Dar es Salaam: Court orders seizure of 150MW city power plant

By Bernard James, The Citizen Reporter.

A severe power shortage is looming here after the High Court ordered the seizure of Symbion Power Tanzania Limited’s Ubungo power plant last week over a $9 million (about Sh14.4 billion) fuel bill.The US-based power firm will pay the sum to Mogas Tanzania Limited, a local oil marketing company it contracted to supply oil for running its thermal power plant.

Yesterday, Symbion lawyers were desperately trying to get the High Court to stop the attachment of its properties until another application it has filed is heard and determined. Symbion is one of three power companies the government contracted in the broader public-private partnership drive aimed at putting to an end the power shortages that have persisted for nearly a decade.

Under the national power rescue plan, Symbion Power was contracted to produce 205MW and supply it to Tanesco. The firm was already supplying over 150MW to the national grid yesterday. To meet its commitment, the company contracted Mogas to supply diesel on credit terms. According to Mogas, the cost of the diesel supplied to Symbion stood at $11 million as at November last year but the US-based company failed settle the bill despite frequent reminders. The fuel was delivered between April and September.

Fearing that Symbion would not settle the debt, Mogas sued the company last December for the payment, which had attracted interest at $330,219 by November last year.On February 12 this year, Madam Justice Upendo Msuya ruled in favour of Mogas on admission of the debt. Symbion has filed an application under certificate of urgency to stop implementation of the attachment order, which came with a 14-day notice to pay up.

Through lawyer Emmanuel Makene, the company argued that the order to attach the plant was issued without their side being heard.Symbion has paid only $2million and has since been demanding that the oil marketing firm withdraws the main suit and comes to an agreement on how the balance should be paid.

The company says it does not dispute the existence of the contract but it is challenging its performance.

“The amount claimed by the respondent is disputed due to under-performance, late delivery, quoting prices that are beyond regulations of the Energy and Water utilities Regulatory Authority (Ewura),” argues the lawyer.

Yesterday,Mogas counsel Deogratias Ringia opposed the application to suspend implementation of the court order, saying there was no justification for stopping it.

The only option to stay execution of the order, he said, was to file an appeal, review or revision. What the Symbion counsel was doing was abuse of the court process, he said, and amounted to delay of justice.

Just a day after Mogas won the case against Symbion in February, Tanesco and Symbion signed a Memorandum of Understanding for building and operating a 400MW power plant in Mtwara through Public Private Partnership.

The work was to include the construction of a 650-km transmission backbone from Mtwara to Songea, where it would be connected to the Tanesco national grid through a line to be built from Makambako to Songea.

The three-phase development will take three years from financial closure to completion.It will take 12 months or so to put the necessary financing in place before the clock begins to tick. Speaking at the signing of the memorandum of understanding, Symbion Power Chief Executive Office Paul Hinks said:

“Symbion and Taneso will be working with a number of international funding agencies, banks and private equity firms in 2013 to put the financial package together. Many of them have already expressed great interest in the project.” He added: “We are hopeful that US government agencies such as Exim Bank and the Overseas Private Investment Corporation will show keen interest in the investment too.”

Source: The Citizen (23/04/2013): http://www.thecitizen.co.tz/component/content/article/37-tanzania-top-news-story/30787-court-orders-seizure-of-150mw-city-power-plant.html