East African countries that have made major gas discoveries need to set up institutional frameworks to manage their new-found wealth effectively and use it to diversify their economies, a senior World Bank official said Thursday. The east African coastline is fast becoming a major energy hub with significant discoveries of gas and oil i n Mozambique, Tanzania, Uganda and most recently Kenya. The Washington-based development lender said Tanzania, east Africa's second-biggest economy, is expected to see an increase in revenue of up to $3 billion a year following major offshore gas discoveries in the country. “The discoveries will have a massive impact. If I take the case of Tanzania, once the gas project is in place, we expect around $2-$3 billion of revenue a year,” newly appointed World Bank vice president for Africa, Makhtar Diop, told Reuters in an interview. “This is a lot of money and it will require early investment now in this window of four to five years to put institutional settings to be able to really manage very well those resources ... before the big investments come in the country.” British gas producer BG Group and explorer Ophir Energy said this month they had found more gas off the coast of Tanzania, raising hopes that the country will become a major new gas supplier. Norwegian oil and gas firm Statoil also announced in February it has found natural gas offshore Tanzania. Mozambique, the fastest-growing energy player in the region, estimates that energy firms will spend $50 billion over the next decade to develop its liquefied natural gas (LNG) industry. Diop said there was a need for African countries to manage their expected revenues from gas and oil effectively and diversify their economies. “It is a question that we are facing in a lot of African countries now that they have either discovered new resources or have been able to manage well the first phase of the commodity boom,” he said. “One of the priorities that we have in our work now is to really help build the capacity by learning from other continents the best experience that we have in terms of management of the resources,” Diop said. He said energy-rich African countries must ensure they do not become a one-sector economy.
