Judegment Day At The High Court London

Judegment Day At The High Court London
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Friday, 25 February 2011

Dowans Fiasco Continues.


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By ORTON KIISHWEKO, 24th February 2011

DOWANS wants Tanesco to settle 34.8bn/- (24m US dollars) as payment for electricity it initially bought from the emergency power firm before their contract went on the rocks in 2008.

This is one of the conditions Dowans has given Tanesco before their negotiations on settlement of the remaining 55.2bn/- awarded by the international arbitrators proceeds.

The condition is among demands contained in a letter by Dowans to Tanesco management for an amicable settlement of the matter, which was revealed to the Parliamentary Energy and Minerals Committee on Thursday. The Dowans Director in Tanzania, Mr Stanley Munai, said this shortly after temporarily switching on the Ubungo Dowans generators. He said switching on done yesterday was aimed at proving to the Committee that the Dowans machinery was not defective as some people suggest. In the letter written to Tanesco, Mr Munai said they expected to negotiate with the latter so that the outcome could save Tanzanians from the current biting power outages.

He also informed the MPs that Dowans would not remove its generators at the Ubungo Plant until Tanesco clears the 24 million US dollars debt and that would be the basis for making fresh arrangements. He said that Dowans had agreed to absorb some of the costs it had incurred without operating the machinery, including 700,000 dollars in annual insurance fees and staff salaries. "So we are now awaiting feedback from them because we have not yet got their official position on the letter we wrote to them recently. "But we want to be clear on this thing as the Dowans majority shareholder, retired Brigadier General Mohammed Yahya Al Adawi said recently," he said.

He said that while Tanesco is not yet committal as to whether it will pay the 34.8bn/-(24m dollars), they (Tanesco) already took the responsibility of remitting the 20 per cent Value Added Tax of over 6bn/- to Tanzania Revenue Authority (TRA) accrued from the amount of electricity which Dowans sold to them.

He told MPs that apart from any penalties that may have arisen from the ICC ruling, even the electricity that Dowans sold to Tanesco has never been paid for. Mr Munai told MPs that only negotiations between Tanesco and Dowans would effect a better environment for payment and perhaps a fresh deal so that Tanzanians get electricity. He confirmed to legislators that Dowans would not demand extra payment from Tanesco arising from their technical obligation to switch on generators every fortnight so that they do not become defective. The Tanesco Manager for power generation using gas, Eng Gregory Chegere, also asked the government to exempt taxes on power machinery parts and implements. He said that companies selling gas to their power generating firms were quoting prices in dollars and extending extra expenses arising from higher taxation.

The Committee Chairperson, Mr January Makamba, asked the Dowans officials why their generators were idle in the country.
The Dowans official said they had at one point wanted to transport the generators out of the country in 2008 but Tanesco had stopped them due to the ICC case going on at the time.

"But since we won the case at ICC, the least Tanesco should do is to pay the 24m dollars as payment for having consumed our power to supply to customers," he said.

In response to a question as to whether Dowans had some tax arrears it had not paid to TRA, the Dowans official said their contract guided them to start paying taxes after a five-year grace period. He also said that contrary to some media reports that Dowans had several uncleared loans, he said they only had a loan of $2m from Stanbic bank but Barclays inherited it and gave them a lower interest of 7 per cent instead of 9 per cent.

However, Tanesco will be saved from the 20 per cent Value Taxes of over 6bn/- as records show that the public power utility had already remitted the same to TRA.  The Committee also toured the Songas plant at Ubungo and the IPTL Plant at Tegeta.

Daily News | Dowans demands 'advance' payment

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