Tanzania Tells Swala Oil to Delay Purchase of 40% Stake in Orca Unit
Tanzania's national oil company TPDC ordered Swala Oil and Gas on Friday to delay its acquisition of up to 40 percent in PAE PanAfrican Energy Corp. pending a more detailed assessment of the deal.
Swala, a Tanzanian firm, said on Jan. 2 it would buy the stake in the unit of Canada's Orca Exploration Group for $130 million.
The deal would give Swala part ownership of PAE’s Tanzanian subsidiary, which holds exploration and production rights for natural gas in the Songo Songo block, in partnership with TPDC.
TPDC said it had instructed Swala to delay the deal until a more detailed analysis was conducted into how it would affect an existing natural gas production sharing agreement (PSA) between PAE PanAfrican Energy Corp. and the Tanzanian government.
"TPDC wrote to Swala requesting them to hold the transaction pending government and its institutions' satisfaction that the deal will have no effect on the PSA signed between the government, TPDC and PanAfrican Energy," TPDC said.
It said the government would issue a statement when it approved the deal, but did not say when a decision could come.
Swala said this month the transaction would involve the issue of 16.3 million preferred shares, worth $16.3 million, to Orca, if shareholders approved. It would also take on PAE Tanzania’s debts worth another $24 million.
PAE PanAfrican Energy, a wholly owned subsidiary of Orca, supplies natural gas for power generation to about 40 industrial and commercial customers in Tanzania's commercial capital Dar es Salaam.
Reporting by Fumbuka Ng'wanakilala