* The country granted IPTL the exclusive right to design, finance, insure, construct, complete, own, operate and maintain its facility in Tanzania.
Dar es Salaam, TANZANIA.
Tanzania
government has been ordered by a World Bank arbitration court to pay $185 million
(Tsh. 425.4 billion) to the Hong Kong subsidiary of Standard Chartered for
breaching an energy contract.
The court’s
ruling, which was released on Tuesday, adds to pressure on the country, which
faces at least two other multi-million claims from international investors.
The case
stems from a legal battle between the Tanzanian government and privately-owned
independent power producer IPTL, which led to the dismissal of several cabinet
ministers in 2014.
The award by
the World Bank’s International Centre for Settlement of Investment Disputes is
less than the $352.5 million sought by Standard Chartered Bank Hong Kong, which
was not immediately available for comment.
The
government of Tanzania denied any responsibility and said it was not planning
to pay the damages.
“Neither the
government nor state power company (Tanesco), have a legal liability in these
cases,” Tanzania government spokesman Hassan Abbasi said on Twitter on
Wednesday.
Tanzania’s Attorney General, Adelardus Kilangi, |
Tanzania’s Attorney
General, Adelardus Kilangi, said that IPTL, not the government, would have to
pay Standard Chartered.
“When the
award says that the Tanzanian government should pay Standard Chartered Bank,
the actual meaning is that the government should supervise IPTL to make the
payment,” he told Reuters.
IPTL did not
immediately respond to requests for comment.
On October 11, 2019, World Bank’s International Centre for
Settlement of Investment Disputes found the
Government of Tanzania to be in breach of 1995 Implementation Agreement under
which Tanzania made various undertakings and assurances in favor of
Independent Power Tanzania Limited (IPTL).
The country granted IPTL the exclusive right to design, finance,
insure, construct, complete, own, operate and maintain its facility in
Tanzania.
The government also agreed to a guarantee to pay IPTL any unpaid costs
owed to IPTL by Tanzania Electric Supply Company Limited (Tanesco) as a result
of arrangements made under a separate Power Purchase Agreement in which IPTL
agreed to delivery electricity to TANESCO for an initial period of 20 years.
The tribunal found that Tanzania had violated the Agreement because it
transferred control over IPTL to Pan Africa Power Solutions, a local company,
and because the government failed to honor the guarantee with respect to funds
owed by TANESCO, it was ordered to pay USD 185 million in damages, plus
interest.
Tanzania
faces at least two other cases at the World Bank tribunal.
US firm
Symbion Power said in 2017 it was seeking $561 million from Tanesco at the
Paris-based International Chamber of Commerce’s International Court of
Arbitration for breach of contract.
In 2017, a
Canadian construction firm seized one of Tanzania’s new Q400 turbo-prop planes
in Canada over a $38 million lawsuit related to a compensation ruling by the
International Court of Arbitration.
Aviation
sources said Tanzania reached a settlement to secure the aircraft, which was
released in March 2018.
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