This is one of interesting issues/topics for discussion;
There are two propositions which require close scrutiny, one is Mlimani city a property of UDSM and the second is UDSM is a co-owner of the property however the article you are about to read will give a very different impression.
University of Dar es Salaam (UDSM) Deputy Vice- Chancellor, Professor Florens Luoga said Turnstar which is listed at Botswana Stock Exchange (BSE) bought a controlling stake at GH Group whose owner, Gulaam Abdoola is also a director at the former.
“Firstly, it is not true that UDSM had entered into any contract with GH Group. At all times the only party with whom UDSM has contract with is Mlimani Holdings Limited. This is a Tanzanian company whose records are available at BRELA.
But, briefly, the majority shareholder of MHL is GH Group,” Prof Luoga explained. He pointed out that although Turnstar has a controlling stake at GH Group which owns majority of shares at MHL, the BSE listed company has no status in Tanzania to ask for any tax exemption.
Prof Luoga said the only company that has preferential treatment is MHL. “This was accorded some incentives under the Tanzania In- vestment Centre (TIC) regime and subsequently the government executed a Performance Agreement with MHL to grant it some more specific tax incentives, particularly relating to loan repayments and interest on loans,” the UDSM Deputy Vice- Chancellor argued.
He further defended Abdoola as having not failed to meet his contractual obligations, saying as GH Group owner and MHL majority shareholder, the GH Group was implementing the Mlimani City Project in three phases which placed construction of the con- ference facility at the end of the phases.
“The first phase comprised the construction of the shopping mall. This is done and you are its physical witness. The second phase was the construction of residential houses and office blocks. You will agree that these obligations were duly discharged to satisfaction,” he noted.
Prof Luoga further pointed out that during the second phase, President Jakaya Kikwete specifically ordered for the construction of the high capacity conference facility which MHL obliged by con- structing the Mlimani City Conference Hall that was not previously planned at this stage. “They (MHL) therefore over performed their initial contractual undertakings.
The third and final phase was the construction of a value mart, a hotel and a botanical garden. This stage was interfered with at the onset of the world economic crunch. Banks were no longer ready to continue financing the project due to difficulties that beset the financial sector,” he pointed out.
But local experts maintained that Mlimani City Project is a going concern, which cannot fail to raise 80 million US dollars locally to complete the project, hence, questioned the authenticity of requesting another round of tax exemptions.
The city whose model and style has been overtaken by those developed by local investors such as Quality Centre of Quality Group, is said to be making between half a million and 750,000 US dollars (between 811.7m and 1.2bn/-) per month in rent.
“Turnstar is a listed company, where does it borrow the money from when it’s simply getting almost grants from BSE,which loan is being given tax exemption here?” the expert wondered, saying as a place where the country’s best brains are hatched, it is embarrassing that UDSM is repeating mistakes done by politicians.
The expert argued that Mlimani City is a project that will con- tinue minting money for the next 50 years questioning the reason why MHL is not listed at Dar es Salaam Stock Exchange (DSE) where local shareholders will also make money like their Botswana peers.
On the future of the project, Prof Luoga said, “MHL entered into dialogue with both UDSM and the government on extend- ing the due dates of performance. These were extended by agreement in order to enable MHL re-arrange its project financing and at the same time get the government to perform its undertakings under the performance agreement.”
He said Mlimani City remains property of UDSM and cannot be associated with any person as the deal is a model Public Private Partnership (PPP) arrangement. In a statement released by Turnstar soon after concluding the deal with GH Group, Managing Director Jacob Mothabane said by acquiring Mlimani City Property Development, the company is inheriting;
“A multi business area — a shopping centre with lettable space of about 19,000 square metres, a fully let office park consisting of four double storeys, A grade buildings with a let space of plus or minus 11,308 square metres, a conference centre with a full range of facilities and amenities which played a host to the African leg of the World Economic Forum (WEF) and a ready built residential housing estate with 50 units.”
In addition, Turnstar will also have access to about 7,500 square metres of undeveloped land for future use. According to Botswana Stock Exchange, Turnstar Holdings’ earnings after the first six months since acquiring Mlimani City in February 2012, increased by 35 per cent.
