The government has no intention of buying the Independent Power Tanzania Limited (IPTL) plant as earlier considered, a senior energy official has revealed.
The Minister of Energy and Minerals, Prof. Sospeter Muhongo
Instead, it is shifting its attention to negotiating with Aggreko International with a view to transforming the latter’s plants so they may produce electricity using natural gas.
“We have no intentions to buy IPTL plants,” explained the commissioner for Energy and Petroleum Affairs, Mr Hoseah Mbise during interview in Dar es Salaam.
Aggreko added some 100 Megawatts of electricity to the national grid during the peak of power rationing in 2011. However, power generation depends on fuel (diesel) and therefore remains to be an expensive undertaking.
Addressing journalists alongside a meeting meant to get immediate economic gains from the energy sector – “Big Results Now” from the energy sector, Mr Mbise said the UK-based firm has agreed to convert its plants from fuelfired to gas-fired, a situation that will significantly reduce production costs by over 50 per cent.
With this option at its disposal, he said, the option to buy IPTL plants is not in the government’s interest. He said the government would give serious consideration to other more profitable undertakings within the energy sector than trying to inject taxpayers’ money in the costly IPTL.
“The machines are not in good condition in the first place. They need massive repair before being transformed into using natural gas instead of diesel.
This is an expensive venture I presume,” he explained The other factor that hinders the government from engaging into IPTL purchase negotiations is that of the pending cases involving the company’s shareholders — Mechmar Corporation and VIP Engineering and Marketing Company Limited.
There are also pending cases involving the shareholders and Standard Chartered Bank Hong Kong (SCBHK) — the project finance lender to IPTL.
According to Mr Mbise, even without the court cases, IPTL would remain the last option for the government to inject taxpayers’ money in.
“We really had the idea of owning so we can convert them…in between, some investors came and were willing to buy them and convert them but nothing has changed so far and the plants remain the way they are…currently, I see no option of buying the plants and this is not the government’s priority,” he clarified.
In January 2009, the High Court of Tanzania ruled that the power producer be placed under receivership after a protracted legal battle between the two shareholders. Consequently, there is an ongoing court case as Civil Revision No.1 of 2012 before the Court of Appeal of Tanzania involving VIP Engineering and Marketing Company Limited and Mechmar Corporation.
Late last year, the Court of Appeal of Tanzania nullified proceedings of the High Court, including the 2011 order that sought the winding up of IPTL over allegations of fraud and mismanagement.
The Court of Appeal panel comprising Chief Justice Chande Othman and Justices January Msoffe and Edward Rutakangwa declared in their December 17 ruling that the High Court committed some fatal irregularities in the conduct of impugned proceeding. The Appeals Court also nullified all proceedings in cases number 49 of 2002 and 254 of 2003.
Source Tanzania Daily News
