WORLD BANK COURT ORDERS TANZANIA TO PAY STANDARD CHARTERED $185 MILLION

* 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.