Tanzania has been notorious for its treatment of mining companies since its 2017 legislative changes which included potential renegotiation of agreements and greater government stakes in mining projects.

The government told coal miner Intra Energy (ASX:IEC) it needs to change how it charges royalties. This was despite telling Intra Energy only two months ago it was following the law correctly.

Intra Energy has paid royalties since it began in 2011 but it is usually paid at the sales point. But now it must apply the royalty on the transportation of coal to the final destination.

The ministry has ordered the company to implement this by September 15 or else it will not let trucks leave the sales point.

Intra Energy told shareholders it would have to sell through dealers since it does not own its trucks. This will increase its costs.

The royalty will be 3 per cent plus a 1 per cent clearance and inspection fee. On top of this, Intra Energy must pay 6 US cents (9c) per tonne per kilometre for domestic customers and 8 US cents per tonne for international customers.

The company estimates the price of coal will increase by $US2.94 per tonne for the largest domestic customers. Meanwhile, exporting customers will face a $US8.23 per tonne hike.

Intra Energy said it intended to discuss the situation with the government and customers to find a solution.

Shares are unchanged today, but the price has dropped in recent months, from as high as 3c back in April. The Tanzanian government run National Development Corporation owns 30 per cent of Intra Energy’s Tanzanian subsidiary and Intra Energy own the remaining 70 per cent.

In other ASX small cap energy news today:

Whitebark Energy (ASX:WBE) is undertaking initial clean up flows at its Wizard Lake Rex-2 well. Whitebark has recovered over 25 per cent of the frac fluids and it noticed oil and gas at surface. The company promised an update once the well had stabilised. On completion its working interest will increase from 30 per cent to 40 per cent.

Queensland-based Senex Energy (ASX:SXY) updated shareholders this morning on its Surat Basin projects, declaring drilling was on time and on budget. It has drilled five out of 60 wells at Project Atlas and it has encountered net coal intersections of up to 43m. It is building a gas compression station there and it expects the first gas sales at the end of this year. At Roma North, it has drilled 10 out of 50 wells and reported good gas saturation in the area.

Comet Ridge (ASX:COI) has reached 2605m at its Albany well in the Galilee Basin. It reported a significant section of sandstone reservoir in this well and good gas shows. The core will now be analysed to allow better stimulation design ahead of further drilling. Also, its joint venture partner Vintage Energy (ASX:VEN) has now reached a 30 per cent earn in at the project having reached its $10m spend target.

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