Energy & Natural Resources
In this month’s article, we discuss the key provisions of the New Petroleum Regulations on the Corporate Integrity Pledge. The Regulations require all licence holders and contractors undertaking petroleum or gas activities to comply with the integrity pledge.
The Regulations are made under section 223(3) of the Petroleum Act No.21 of 2015 (the Act). The Regulations entered into force on 1 November 2019, following their publication in the Government Gazette of the same date (Government notice number 782 of 2019).
Corporate Integrity Pledge is defined in the Regulations as a formal, unilateral and concrete expression of commitment by contractors, sub-contractors, licensee or any other person conducting petroleum operations to uphold corporate anti-corruption principles, abide by ethical business practices, support a national campaign on ethics and war against corruption.
Covered persons are:
The Regulations govern corporate integrity pledge programmes related to upstream, midstream and downstream activities in Mainland Tanzania and Zanzibar, and are enforced by the Petroleum Upstream Regulatory Authority (PURA) and the Energy and Water Utilities Regulatory Authority (EWURA).
The objectives of the corporate integrity pledge are to:
On the basis of the above, those conducting petroleum operations must adhere to the following corporate integrity principles, namely to:
The above named parties are obligated to:
Within forty five (45) days of the anniversary of a contractor, sub-contractor or licensee's commencement of its petroleum operations (the Reporting Period) it must submit to PURA or EWURA an annual integrity pledge performance report covering all its projects and activities for the Reporting Period.
The annual integrity pledge performance report shall be in a format prescribed by PURA or EWURA and shall include:
PURA and EWURA aim to assess each corporate integrity pledge performance report within sixty (60) working days.
PURA and or EWURA have the following powers and functions, namely to:
summon any person to submit or provide information deemed necessary in the course of discharging its duties; and
suspend or revoke any licence for a failure to comply with the requirements of the Regulations.
access facilities, documents and information for the purpose of assessing and verifying the corporate integrity pledge information provided.
require a contractor, sub-contractor or licensee to engage an IRO within ninety (90) working days of the Regulations entering into force.
review the corporate integrity programmes in relation to petroleum operations and ensure compliance with the corporate integrity pledge requirements.
inform relevant entity of the outcome of the assessment or review of the corporate integrity programmes within thirty (30) working days of receipt.
initiate an investigation into the activity of a contractor, sub-contractor or licensee, when required.
The Board of Directors of a contractor, sub-contractor, or licensee shall be responsible for:
The Chief Compliance Officer appointed by the contractor, sub-contractor or licensee must:
It is worth noting that a failure to comply with the Regulations by a contractor, sub-contractor or licensee will amount to a breach of the conditions of their respective licence or permission to engage in petroleum operations (as a regulated activity), resulting in its withdrawal or cancellation, whereby the Government of Tanzania will be entitled to take over operations as provided for under the Act.
The specific penalties for each of the offences outlined in the Regulations are set out below:
|Failure to comply with an obligation under the Regulations||5 million Tanzanian Shillings accruing from the date that the obligation became due.|
|Failure to meet the deadline for submitting the implementation report or annual reports to PURA or EWURA||5 million Tanzanian Shillings accruing from the date that the obligation became due.|
|Failure to submit an IRO review report||5 million Tanzanian Shillings accruing from the date that the obligation became due.|
|Failure to grant access as required||3 million Tanzanian Shillings accruing from the date that the person failed to grant access.|
|False certification on implementation report, annual report or additional documentation to a report requested by PURA or EWURA||10 million Tanzanian Shillings for each false certification submitted by or on behalf of the person.|
|Failure to comply fully and adequately with any obligation of the Regulations||2 million Tanzanian Shillings accruing from fourteen (14) working days after the person receives a notice of non-compliance from PURA or EWURA.|
|Contravening any provision of the Regulations, where no specific penalty is prescribed.||A fine of not less than 10 million Tanzanian Shillings.|
||100 million Tanzanian Shillings and a further 5% for each accruing day.|
This briefing is prepared for clients and contacts of Clyde & Co Tanzania. We aim to keep our clients abreast of developments in Tanzania as they happen and if you have any questions on the issues raised above please contact us directly.
Further advice should be taken before relying on the contents of this summary. Clyde & Co Tanzania accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Clyde & Co Tanzania.