GOVERNMENT REVOKES TANZANIA PORTS AUTHORITY CONTRACT

GOVERNMENT  REVOKES  TANZANIA PORTS  AUTHORITY CONTRACT

Dar es Salaam port, which has been at the centre of a controversial agreement signed between Tanzania Ports Authority and a Switzerland-based company. PHOTO | FILE      

By The Citizen Reporters

Posted  Tuesday, April 21  2015 at  09:35

IN SUMMARY

The government says it has cancelled the agreement ahead of a thorough study meant to establish whether the contract was profitable or not.

Dar es Salaam. The controversial multibillion-dollar joint venture contract that led to Tanzania Port Authority (TPA) surrendering a 51 per cent stake in Dar es Salaam port to a foreign-based firm has been revoked, The Citizen has learnt.

The government says it has cancelled the agreement ahead of a thorough study meant to establish whether the contract was profitable or not.

TPA, under sacked director general Madeni Kipande, entered into a joint venture agreement with Impala Terminals Tanzania Limited on a capital injection amounting to $27 million (Sh47 billion) that was to have been provided by the latter.

In addition, The Citizen has learnt, the company would have invested $180 million (Sh334 billion) during the first phase of the project.

The agreement, if approved, meant that operations of Dar es Salaam  Port, a leading gateway for exports and imports in the region, would have been under Impala Terminals Tanzania Limited.

With an annual growth output of 12.8 per cent, Dar es Salaam  Port last year handled 14.6 million tonnes of cargo, including 621,000 containers, with 34 per cent being goods on transit to neighbouring countries in eastern and southern Africa.

The joint venture was to have entailed designing, developing, financing, constructing and operating of a quayside terminal in the Gerezani creek area of Dar es Salaam  Port. It was signed in September 2014, but it was not clear how the TPA management sourced Impala Terminals for such a huge project.

The Citizen recently saw a copy of the joint venture agreement for the transfer of 51 per cent of shares owned by TPA to Impala Terminals Tanzania Limited, which is a subsidiary of a Swiss-based company, Vullstar Limited. Reached for comment, TPA acting communications director Janeth Ruzangi said the contract was nullified to pave the way for a study aimed to ascertain the pros and cons of the project.

“The memorandum of understanding that was signed between TPA and Impala has been cancelled. The port will remain under TPA until a study is done to see whether there is a need to go on with the deal,” she said.

Out of the 11 berths available at the port, TPA owns berths 1 to 7, with the rest being under Tanzania International Container Terminal Services (TICTS).

According to Ms Ruzangi, the MoU was signed without a study being undertaken to establish whether it would have been prudent to privatise the remaining berths at the port or not.

Contacted for comment last week, Transport Permanent Secretary Shaaban Mwinjaka said he was not aware of the contract.

“I haven’t heard about such an agreement. The TPA acting director general should be in a better position to give detailed information,” said Mr Mwinjaka by telephone.

The Citizen has established that information about Impala Terminals Tanzania Limited on details such as its directors, physical address, capital, tax returns and share allotment is not readily available at the Registration, Insolvency and Trusteeship Agency (Rita) offices. The law requires that all companies, local or subsidiaries of multinational corporations operating in the country, must be registered with Rita and the documents be available for scrutiny by any interested person.

Also, on its website, the firm does not say much about its operations and business interests in Tanzania. Even when the contract was already signed, meaning it was a done deal before the cancellation, nothing about the agreement appeared on its website’s international brochure.

According to documents seen by The Citizen, in the now cancelled contract, TPA was supposed to issue 55 ordinary shares being 30 per cent of the issued shares in the joint venture company (JVC) for which TPA was to contribute the land and water rights as set out in the concession agreement.

On the other hand, TPA was also to issue 36 ordinary shares being 19 per cent of the issued shares in the JVC for which TPA will pay $95,000 to extend to JVC a pro rata shareholder loan in the amount of $855,000 in accordance with the agreed financial leverage.

According to the agreement, if TPA fails to pay the full subscription price for the additional TPA shares or does not extend to JVC the corresponding pro rata shareholder loan, Impala shall subscribe for and JVC shall issue additional shares to Impala.

The agreement granted Impala, which would have been the majority shareholder, the right to have major decision in managing the joint venture project.