IPTL’s licence extension flops

DAILY NEWS Reporter

• EWURA cites high capacity charges as one of the reasons

THE Board of Directors of Energy and Water Utilities Regulatory Authority (EWURA) has turned down an application by the Independent Power Tanzania Company Limited (IPTL) for an extension of its Electricity Generation Licence for 55 months (4 years and 7 months).

On 28th March, 2017, IPTL submitted the application seeking for an extension from 16th July 2017 to 15th January 2022. A statement issued yesterday by the EWURA management explained that after deliberating on the application, the board rejected the application basing on three factors.

Firstly, he explained, was the exorbitant capacity charges. “The effect of allowing the application for licence extension to the electricity price to be paid by consumers including the continued payment of USD 2.667 million per month as capacity charges,” stated the statement.

The board decision also based on objections received from the public and other stakeholders and pending legal disputes involving IPTL. The rejection of IPTL’s application comes a few months after the arraignment of two alleged key players in the infamous 306bn/- Tegeta escrow account scandal.

The two, the Director of VIP Engineering and Marketing, Mr James Rugemalira and Mr Harbinder Singh Sethi of Pan Africa Power Solutions Tanzania Limited (PAP), have appeared at the Kisutu court facing six counts of economic sabotage and occasioning a loss of US $ 22.1 million dollars and 309bn/-.

The prosecution informed the court that between October 18, 2011 and March 19, 2014, in Dar es Salaam, they conspired to commit offences in South Africa, Kenya, India and elsewhere.

The court heard that between November 28 and 29, 2011 and on January 23, 2014 at the Stanbic Bank headquarters at Kinondoni and Mkombozi Bank, St. Joseph Branch, the two businesspersons through deceit, received the said amount from the Bank of Tanzania (BoT).

Before the arraignment of the duo, the Director General of Prevention and Combatting of Corruption Bureau (PCCB), Mr Valentino Mlowola, told a news conference that the agency had all along been investigating the scam which rocked the country in 2014.

The scandal involved the transfer of 309bn/- from an escrow account at the Bank of Tanzania (BoT), where it was jointly opened by Tanzania Electric Supply Company (TANESCO) and IPTL, pending legal wrangles over capacity charges between the parties before domestic and international courts.

IPTL which operates dieselfired turbines at Tegeta in Dar es Salaam was initially founded through a joint venture between a Malaysia company, Mechmar (70 per cent) and Mr Rugemalira’s VIP Engineering and Marketing Limited (30 per cent).

It is still unclear how Mechmar sold-off its shares to another company PiperLink of British Virgin Island which later allegedly sold its stake to Mr Sethi’s PAP. Billions of shillings were then paid to Mr Sethi from the account after he convinced officials that he had acquired the 70 per cent stake in IPTL.

He then proceeded to acquire the 30 per cent stake which was owned by VIP Engineering and Marketing. To reach a deal with Mr Rugemalira’s company, it is said that Mr Sethi had to pay a whopping US $75 million dollars (about 165bn/-) to acquire the 30 per cent.

During the parliamentary session in November 2014, the august House made eight resolutions, one of which was for investigations and arrest of all people who were involved in the scandal. The resolution followed a report by a special committee of the parliamentary Public Accounts Committee (PAC) which was formed to probe the affair.

As the scandal ravaged on with calls for actions from Parliament and subsequent investigations by PCCB and audits by the Controller and Auditor General (CAG), several top government officials were sacked while others resigned.

Among those who resigned were the then Minister for Energy and Minerals Sospeter Muhongo and Attorney General Fredrick Werema, while Prof Anna Tibaijuka, then Minister for Lands, Housing and Human Settlements Development, was fired by former President Jakaya Kikwete.

The former UN Habitat boss was fired after it emerged that she had been paid 1.6bn/- by Mr Rugemalira. The funds were suspected to be part of monies from the escrow account. The list of other individuals said to have pocketed some of the funds include former Minister for Energy and Minerals William Ngeleja and former Attorney General Andrew Chenge.