Kigali — The High Court last Friday issued a temporary injunction against Dane Associates, stopping the company from being party to Kibuye Power (KP1) Limited activities in regard to Methane Gas prospecting.

Sources familiar with the standoff that has pitted the government against Dane Associates, with accusations that the latter reneged on its contractual obligations, told The New Times yesterday that the temporary injunction would remain in force until management of KPL is sorted out this week. "The (court) hearing of the substantive case on whether Dane Associates continues to be party to the management of KPL will start March 29," the source, which spoke on condition of anonymity, said on phone yesterday. As a result, the source added, a caretaker - Engineer Alex Kabuto - has been appointed to oversee the KP1 management activities. Also temporarily dissolved till the case lodged by government is disposed of by the court is the Dane Associates Board of Directors.

Genesis of deal

According to available information the Norway-based Dane Associates approached the government in 2002, expressing interest in the multi-million Euro joint venture that targetted the extraction of 35MW of Methane Gas from Lake Kivu (Northern Rwanda). Subsequently, the government later signed a Memorandum of Understanding (MoU) with the company on terms of operation and shareholding. And, in February this year, the State Minister for Energy and Communication Eng. Albert Butare said that due to the need to prospect for the gas expeditiously and, there being no other parties that expressed interest in the deal, there was no tendering involved in the project. This means that the joint venture between government and Dane Associates was entered into basing on mutual consent. But the company has in the past months been in the spotlight over accusations by Government that it had failed to honour its part of the bargain in respect to the project contract.

According to details of the shareholders' contribution, the government invested €960,000 (30%) as equity, while Dane Associates were also supposed to contribute €2.3million (70%) and securing guarantees of $15million from the World Bank.

Parties clash

Efforts to contact officials from Dane Associates yesterday were fruitless but Government sources told The New Times that company's woes began when it allegedly breached the original contractual terms by refusing to transfer the €5.9m project account from the Royal Bank of Scotland to Kigali. There are also reports that government instituted the February legal proceedings against Dane Associates after the firm failed to account for the money that was extended to it for preparatory surveys for the extraction of the gas.

And, in February the Minister of Finance and Economic Planning James Musoni, while answering questions concerning challenges to investments and commerce in the country, told the Senate that government sought legal redress to resolve the matter after Dane Associates failed to fund 70% of the project. As a result the government is said to have halted $10m (about Frw5.6b) it was planning to advance the company as a non-interest sub loan to facilitate operations of the Methane Gas pilot project. Methane gas deposits were first discovered in Lake Kivu in 1953 and sources in the infrastructure ministry told The New Times after completion the multi-million Euro Gisenyi pilot plant will produce five megawatts of power. Meanwhile, Eng. Butare revealed that beer and soft drinks giant Bralirwa and, power and water utility Electrogaz joined talks to discuss the possibility of investing in the Methane Gas venture "but finally the duo did not come up with a substantive decision."