the festival. In order to attract agood number of visitors this year, theBET Management has decided to allowthe general public enter the fair groundsfree of charge.Members are therefore requested toparticipate in this premier event whichwill expose their products/services toover half a million people who areexpected to visit the festival during itseighteen-day duration.For registration please contact the Boardof External Trade (BET) or theSecretariat not later than 31 st October2008. (Ref. No. 2008-140-04).IES Africa 2008The Embassy of the United Republic ofTanzania in USA has informed that theInternational Economic Summit, Africa2008 which brings together SMEs fromthe two countries will be staged inPrince George’s County, Maryland,USA in November 10 th – 11 th , 2008.The Details of the summit are availableat www.pgcedc.com(Ref. No. 2008-140-05)Tanzania Business Mission to DRCThe Board of External Trade (BET) isplanning to organise a Business Missionto Democratic Republic of Congo from25 th to 29 th November, 2008.Following the market assessment forTanzania’s products, it has proven thatthere is a huge market for all types offoodstuffs, building materials, agroprocessedproducts, textiles, householditems, services etc.Members are strongly urged toparticipate and explore a new market. Inaddition to travel and living expenses,participants are also requested tocontribute USD 400 to cover the costsof venue, printing of participant’sbrochures in French, hiring ofinterpreters, local transport, tea, coffeeplus other incidentals.Interested members please confirm yourparticipation as soon as possible to theBoard of External Trade throughbetis@intafrica.com Fax: +255-22-2850238.(Ref. No. 2008-140-06)IITF 2008The India Trade PromotionOrganisation (ITPO), the premier tradepromotion agency of the Governmentof India is organising the 28 th edition ofof its annual mega event, IndiaInternational Trade Fair (IITF) atPragati Maidan, New Delhi from 14 th–27 th November 2008.The event is an ideal opportunity forIndia and overseas exhibitors forshowcasing and launching their newproducts and reinforcing existingbrands.Members who wish to participate areadvised to visit their website:www.iitfonweb.com for all details aboutIITF 2008 and online Business VisitorRegistration. (Ref. 2008-140-07)Germany Business Mission toTanzaniaPlease be informed that the GermanBusiness delegation will have a factfindingmission to Tanzania from 30 thNovember – 5 th December 2008. Themain objective of the delegation is toexplore different business andinvestment opportunities in thecountry.The following sectors have beenearmarked for the business-to-businessmeetings: Energy, mining, water,infrastructure (transport), consulting,tourism, general trade, medicine,vocational training and capacitybuilding, information and technologyand agro-industry. Members in thesebusinesses should prepare their profilesready to meet their counterparts.(Ref. No. 2008-140-08)Opportunity 2008, Trade &Investment ForumOpportunity invites members toparticipate in the exhibition at theirtrade and investment forum & expothat will take place from 13 th – 14 thNovember 2008 at the InternationalConvention Centre, Meiring NaudeRoad, Brummeria, Pretoria, SouthAfrica.This specially designed partnership willallow members to connect with atargeted audience from a dynamic andstrategic communications platform.Participation fee is R15, 000 excludingVAT. Interested members please contactthe Secretariat for more information.(Ref. No. 2008 -140 – 09)Dubai Buyer and SellerMeetingThe Consulate General of the UnitedRepublic of Tanzania in Dubai U.A E.has requested the Tanzania BusinessCommunity with good quality productsthat could be sold in Dubai to preparetheir profiles and contact the ConsulateGeneral as soon as possible in order tobe connected with their counterparts inDubai.Interested members please contact theSecretariat for details.(Ref. No. 2008-140-10)The Voice of Industry 10

www.cti.co.tzMonthly Newsletter of the Confederation of Tanzania IndustriesForeign Direct Investment andthe LawAfrica in general and East Africa inparticular, offers many opportunities forthe enterprising international investor.However competition for Foreign DirectInvestment (FDI) is high and global. It istherefore important that businessprofessionals, governmental decisionmakers and key technical support staff,including lawyers, accountants andbankers, have a strong understanding ofcritical issues that affect Foreign DirectInvestment into the region.To assist those involved gain a greaterunderstanding of the elements involved,Regal Exchange of UK will host atraining course on Foreign DirectInvestment and the Law, an exhaustiveexamination of many of the topicsinvolved. The course will take place from17 th to 19 th November 2008 in Kigali,Rwanda.Further details of the course can beviewedfromhttp:/www.regalexchange.com/pdf_brochures/foreign_direct_investment_Kigali_11-08.pdf(Ref. No. 2008 – 140 – 11)TRAININGPublic Relations and CustomerCare SeminarThe Modern Management Institute ofNairobi, Kenya offers a variety ofManagement Training Courses. One ofthem is the above seminar that will beheld from 24 th – 28 th November 2008.The aim of the seminar is to equip theparticipants with a wide range of relevantprofessional knowledge, skills, values andpositive attitude vital for effective publicrelations and customer care in theirorganisations.The training is non-residential but areasonable accommodation can bearranged on request near the venue. Thefee for the seminar is US$800 perparticipant. Interested members shouldcontact the Secretariat for moreinformation.(Ref. No. 2008 – 140 – 12)Sida-Sponsored InternationalTraining Programme on“Strategic BusinessManagement”Members are invited to apply for theabove mentioned training in Sweden andsponsored by SIDA. The training willtake place from 4 th – 22 nd May 2009 inStockholm, Sweden and will be carriedout by AF-Process.The Programme is sponsored by Sida andincludes all lectures, accommodation,and meals, transfer to and from theairport in Sweden as well as internationaltravel costs in connection with thesecond phase of the training programme.Participants have to pay forinternational travel costs to and fromStockholm as well as personal expenses.An electronic application can also bedownloadedfromwww.afconsult.com/international/trainingand filled in by computer.Closing date for application is 3 rdNovember 2008 and application formsshould be sent to the Embassy ofSweden. (Ref. No. 2008 – 140 – 13)Compiled by Thomas KimbungaDirector of Membership, Services& Communication.WE ARE SEEKINGADVERTISEMENT FOR THIS PAGE