Dar firm rues advice to Tanesco on IPTL

VIP Engineering and Marketing Limited (VIP) has filed a complaint to the Administrator General (AG) against the advice that Mkono and Company Advocates were giving to the government and Tanzania Electric Supply Company (TANESCO) regarding Independent Power Tanzania Limited (IPTL).

In a letter dated May 26, 2014 to the Permanent Secretary of the Ministry of Energy and Minerals, Mr Eliakim Maswi, VIP has attached a copy of its complaint dated August 27, 2009, enquiring whether the government was still maintaining Mkono and Company’s advice on the matter.

“Our concerns and surprise arose when we saw various correspondences and reports by Mkono and Company Advocates addressed to the government of Tanzania and Tanesco between November 4, 2008 and August 20, 2009,” stated part of the letter.

The VIP letter indicates that such correspondences were in connection with the purported mandate to resolve the IPTL disputes and particularly the accusations by Mkono and Company Advocates that the AG, who had been appointed provisional liquidator (PL) of IPTL, was favouring VIP in the matter.

During his investigations as PL, the AG had determined that it was in the interest of all stakeholders in IPTL, including the public to recommence operations of the power plant and to commence converting the plant into firing natural gas before carrying out detailed investigations as ordered by the court.

Initially, Mkono and Company Advocates had since November 4, 2008 supported the operation and conversion of the IPTL Power Plant against the position taken by Standard Chartered Bank (SCB) that such move was against the interests of Tanesco and government but served the interest of VIP.

“It cannot be clear why Mkono and Company Advocates suddenly after June 3, 2009 changed their sentiments and followed the position of SCB by holding that operation by the IPTL Power Plant and Gas conversion was against the interests of Tanesco and government of Tanzania,” the letter reads in part.

VIP queried, “The paradox is why the government and Tanesco, after fighting very hard at International Centre for Settlement of Investment Disputes and managed to prevent the daylight cheating on capacity charges allowed a bigger cost in the energy charge which is within their contractual right to control.”

As a result, VIP alleges, they remained as a monster tariff to Tanesco through very high pass for Fuel Oil Costs of more than US$ 6.0million per month which were avoidable if the IPTL Power Plant was to be converted to gas firing as provided for under Public Partnership Agreement (PPA).

“VIP has made a lot of noise complaining to the Government that there could not be any justification for the IPTL Power Plant to remain without being converted to gas firing but nothing that VIP did in the gas conversion crusade have made any difference so far,” the letter further states.

According to the letter, VIP had been disputing that SCB is a creditor of IPTL because no proper Board resolution of the country’s giant electricity producer company was passed for SCB to buy and take over the purported IPTL debt from Danaharta in the year 2005.

Consequently, the letter says, VIP submitted that SCB has no legal locus stand in IPTL and the proposal to hive down the IPTL Power Plant to a new Company (NEWCO) to be owed 100 per cent by Tanesco was a day light robbery ploy for SCB to justify receiving payment for illegal debts foisted upon IPTL.

Also VIP stated that it cannot be clear what the real problem was that continued to prevent IPTL to be converted to gas when the President of the United Republic of Tanzania ordered the company’s power plant to be converted to gas firing since almost the last six years.

Daily News: Tanzania.