THE new owner and operator of Independent Power Tanzania Limited (IPTL), Pan Africa Power Solutions Tanzania Limited (PAP) has committed to sell power to Tanesco at tariffs ranging between six US cents and eight cents per unit.
The firm's commitment will accelerate the government's initiative to control power shortage in Tanzania and boost the country's economy.
According to a ruling issued by the High Court last week, (PAP) has committed to expand the plant's capacity to 500MW and sell power to Tanesco at tariffs ranging between six to eight US cents per unit.
It is said that the expansion of the plant's capacity from the current 100MW would be made in the shortest possible time after PAP took over the possession of IPTL plant in the public interests and convert the machines into dual gas and heavy fuel firing.
Last Thursday, Judge John Utamwa ordered the Administrator General (AG) to hand over the power plant to PAP, after granting a notice lodged by VIP Engineering and Marketing Limited (VIP), for withdrawal of its petition for winding up of IPTL.
"I therefore order and mark the petition withdrawn as prayed. I also grant all the orders prayed by VIP as agreed by the parties to the petition," the judge ruled. The parties to the case were IPTL, Provisional Liquidator and Mechmar Corporation (Malaysia) Berhard.
Judge Utamwa said the court took judicial notice of agreement signed by VIP and PAP, with the latter would fulfill its commitment to convert the plant into dual gas and heavy fuel firing, thus making tariff charges the cheapest in the country among electricity producer companies.
The PAP Executive Chairman and Chief Executive Officer Managing, Mr Harbinder Sing Sethi, was quoted as saying recently that they learnt with astonishment that the government and Tanesco were buying to other companies shocking tariff of between 33 to 55 US cents per unit.
In his ruling dated September 5, 2013, therefore, the judge granted all requests by VIP, who had sought for, among others, termination of the appointed liquidator of IPTL and subsequently the latter to hand over all its affairs, including the power plant to PAP, a Tanzania Company.
The AG had been appointed by the High Court as official receiver and provisional liquidator of IPTL, pending a decision on the petition for winding up the company. In IPTL, VIP was minority shareholder with 30 per cent, while Mechmar held majority 70 per cent shares.
Judge Utamwa also authorized the parties to freely commence new independent claims in any court with competent jurisdiction against any party should they fail to reach amicable settlement out of court on any issue which arose in IPTL.
The International Independent Consultant with VIP, Mr James Rugemalira, recently announced his company's decision to withdraw the petition and resolved to sale its shares to PAP after noticing his co-shareholder, Mechmar Corporation (Malaysia) Berhard, did so since 2010.
A legal firm, Law Associates, had filed an application to oppose the withdrawal of the petition. But the judge dismissed the application after upholding an objection advanced by advocates Michael Ngalo, Respicius Didas and Joseph Makandege, for VIP and IPTL, respectively.
The advocates had argued that the application presented by Counsel Gabriel Mnyere, for the law firm, was incompetent because the court was not properly moved following wrong citation of law and the applicant had no locus to prevent VIP to withdraw its own case before the court.
Judge Utamwa noted that the omission was so serious and went to the root of the application and, thus, was unforgivable. He held further that the orders sought to prevent the withdrawal of the petition were maintainable in law.
The judge agreed with advocate Makandege that the law in the country was in favour of the parties withdrawing their matters in court and encourages amicable settlement outside courts.
He said that the Court of Appeal also once observed that parties to courts proceedings were at liberty to compromise their rights in civil cases by agreements and courts should respect their compromises unless they amount to abuse of court process or violate the law or public policy.
"I am not convinced that the agreement by the parties to the petition offends the law or public policy. Now in the present matter, parties in the petition have agreed to settle the matter outside court and withdraw the petition.
According to the judge, an alien to that petition cannot thus be heard objecting the move by the parties unless he expressly indicates the law permits him to act so. But in IPTL the case, Judge Utamwa observed, the applicant (Law Associates) did not do so.
"I find no reason as to why this court should not consider the notice positively and grant the orders prayed by VIP. For the above reasons, I uphold the (objection) and consequently strike out the application," the judge ruled.