Dispute Resolution Mechanisms in Midstream and Downstream Oil and Gas Operations in Tanzania

The Tanzanian oil and gas sector, particularly in midstream and downstream operations, has undergone notable regulatory reforms aimed at enhancing transparency, operational efficiency, and investor confidence. Given the complexity and high stakes involved, disputes in the industry are almost inevitable.

Similar to upstream activities such as exploration and production, midstream and downstream operations also pose distinct legal challenges. These challenges underscore the need for a well-structured and effective dispute resolution mechanism.

In this month’s legal update, we analyse the Energy and Water Utilities Authority (Consumer Complaints Settlement Procedure) Rules, G.N. No. 428 of 2020 (the Complaints Settlement Rules). The Complaints Settlement Rules provide a structured framework for dispute resolution in the oil and gas sector, which is crucial to stakeholders.

Key Interpretations

The following key terms have been defined in the relevant legislation which are applicable to this legal update:

“Complaint” means material facts of the matter or act complained by the complainant, in respect of the supply, possible supply or purported supply of regulated services and specifying the reliefs sought;

“Council” means the Energy & Water Utilities Regulatory Authority (EWURA) Consumer Consultative Council established under section 30 of the Energy & Water Utilities Regulatory Authority Act, Cap 414 (as amended) (the EWURA Act);

“Customer” means a person who purchases, transports, stores, distributes, re-gasifies or markets services for which tariffs are levied by a licensee;

“Division” means the division of EWURA responsible for hearing of complaints;

“Downstream activities” means the transportation, distribution, storage, regasification and marketing of gas and petroleum products;

“Licensee” means a holder of a licence granted by EWURA;

“Midstream activities” means activities related to petroleum processing, refining, liquefaction, storage and transportation the point of supply or loading as a commodity;

“Regulated services” means any goods or services supplied or offered for supply in a regulated sector and includes goods or services which EWURA declares to be regulated services in accordance with the EWURA Act; and

“Regulated supplier” means any person engaging in activities or in connection with a regulated sector and includes any person whom EWURA declares to be a regulated supplier in accordance with the EWURA Act.

Legal Regime

Midstream and downstream activities are primarily governed by the provisions of the Petroleum Act, No. 21 of 2015 (as amended) (the Petroleum Act). The regulatory body responsible for these activities is EWURA, a body established under section 4 of the EWURA Act. In essence, EWURA performs technical, economic and safety regulatory functions in respect of petroleum activities such as monitoring petroleum quality and standards. One of the main functions of EWURA is to adjudicate disputes between licensees and customers. Such disputes are filed, investigated, mediated and heard in accordance with the Consumer Complaints Settlement Rules.

Complaint Filing

The Complaints Settlement Rules allow any person to file a complaint against a regulated supplier concerning any matter related to regulated services. Complaints are filed using a prescribed form set out in the First Schedule to the Complaints Settlement Rules. While complaints are generally submitted using the prescribed form, the framework is flexible and allows complaints to be submitted through other forms of correspondence, whether electronic or otherwise. Once received by EWURA, such complaint shall be reduced into writing.

In some instances, a complaint may be filed by the Council, an authorised representative or any group of people on behalf of a consumer. Where a complaint is lodged by a person or group of people, the following will be required:

• a list of the individuals’ names and signatures or thumbprint affixed to the complaint; and
• minutes of the meeting resolving the filing of a representative complaint, submitted to EWURA along with the complaint.

Upon receipt of a complaint, EWURA will evaluate it with a view of checking its propriety and compliance with the EWURA Act and the Complaints Settlement Rules. Where EWURA is satisfied that the complaint is in order, it shall proceed to process the same.

A complaint may be rejected by EWURA  on the following grounds:

• where it discloses no cause of action;
• where it is time barred;
• where it is pending before any court, tribunal, arbitral or quasi-judicial body;
• where it does not fall under the EWURA Act;
• where it has no locus standi; or
• where it is found to be frivolous or vexatious.

In the event of rejection, EWURA shall inform the complainant of its decision within seven (7) days, in writing. Upon rejection, the complainant may file a fresh complaint relating to the same cause of action, provided the provisions of the law have been complied with.

Where a complaint has been successfully lodged, the respondent will be summoned, no later than seven (7) days. The defendant will be afforded twenty-one (21) days from the date of receiving the summons, to present his defence to the complaint.

Investigation and Mediation Process

Once EWURA establishes that the complaint is not frivolous or vexatious and the complainant has an interest in the matter to which the complaint relates to, EWURA will proceed to investigate the matter. As part of the investigation process, EWURA will attempt to resolve the dispute amicably, within sixty (60) days from the date of filing the relevant complaint, through mediation. If mediation is successful, a settlement reached by the relevant parties will be put into writing in a form prescribed under the Third Schedule to the Complaints Settlement Rules and signed by the parties. Once signed, a copy of the settlement shall be submitted by the mediator to EWURA for adoption. Upon adoption, such settlement shall be deemed as an award issued by EWURA. 

If at any point during the mediation process, it becomes evident that the parties will not reach an amicable settlement, or after the expiry of the mediation process, no amicable settlement has been reached, the dispute will be referred to the division for hearing.

Hearing

Proceedings under the Complaints Settlement Rules are quasi-judicial in nature. A party may appear in person, represented by an advocate or an authorised representative, subject to furnishing proof of such authorisation.

Once hearing proceedings have been concluded, the division will furnish its findings to EWURA who will consider the recommendations and issue one of the following orders:

• impose a fine of not less than TZS 3,000,000 (approximately USD 1,123) or such amount as may be prescribed to a guilty party;
• require a party to supply regulated services on prescribed terms and conditions;
• require a party to pay costs of another party or of a person appearing at the hearing or producing documents;
• dismiss the complaint;
• require specific performance;
• setting up an escrow account;
• appointment of trustees;
• making refunds; or
• providing such other relief as may be deemed reasonable and necessary.

An award issued by EWURA shall be enforceable as an order of the High Court of Tanzania. For purposes of enforcing the award, the award holder shall be required register the award to the High Court of Tanzania within the prescribed limitation period depending on the nature of complaint. In some instances, the Council may apply for registration of an award on behalf of the award holder.

Appeals

In the event where a party to a dispute is aggrieved by the decision of EWURA, it may file an appeal before the Fair Competition Tribunal (the Tribunal) within fourteen (14) days from the date of the decision in accordance with section 247(3) of the Petroleum Act.

The following are some of the grounds for filing an appeal before the Tribunal:

• the award issued was not based on the evidence tendered;
• the decision was made in an error in law;
• the procedures or other statutory requirements applicable to EWURA were not complied with and the non-compliance materially affected the award; or
• EWURA did not have power to make the award.

Conclusion

As Tanzania continues to develop its midstream and downstream operations, having clear, accessible, and enforceable dispute resolution mechanisms remains critical. For both investors and local stakeholders, understanding and effectively navigating these mechanisms is essential to managing risk and maintaining operational continuity. The Complaints Settlement Rules provide a comprehensive and practical approach for dispute resolution within the sector. By understanding and adhering to these mechanisms, stakeholders can navigate conflicts effectively, ensuring the continued growth and stability of the sector.