THE Richmond power generation contract leaked to THISDAY has confirmed that the controversial agreement signed under strange circumstances last year does not provide for the re-assignment of the deal to Dowans Holdings S.A of the United Arab Emirates, which took over the project last December.
Article 15.14 of the contract signed on the night of June 23, this year, at the Ministry of Energy and Minerals in Dar es Salaam clearly states that there shall be no third parties to the agreement other than Richmond Development Company itself and the Tanzania Electric Supply Company Limited (TANESCO).
This agreement is intended solely for the benefit of the parties and nothing in this agreement shall be construed to create any duty to, standard of care with reference to, or any liability to, or confer any right of suit or action on any person not a party to this agreement other than to the extent it has been granted specific rights or benefits in this agreement, says the contract.
After the Richmond deal went bad, the government announced last December that Dowans Holdings had assumed all contractual obligations and responsibilities vested on the US-registered company.
However, it now appears that the agreement between Richmond and TANESCO does not provide for transfer of any liability or duty of care to Dowans.
In fact, as stated in black and white in article 8.2 of the contract, the agreement only allows a sub-contracting arrangement, with Richmond remaining as the main implementing company.
The subcontracting by the supplier (Richmond) of any of its obligations under this agreement shall not relieve the supplier of any of its obligations or potential liabilities under this agreement, says the contract.
The state-run Public Procurement Regulatory Authority (PPRA) casts serious doubts on whether the government would be able to recover penalty fees from Dowans for delayed power generation because of a lack of binding contractual agreement on this specific matter.
Article 4.4 on delay damages states in part that in the event that Richmond has not commissioned the plant by the required commercial operations date (February 2, 2007), then TANESCO shall be entitled to liquidated damages of $10,000 (approx. 13m/-) per day from the supplier (Richmond) after the required commercial operations date and expiring on the date on which the supplier commissions the plant.
The penalty fees have led to Dowans now owing the government an accumulated fine of $2,430,000 (over 3bn/-).
On the other hand, the PPRA report on TANESCO highlights the fact that the contract between Richmond and the public power utility does not provide for re-assignment of the agreement to Dowans, hence creating complications in the recovery of the 3bn/- penalty.
There is no agreement between the parties (in the original contract) as to how the amount would be claimed from Dowans Holdings, the report of the procurement regulator notes.
According to the PPRA report, the performance guarantee was also surprisingly withdrawn from the list of requirements by the government during the negotiations with Richmond.
The crucial performance guarantee was removed from the contract by the government negotiation team contrary to TANESCOs own wishes.
The 25-page Richmond contract leaked to THISDAY with annexes A to F, shows that the agreement was signed by Hans Lottering from NETGroup Solutions (Pty) Limited in his capacity as the Acting Managing Director of TANESCO and Mohamed Gire, the Manager of Richmond Development Company.
At the time the highly-controversial deal was signed, TANESCO was being managed by South Africas NETGroup Solutions.
The Acting company secretary of TANESCO, Godson Makia, signed the agreement as a witness for the public utility while prominent advocate Dr Ringo Tenga was the witness on Richmonds side as its company secretary.
Earlier exclusive reports by THISDAY have revealed that the governments procurement watchdog uncovered political influence and remarkable meddling by higher authorities in government in TANESCOs tender process for the contract, resulting in Richmond emerging bid winners.
According to the PPRA findings, TANESCO was literally bulldozed to sign the contract despite the power utilitys initial rejection of Richmond.
It is further asserted that the contract was signed in strange circumstances, at night and at the ministry, with some contractual issues protecting the client having been ignored as there was no room for TANESCO to review the draft contract and the company secretary does (did) not know who drafted the contract.
The report states that not even TANESCOs company secretary - as the companys chief legal advisor ? was aware of who drafted the contract. with Richmond.