How Ndulu’s queries on IPTL were ditched

 
BoT Governor Benno Ndulu.PHOTO|FILE

Dar es Salaam/Dodoma. The Attorney General’s office and Ministry of Energy and Minerals overruled queries raised by the Bank of Tanzania (BoT) on the legality of transferring $122 million (Sh207 billion) to the account of Pan Africa Power Solutions at Stanbic Bank, The Citizen can reveal today.

BoT also demanded evidence that IPTL and Tanesco had resolved the dispute on capacity charge—which ended up with the two parties going for arbitration in Washington, DC.

The revelation comes as the nation waits with bated breath to see what action will be taken against the key escrow billions masterminds by Parliament when the report is finally tabled for debate next week.

In an eight-page letter to Attorney General Frederick Werema and copied to the permanent secretary in the Ministry of Energy and Minerals, BoT Governor Benno Ndulu demanded proof that PAP lawfully acquired 70 per cent of IPTL.

But, according to documents seen by The Citizen, neither Mr Werema nor Mr Maswi provided any concrete evidence that PAP did legally buy a 70 per cent stake in IPTL from the Malaysian firm Merchmar Berhard.

Instead, the AG wrote a legal opinion advising that failing to release the escrow cash—which belonged to PAP in the estimation of the government’s chief legal counsel, would be interpreted as contempt of court.

Demanding more evidence

The Citizen understands that there was a dispute to do with capacity charge between the state-owned power utility and IPTL, which was the basis for the establishment of the escrow account at the BoT, pending the outcome of arbitration by the International Centre for Settlement of Investment Disputes in Washington (ICSID) .

On July 5, 2006, a tripartite agreement was entered between the government through the Ministry of Energy and Minerals, IPTL and BoT in respect to the Tegeta electricity power generating plant in Dar es Salaam.

BoT was appointed an escrow agent and was charged with the responsibility of establishing and maintaining the Tegeta account. It was agreed that all Tanesco payments would go to IPTL and be deposited at the escrow account pending the outcome of the arbitration.

Standard Chartered Bank Hong Kong Limited, acting on behalf of IPTL, filed for arbitration after Tanesco disputed the high capacity monthly charges. On February 12 this year, ICSID ruled that IPTL overcharged Tanesco and instructed both parties to recalculate the tariff to determine who got what so that the escrow money could be withdrawn from the BoT.