Working for Tanzania Government Under Mkapa's Leadership

By Patrick Rutabanzibwa

President Mkapa embodied many of the essential qualities that leading a nation requires: Intellect, diligence, a

problem-solving acumen, humility and a desire for fairness and justice. Throughout the ten years that he was President, I was a civil servant in the then Ministry of Energy and Minerals, first as Commissioner for Energy and then as Permanent Secretary. My official interaction with him therefore had to do mainly with issues in the energy and mining sectors. Many of my contemporaries, particularly those who were posted in the central Ministries and other higher offices, would have had more frequent interaction with President Mkapa, and I would call upon them to attest to his qualities which I believe we all could see.

This brief narrative attempts to provide a glimpse of the President Mkapa from the vantage point of his dealing with some of the matters that the Ministry of Energy and Minerals grappled with under his leadership. It is only a glimpse because the array of issues, initiatives, programmes and projects that the President had to deal with, within and outside Tanzania, was extremely wide. For brevity I am excluding matters pertaining to the mining sector, since the purpose of my account is to highlight some of President Mkapa's qualities, which were adequately manifested in his handling of energy-related or purely administrative matters.

Intellect

President Mkapa's extraordinary intellectual ability had been well known since his days as a newspaper editor, President Nyerere's press secretary, minister and ambassador. However, many Tanzanians did not actually witness it until 1995, during and after the first televised debate among Presidential candidates from different political parties, in the run-up to the first general election under our re-established multi-party political system. Candidate Mkapa's seriousness, eloquence and ability to effortlessly assemble facts to make his point impressed many and probably contributed to the election victory that made him President.

Diligence

My first official, one-on-one encounter with President Mkapa was on a Saturday morning in May, 1997 when I received a message summoning me to State House. I was ushered into his office where he spent the better part of an hour asking me questions about various challenges in the energy sector. I was the Commissioner for Energy and Petroleum Affairs at the time. I explained to him how we were trying to deal with the recurring problem of power rationing; how some private petroleum product distributors were evading taxes by dumping, on the domestic market, products that were destined for neighbouring countries; and a multibillion-shilling debt owed to the Tanzania Petroleum Development Corporation (TPDC) by a particular distributor. The President was very attentive, and he asked probing questions. Before dismissing me he thanked me and apologised for summoning me at short notice. I was surprised by his courteousness.

The following day it was announced, in the evening news on the radio, that I had been appointed Permanent Secretary of the Ministry of Energy with immediate effect. It was then that I realized that my meeting with the President the previous day had been part of his own final vetting exercise. He had wanted to interview me and size me up before accepting the proposal to appoint me that had probably been submitted by the Chief Secretary. The careful vetting and selection of individuals to fill senior public service positions was a hallmark of the Mkapa administration that probably resulted in a stable government bureaucracy. By and large, results were achieved with fewer sanctions against senior public servants for underperformance. This was because their relatively long tenure ensured that they often had no predecessors they could blame.

Problem-Solving Acumen

Throughout his 10-year tenure, President Mkapa had to deal with a myriad of problems and challenges in the energy sector.

The Mkapa administration inherited the IPTL power plant's controversial agreements with the government and the Tanzania Electric Supply Company Limited (Tanesco). The onerous terms of those agreements threatened to bankrupt Tanesco which already had serious financial, technical and administrative problems. His administration also inherited the Songo Songo gas development project negotiations which had begun with private foreign investors in 1993. The government's interest in the project was essentially to use indigenous natural gas for power generation so as to reduce overdependence on hydropower and thus eliminate power rationing, as well as to displace imported fuel in the industrial, transport and other sectors. It was the government's policy to implement major projects using private capital wherever possible. This presented many challenges related to quickly having to build capacity within the government to negotiate with, monitor and regulate the private investors so as to ensure that the public-private partnerships are established and operated in accordance with Tanzania's laws and with a fair balancing of costs, risks and benefits among all the partners.

The IPTL agreements had been signed in May and June, 1995 after a total of only four days of negotiations. Because of the powerful influence that IPTL had over the government's negotiating team, IPTL got even better terms in the signed agreements than it had offered at the start of the negotiations. In 1996 the Ministry of Energy assessed the impact of IPTL 's electricity tariff on Tanesco and found that the utility would not be able to afford IPTL's power. A report on the problems encountered during the project negotiations and the implications of proceeding with the power project was submitted to the government, but by 1997 no clear path forward had been discussed. Meanwhile, IPTL's agents lobbied hard for the Mkapa administration to support the project, using misinformation, false allegations in the media against individuals in the government who had raised the alarm and employing an extensive network of supporters within the government and Tanesco. When it appeared like IPTL was winning the information war, I made an appointment to see President Mkapa to tell him the truth about the consequences of the IPTL project for the power sector given the process by which the project agreements were signed - which included the attempted bribery of government officials - and the highly inflated project cost which would lead to a proportionately higher power tariff. He listened attentively for an hour or so, interjecting from time to time that the information I was giving him contradicted what he had received from other sources. When I was through, I gave him a written summary of what I had told him and offered to resign or be dismissed if anything in the summary was found to be untrue or inaccurate. I half expected him to sack me because the IPTL lobby had co-opted many powerful individuals within and outside the governments of not only Tanzania but Malaysia as well. But he did not remove me from my position. Instead, President Mkapa, from then onwards, paid close attention to all the information pertaining to IPTL that he was being given. At one point he directed the most involved members of his Cabinet not to mislead him and to avoid dealing with IPTL or other private sector projects like it without seeking advice from their respective Ministries' technical experts. He also directed the Ministry of Energy and Minerals to try to renegotiate the agreements with IPTL. Following IPTL's refusal to renegotiate, in November 1998 the President directed Tanesco to file for ICSID arbitration in accordance with its power purchase agreement with IPTL. Two and a half years later ICSID found that over US$ 36 million of the IPTL power plant's claimed capital costs could not be justified and disallowed them. This in turn reduced the capital-related price of IPTL's power (the "capacity charge") by more than 40 percent, from US$ 4.5 million to US$ 2.6 million per month. However, the victory did not mark the end of Tanesco's disputes with IPTL. After the end of the Mkapa administration information came to light about how IPTL actually financed and accounted for its project debt and equity, leading to more disputes with Tanesco and the establishment of the Tegeta Escrow Account in 2006. Those disputes, however, do not diminish the positive outcome that President Mkapa achieved through his enlightened and measured decision-making, sometimes against the advice of some of his closest advisers within his government.

In the energy sector, a priority that the Mkapa administration inherited was to put an end to recurring power rationing, which was first experienced in 1992 and 1994-95. During the Mkapa presidency power rationing in the national grid system was experienced in 1997 and 2000. It was a fundamental objective of the national energy policy to reduce the grid's dependence on hydropower generation sources and exposure to drought by diversifying power generation sources to include natural gas, coal and others. It was in this context that President Mkapa oversaw and guided the negotiation of the complex arrangements for the development and exploitation of Songo Songo gas. The negotiations involved the government, TPDC, Tanesco, private investors, the World Bank and other multilateral lenders and development finance institutions. Obstacles arose in 1997 when the World Bank suspended its financial and technical support to project preparations due to the government's signing of the IPTL agreements contrary to its power sector credit agreements with the Bank; and when some of the project investors withdrew from the project and were replaced by others. President Mkapa played an important part in overcoming these obstacles through diplomacy and statesmanship and eventually, in 2001, the negotiated agreements were signed to mark the final commitment of the dozen parties involved (including the government, TPDC, Tanesco, TDFL, Songas and PanAfrican Energy) to the implementation of the gas-to-electricity project.

Humility

At the inauguration ceremony for the gas-to-electricity project in 2004, President Mkapa took the opportunity to give special awards to several individuals to recognise their extraordinary contribution to the project's development over the 30 years that the government had been working on it. Those individuals included Al Noor Kassum (who had been Minister for Energy, 1977-1990); Jakaya Kikwete (Minister for Energy, 1990-1994 and Minister for Finance, 1994-1995); Mark Mwandosya (Commissioner for Energy, 1985-1990; Permanent Secretary for Energy, 1990-1992; and TPDC Board Chairman, 1996-2000); and Sylvester Barongo (Managing Director, TPDC, 1973-1991 and Natural Gas Adviser, Ministry of Energy, 1991-1994). This magnanimous gesture by the President showed how modest he was, and how much he valued teamwork. He had worked decisively for nearly a decade to put Tanzania on the world map of natural gas producers for the first time, yet he was ready to give credit to others who had been involved in the gas development effort before he was.

The awards he gave were fitting because today, after 16 years of the production and sale of Songo Songo natural gas, the government's share of the total net revenue generated is more than 80 percent, and Tanzania has saved over US$ 6 billion by substituting imported liquid fuel with gas.

Fairness

In 2001 the government made the politically difficult decision to temporarily employ a private contractor to manage Tanesco's operations, under a government-appointed Board of Directors, in order to reduce the utility's power losses, increase revenue collection and improve the management of investment projects and the overall financial situation. At that time, Tanesco's customers owed the company the equivalent of nearly a year's supply of electricity. Tanesco was making losses of billions of shillings each month and was technically insolvent.

Tanesco and the Presidential Parastatal Sector Reform Commission (PSRC) were instructed to jointly procure the services of a private contractor with proven experience in managing and turning around ailing power utilities. Tanesco and PSRC procured a South African company, NetGroup Solutions (NetGroup), under the oversight of the Ministry of Energy and Minerals. The Tanesco management contract was signed in 2002. The Swedish International Development Agency (SIDA) agreed to provide a grant to pay the management fees through the World Bank. In addition to the fees, NetGroup were to receive bonuses for efficiency improvements in Tanesco's operations. The bonuses would be a small percentage of any increase in Tanesco's net revenues.

Not long after NetGroup began their operations - against stiff resistance from Tanesco staff and some members of the Board - rumours began to circulate that President Mkapa had selected NetGroup to run Tanesco in order to enrich one of his relatives. The rumours were so widespread that even some government Ministers believed them. The East African newspaper also bought into the rumours. It carried an article essentially repeating them and criticised the President for allegedly abusing his office.

The President summoned me to State House. He was visibly angry. He asked me to explain how his relative got involved with NetGroup, and why the company was awarded the Tanesco contract. I informed the President that the whole process by which NetGroup was procured was absolutely transparent and had followed the Public Procurement Act and the World Bank Procurement Guidelines to the letter. I assured him that I had personally overseen the process together with the PSRC and Tanesco chairmen, and that at no point during the process was his relative involved in any way. I informed him that to the best of my knowledge, his relative reached agreement with NetGroup to help their senior staff settle into their jobs in Tanzania after the management contract was awarded. The President's deep anger then turned into indignation. He wondered why his own Ministers, who were briefed on the procurement process, would also spread the false rumours.

During the term of NetGroup's two-year contract, the contractor's staff built good working relations with Tanesco staff and managed to double Tanesco's monthly revenues with only a 25 percent increase in electricity tariffs. President Mkapa's personal support was key to achieving this positive outcome. NetGroup began their work of collecting arrears from delinquent Tanesco customers in Dar es Salaam by disconnecting power to the most sensitive consumers, which owed Tanesco the largest amounts. The water utility (Dawasa) had its facilities disconnected. The Police and Tanzania People's Defence Force (TPDF) also had some residential properties disconnected, prompting the Police to threaten to arrest the new Tanesco Managing Director. When this serious matter was referred to the State House, President Mkapa ordered these sensitive consumers to simply pay their bills since they had adequate budgets, and they did so. The government's seriousness was not lost on Tanesco's other customers, and there was a rush by customers to pay their bills, prompting Tanesco to open its revenue offices until late at night for several weeks.

Before the management contract expired in 2004, Tanesco staff, through their trade union branch, recommended that it be renewed for another term. By the time the extension to the contract expired in 2006, NetGroup's relations with the Ministry of Energy and Minerals had soured partly because they differed with the Ministry on the selection of Richmond Development Company to provide an emergency power plant to avert the load shedding that was experienced during most of that year.

Justice

During my nine years as the chief executive of the Ministry of Energy and Minerals I experienced many difficult moments, not because of the heavy workload and the many crises such as power rationing that occurred incessantly, but because of the numerous, absolutely false allegations of disciplinary and criminal misconduct that were levelled against me in the media, in Parliament and in official and unofficial communications addressed to the President's Office and other high government offices by private individuals and even government agencies. I was accused of being an agent of the World Bank; sabotaging Tanzania's relations with Malaysia, presumably because of my professional views about the terms of the IPTL agreements; embezzling billions of shillings generated by the Ministry's diamond sorting unit (which was then located in London); misappropriating funds budgeted for the acquisition of the wayleave of the Songo Songo gas pipeline; and numerous other incidents of bribery, misappropriation, tribalism and nepotism. At one time, when a sensitive government institution informed the President's Office that I had conspired with Canadian interests to undermine the Zanzibar government after the 1995 general election, the President asked the Chief Secretary to first hear my side of the story. I pleaded with the Chief Secretary not to listen to my categorical denial, but to either ask my accusers to produce the evidence against me, or establish an impartial commission to investigate and present all the facts, if there were any. Another time, the sustained media campaign against me was so intense that President Mkapa telephoned me and remarked jokingly that I appeared to be stealing the newspaper headlines away from him. This reassured me that he understood what was going on. I informed him that I was in the middle of a battle for my Ministry's financial resources after having initiated disciplinary and criminal proceedings against several heads of department and accountants in the Ministry for theft and embezzlement, and that the scandals alleged against me in the media were meant to slow me down or have me removed before I could hold anyone accountable.

Despite all the accusations that were made, until I retired from the public service in 2013 I was never required to defend myself against any allegations, and I was never charged with any offence, disciplinary or otherwise. I can only attribute this to the President's as well as his Chief Secretary's sense of justice, which I believe moved them to get to the truth. For this I will always be grateful to the late retired President Benjamin Mkapa.