Kikwete anawajua Vizuri IPTL waliingia nao Mkataba Mbovu yeye (JK) akiwa Waziri Wa Madini na Nishati (1995),Kwa kumbukumbu pitia tena kipande hichi cha gazeti kama kilivyoandikwa na Gazeti la Thisday - 2008
AN independent investigation into the dubious Independent Power Tanzania Limited (IPTL) contract has established that the project suffered ''from a complete lack of professional scrutiny'' and was prone to corruption in high levels of government.
Apart from the involvement of bribery in the 20-year deal signed in 1995, the investigation by a Washington DC-based investigative consulting firm, Decision Strategies Fairfax International (DSFX), gathered overwhelming evidence suggesting that the integrity of high-level government decision-making processes was compromised.
US investigators working with their Tanzanian counterparts from the then Prevention of Corruption Bureau (PCB) gathered a trail of evidence revealing that the IPTL ''project was addressed and facilitated by certain government officials in a most unusual, secretive and out-of-channel fashion.''
However, despite official statements made to authorities by several government officials revealing that they were offered huge bribes by IPTL operatives to approve the deal, there have so far been no criminal prosecutions of the alleged corruption -- more than a decade after the controversial project was signed.
Experts say the 100MW energy contract will continue to bleed Tanzanians of millions of US dollars until the agreement formally expires in 2015.
Following is a chronology of key events in the IPTL scandal, sourced from official government records seen by THISDAY:
Early 1992
Tanzania starts to experience extensive power rationing caused by a period of prolonged drought. The government reviews a number of proposals for an emergency solution to the crippling power cuts.
November 1994
Independent Power Tanzania Limited gives the government a proposal for medium-term power project. IPTL is a joint venture between Mechmar Corporation of Malaysia (70%) and VIP Engineering and Marketing Limited (30%), a local company owned by businessman James Rugemalira.
December 1994
Representatives of Mechmar visit Tanzania and hold talks with a government delegation comprising officials from the then Ministry of Water, Energy and Minerals, the Tanzania Electric Supply Company Limited (TANESCO) and the Attorney General's Chambers.
January 1995
Ministry of Water, Energy and Minerals sends a draft Cabinet paper to the Inter-Ministerial Technical Committee (IMTC) in favour of the IPTL proposal. The IMTC rejects the draft paper on the ground that it was not supported by any financial or economic analysis. After the IMTC's decision, TANESCO's then Managing Director, Baruany Luhanga, commissions London Economics International, an independent economic consultancy firm, to assess the financial and economic implications of the proposed IPTL project. After a preliminary assessment, London Economics concluded that the terms of the agreement would be a huge burden to the Tanzania government and overly favour IPTL. The UK firm recommended that the terms of the contract should be analysed in greater detail before any agreement was finally reached.
May 3, 1995
Against expert advice, the Cabinet approves the signing of a power purchase agreement (PPA) and the implementation agreement (IA) with IPTL on the condition that the final electricity tariff in PPA should not be mentioned until after its economic committee had assessed the project's financial and economic implications.
May 26, 1995
TANESCO's Board of Directors approves the signing of the PPA after the power utility's management informed the board that the Ministry of Water, Energy and Minerals (the parent ministry) had given authorization to sign the contract. The PPA was thereafter signed on the same day. A tariff of 10 US Cents per kilo-watt-hour (kwh) is one of the key terms of the PPA, which is abnormally high considering that TANESCO's tariff to consumers was less than 9 US cents per kwh. By signing the contract, TANESCO becomes contractually bound to buy power from IPTL at bloated rates for a period of 20 years.
July 16, 1996
The Ministry of Water, Energy and Minerals issues an electricity licence to IPTL with a condition that IPTL and TANESCO should agree on a tariff since the PPA as amended did not give a clear tariff calculation mechanism.
February 1997
IPTL signs an engineering, procurement and construction (EPC) contract with Stork-Wartsila NSD of the Netherlands. IPTL breaches the contract with TANESCO by installing medium-speed diesel (MSD) turbines instead of the slow-speed diesel (SSD) engines specified in the agreement. This was a direct departure from the terms of the PPA and TANESCO was not even notified by IPTL about this fundamental change.
September 1997
President Benjamin Mkapa issues instructions that the IPTL contract terms be renegotiated and orders the Ministry of Energy and Minerals to write to IPTL and express the government's concern over a range of matters, particularly irregularities in the negotiations, the approval process and the onerous terms in the agreement which benefited IPTL to the government's detriment.
October 13, 1997
The Cabinet approves that the IPTL project should proceed with the condition that the independent power company contractually binds itself to a tariff of 10 US cents. IPTL rejects this conditionality.
March 1998
TANESCO gets the government's approval to issue a notice of default to IPTL over the private company's unilateral decision to install diesel engines (turbines) with different specifications from those specified in the PPA. IPTL later files a suit in the High Court in Dar es Salaam seeking TANESCO to pay its monthly capacity and energy charge obligations under the agreements and succeeded in this action, which was later stayed pending the Court of Appeal's determination over the matter. The matter later ends up for arbitration before the International Centre for the Settlement of Investment Disputes (ICSID) after IPTL failed to justify cost structure and payments.
February 2001
The London-based ISCID rules that IPTL was overpriced by $23.5m but that the contract still stands since TANESCO was aware of the switch from SSD to MSD.
2002 � present day
IPTL's local shareholder in Tanzania, VIP Engineering & Marketing Limited, files a petition at the High Court in Dar es Salaam to wind up IPTL. The case has been ordered to be referred to the London Court of International Arbitration (LCIA), which says it has jurisdiction over such claims.
Mechmar''s Executive Director and group financial controller, Loh Kiat Loon, dismisses the move, saying the court action was nothing more than an attempt by VIP Engineering to obtain a ''better valuation for their share'' of IPTL.
Meanwhile, the government has been forced to pay a staggering $30m (approx. 35bn/-) each year to IPTL, whose Malaysian owners now say they have no intention of selling the power plant to the government, as previously implied.
The current Ministry of Energy and Minerals is reluctant to answer any queries on the IPTL saga, referring queries to the Attorney General's Chambers.
