The Tanzania Electric Supply Company (Tanesco) headquarters, Dar es Salaam. PHOTO | NMG
Tanzanian will fork out $148.4 million after it lost an appeal
against a settlement made in favour of Standard Chartered Bank for a
breach of power contract by its energy utility, Tanzania Electric Supply
Company (Tanesco).
Washington-based International
Centre for Settlement of Investment Disputes made the order in a case
that began in 2001 concerning a purchase agreement in May 1995 between
Tanesco and Independent Power Tanzania Ltd, whose rights were later
taken over by Standard Chartered four years ago.
The
agreement required IPTL to supply Tanesco with 100MW before the company
was placed in liquidation in December 2008 following ownership disputes
between its shareholders.
Tanesco, in its appeal,
maintained that it paid IPTL for the power supplied, while Standard
Chartered argued that it should have been paid instead.
The
power firm will now be required to pay the bank interest at three-month
London interbank offered rate plus four per cent from September 30,
2015 until the date of the award. Interest is expected to accrue until
the entire payment is received by the bank.
The court,
presided over by Claus von Wobeser, rejected several grounds submitted
by Tanesco seeking an annulment of the award, upholding a 2016 decision
by Ronald McRae, president of the tribunal, which ordered that Tanesco
pay the bank $148.4 million.
The hearing on the annulment took place in London in November
2017, and Tanesco submitted its costs in February 2018. Documents show
that the utility firm has already paid more than $600,000 for the
tribunal costs, with the latest payment of $200,000 made in June this
year.
In March 2017, another firm, US-based Symbion
Power took to the International Court of Arbitration in Paris seeking
$561 million settlement for breach of contract, after efforts to resolve
the dispute about the validity of the 15-year power purchase agreement
for more than a year failed. The case is still ongoing.
For
the Tanesco case, Tanzania will also pay more than $5.3 million in
legal costs, including $4.7 million for its team of lawyers and a
further $600,000 as cost for the committee seating.
The
legal team comprised two Tanzanian law firms R.K. Rweyongeza & Co
Advocate, and Crax Law Partners. London-based Clyde & Co was also
part of the legal team.
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