I was bewildered that the power generation company, Independent Power Tanzania Limited (IPTL), would fume and attract its ire because of an obscure online gutter press that few people use. IPTL was an unknown entity locally until it was contracted to supply Tanesco with fossil fuel-generating power in 1995.
Thereafter, IPTL has been mired in controversies that remain unresolved today despite parties in dispute seeking judicial intervention and out-of-court settlements. In the meantime, the owner of an online paper, Mwanahalisi Newspapers, Saidi Kubenea, has been forking out some dubious exposè about how the IPTL was wringing the government’s arm to ease its legal and financial woes.
IPTL has threatened Kubenea with very specific legal and financial consequences if he does not retract his allegations, which cast IPTL in a blazing false light. This article chronicles IPTL’s whereabouts, parses through the contrarian arguments espoused by both parties and draws up my views.
What is the IPTL?
The IPTL saga began during the presidency of Ali Hassan Mwinyi (1985-95). In 1992, the Government of Tanzania published a national energy policy prioritizing the development of power generation using natural gas from the Songo Songo offshore field. Reducing dependence on unreliable hydropower and imported diesel was a key objective of this least-cost expansion plan.
But while the government engaged in discussions with Canadian company Ocelot to develop the natural gas project (Songas), it received an unsolicited proposal from Mechmar Corporation (Malaysia) to finance and build an emergency diesel-fuelled power plant to help mitigate the power-rationing crisis in 1994-95.
Like many other companies, Mechmar unlocked the political patronage of Malaysian Prime Minister Mahathir Mohamed (1981-2003), who spearheaded national investments in utilities, telecoms and real estate across Africa during the 1990s under the banner of “South-South cooperation”. Despite not being in line with the Tanzanian government’s official least-cost power strategy, Mechmar and the government signed a 20-year power purchase agreement (PPA) in May 1995.
By then, the power crisis was referred to in the past tense and was a goner! Meanwhile, Songas was frustrated by bureaucratic inertia. The gas power generation option cooled off, attracting the ire of the World Bank, which froze parts of the World Bank-funded Power VI Project.
IPTL’s local partner and 30% shareholder, VIP Engineering and Marketing, a Dar es Salaam-based concern owned by Tanzanians of Asian descent, secured official endorsement for the deal. VIP director (and later owner) James Rugemalira parried off government resistance to the project, informed by exorbitant costs and violations of the Word Bank terms in the Power VI Project.
Much later, TANESCO derided IPTL’s owners for significantly overpricing the plant and substituting cheaper medium-speed generators for slow-speed generators specified in the Power Purchase Agreements (PPA). In 1999, the dispute was taken to the International Centre for Settlement of Investment Disputes (ICSID) for arbitration.
Over three years later, during which Tanzania endured further power shortages due to the continued dependence on hydropower, ICSID finally assessed the real cost of IPTL at US$127.2m, compared to the original US$270m. Without the tenacity of the permanent secretary at the Ministry of Water, Energy and Mineral Resources, the indefatigable Patrick Rutabanzibwa, Mechmar, would also have saddled TANESCO with substantially higher monthly capacity charges. ICSID reduced these monthly capacity charges from US$4.5m to US$2.6m monthly.
Part two of the IPTL saga became known as “Escrow.” In 2007, TANESCO requested arbitration from ICSID for a second time, again maintaining that IPTL was overcharging for electricity. The claim was based on VIP’s failure to pay up its 30% equity stake in the company. It took ICSID the best part of seven years to decide. In the meantime, capacity charges payable by TANESCO to IPTL were held in escrow at the Bank of Tanzania in the so-called Tegeta Escrow Account (TEA).
Finally, in February 2014, ICSID upheld TANESCO’s claim and instructed Standard Chartered Hong Kong – the owner of IPTL’s debt since the company had gone into receivership in 2005 – and TANESCO to agree on how much the utility had been overcharged. However, by the time the ruling was made, IPTL was under new ownership, and more than half of the money held in escrow had already been paid out to IPTL’s new owner, Pan African Power Solutions (PAP), owned by Harbinder Singh Sethi.
Revelations of the extent of foul play involved in the transfer of ownership of IPTL to PAP and the withdrawal of funds held in the TEA filled the Tanzanian media during most of 2014. The scandal was revealed by the Parliamentary Public Accounts Committee (PAC), chaired by opposition MP Zitto Kabwe, and a series of investigative articles in The Citizen newspaper.
Kabwe recommended to the Parliament that the Prevention and Combating of Corruption Bureau and the Controller and Auditor General’s Office, Tanzania’s supreme auditor, investigate.
By 2018, there were recriminations from one IPTL Director of Operations, Malaysian Parthiban Chandrasekaran, who was interdicted for chiefly accusing the then president, Dr John Pombe Magufuli, of killing jobs of Tanzanians who were working there.
Mr Chandrasakaran claims to have told the company’s employees, “You IPTL staff are going to lose jobs because of your stupid President, who has refused to let IPTL operate.”
Conflicting statements about whether Dr Magufuli terminated or couldn’t renew the IPTL agreement leave the company in a quandary. This is one of the areas that the IPTL is grousing about, but would also love to dump her relic located at Tegeta to the government for substantial compensation!
Mwanahalisi Commentary Amidst Brushes With the IPTL
IPTL lawyers called a press recently, revealing that it had written a letter to the owners of the Mwanahalisi online gazette compelling him to retract his allegations against the company. The lawyers said Mwanahalisi should follow their instructions within a specified time or risk being slapped with a libel suit worth Tshs 5 billion. The lawyers were elaborate and forceful about the historical data of their employers concerning what they termed the Mwanahalisi defamation matter.
Mwanahalisi applied an editorial methodology regarded as a “whistleblowing” kind. No source laden with unsubstantiated allegations can be summarised as hearsay postulates inspired by past perceptions of gross misconduct and sheer determination to reveal a high-octane grapevine.
Mwanahalisi is alleging conspiracy theories that intend to indicate IPTL was either plotting a “baby come back” of sorts or marshalling a “sending off” party that would be a rip-off, and as a result, the IPTL is pissed off.
My Take:
For the IPTL to react against the gutter press in itself amounted to exercising poor judgment fueled by deep insecurities. First, very few read what Mwanahalisi writes about, but addressing the press about it did more damage than to Mwanahalisi, who thrives in sensitising conspiracy theories. Those unaware of what Mwanahalisi was shovelling now know, or at least curious, of gratitude to the company.
IPTL was taking their case to the court of public opinion, which holds no sympathy for them. As far as the public is concerned, the troubles are self-inflicted and have nothing to do with them.
The company has to pay her debts and sort out her future without getting our government back into that parasitic relationship. In other semantics, the company should deal perpendicularly with her self-inflicted wounds that do not concern us.
Mwanahalisi will never be able to pay the Tshs 5 billion that the IPTL is brandishing it with. So why seek pecuniary compensation from a Lilliputian? This is a question only they can respond to.
Arguing against Mwanahalisi and demanding colossal amounts of cash lend credence to what Mwanahalisi advocates. The lawyers alluded that they would want the government to buy their obsolete machines to keep local jobs, among other things, and their lead speaker made what looks like a presidential campaign manager’s inauguration speech. We have not seen the end of the IPTL doing business with the government, which is exactly what Kubenea has been portraying.
After hearing both sides, sadly, it is not Saidi Kubenea who is in the dock but the IPTL, which will always be remembered for openly doling out huge sums of money through the Mkombozi and Stanbic Banks to buy and sustain political leverage from influence peddlers in government circles. These legal perspirations have successfully reignited a serious matter.
As a concluding rider, in the court of public opinion, IPTL is not guilty until proven innocent but is guilty as charged. Hence, making her case to win the hearts and minds of ‘Wabongo’ was not a well-thought-out move. To many, the company is a train wreck waiting to implode.
