Q&A – 20 October 2014
Unfair PSAs for Tanzania
A company I worked for got a PSA signed few years ago. However the PSA seems to be siding with the company I worked for. It freezes the law in that parliament’s hands are tied in changing any law that is to the detriment of this company. I know all other companies have tied the government like this. How can I challenge these PSAs? I am lawyer and if I become the Attorney General, I will terminate them all.
UI, Dar
You might be thinking you are a true patriotic Tanzanian but your sentiments are dangerous and could lead to huge arbitral awards against the government if the government doesn’t stick to these PSA as agreed at the time of signing. It is trite law that contracts cannot be unilaterally changed by one party and this applies to the PSA.
To the best of our knowledge the change in legislation provision of the PSA does not freeze the law but states that if there is a legislation change, the terms of the PSA will be looked at to ensure that the oil and gas company, the contractor under the PSA, will not be commercially affected. This doesn’t stop the parliament from changing the law- whilst the parliament can change the law, the government must ensure under the PSA that the commercial benefits that the company misses out because of the change in law, are restored for the company and this is only fair. It is a term in a lot of PSA in other jurisdictions and we are no different.
This restoration of commercial benefits is not negotiable as the PSA has the power of law under the Petroleum (Exploration and Production) Act and should there be any attempts to the change law to the detriment of the company, this is actionable under the PSA and the Government will be taken to international arbitration.
You need to look at the model PSAs before concluding whether these PSAs are fair or not. In any case, there is very little, if anything at all, that you can do at this juncture. A recent statement by TRA on renegotiating PSAs was disowned by the government, which has fully realized that the PSAs have to be respected to the last word. You will have noted that our government is responsible in the way it acts against investors who have binding contracts with the government, no matter how bad the contract is.
Lastly, as lawyers, and we sadly say so, we hope you do not become the Attorney General as you will cause huge losses for our government.
Relaxed after retention licence
We are prospecting for a certain mineral and are unable to proceed with mining because of the current market conditions. Financing is also challenging presently because of the downslide in mining generally. Our consultant says we can now apply for a retention licence and relax. Is that a possibility and what are the threats even after a retention licence?
PI, Dar
Your consultant is right in that you can apply for a retention licence so that you can retain that area until the economics of the project improve. However a retention licence is granted for a period of 5 years and renewable for a further period of 5 years, and at such terms on preservation of minerals and environment as shall be stated in the retention licence. You hence cannot totally relax once you have it.
Furthermore, the Minister may, by notice in writing, require the holder of a retention licence to show cause why the company should not apply for a special mining licence in respect of the area of land subject to the retention licence. The Mining Act also states that where the holder of a retention licence fails to show cause within a reasonable time, specified in the notice or adduces reasons which the Minister considers insufficient, the Minister may by a further notice require the holder to apply for a special mining licence within a period of sixty days from the service of that further notice or surrender the retention licence.
You can see from the above that for example if some other company is willing to mine in the area that you have a retention licence over, they can move the Minister to give you a show cause notice, and if you fail to apply for a special mining licence, your retention licence will be revoked and you will effectively lose the area that you had prospected over.
Whilst there is a process that the Ministry must follow before revoking a retention licence, you cannot go on a honeymoon after getting such a licence and you must comply with the terms of the licence.
Fighting in public
My boyfriend’s ex girlfriend fought me with in a nightclub out of no wrong that I had done. She thinks she owns my boyfriend. She also literally swore at me in front of hundreds of people and the DJ instead of increasing the speaker volume decreased it so that everyone can hear what was happening. My boyfriend also seemed to be encouraging both of us to fight. I am heart broken.
OU, Dar
The Penal code clearly states that any person who takes part in a fight in a public place is guilty of a misdemeanor, and is liable to imprisonment for six months or to a fine not exceeding five hundred shillings. Further any person who— (a) uses obscene, abusive or insulting language to any other person, in such a manner as is likely to cause a breach of the peace; or (b) brawls or in any other manner creates, a disturbance in such a manner as is likely to cause a breach of the peace, is guilty of a misdemeanor and on conviction therefore is liable imprisonment for six months.
Your boyfriend’s ex can be reported to the police and the above will apply to her which means that she could be imprisoned.
The Penal Code also stated that any person who challenges another to fight a duel, or attempts to provoke another to fight a duel, or attempts to provoke any person to challenge another to fight a duel, is guilty of a misdemeanor.
You can see that both the DJ and your boyfriend might be in breach of the above provision and you can report them both to the police for investigation.
As for being heartbroken, this is not a legal question and whilst we sympathize with you, we are unable to respond to this. You might need services of a counsellor.