12 September 2013

Tanzania: IPTL Handed Over to New Owner

THE Administrator General (AG) has handed over the Independent Power Tanzania Limited (IPTL) plant to the new operator, Pan Africa Power Solutions Tanzania Limited (PAP), who promised to extend its capacity from the current 100MW to 500MW.

The AG had been appointed by the High Court as official receiver and provisional liquidator of IPTL, pending a decision by the court on a petition filed by VIP Engineering and Marketing Limited (VIP) to wind up the country's giant electricity producer company.

Advocate Joseph Makandege, for the provisional liquidator, yesterday told Judge John Utamwa that the handing over was successfully made on September 6, this year and by Wednesday all the documents were already presented to PAP.

"We honourably report to you that we have diligently complied with the court's orders issued on September 5, this year, by handing over the IPTL affairs to PAP.

The handing over was successful," the advocate submitted. The handing over session comes after Judge Utamwa granted the requests by VIP, who was minority shareholder in IPTL to withdraw the winding up petition it had lodged in court.

In his ruling dated September 5, 2013, Judge Utamwa 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.

According to the ruling, PAP has committed to pay off all legitimate creditors of IPTL and to expand the plant capacity to 500MW and sell power to Tanesco at tariff ranging US dollar cents six to eight per unit in the shortest possible time after taking over in the public interests.

The judge also authorised 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.

Furthermore, the court took judicial notice of agreement signed by VIP and PAP, for which the former sold its 30 per cent shares in IPTL and conveyed to the latter its rights, title and interests connected to the shares, including monies in the Tegeta escrow account at Bank of Tanzania (BoT).

The International Independent Consultant with VIP, Mr James Rugemalira, recently announced his company's decision to withdraw the petition and resolved to sell its shares to PAP after noticing his co-shareholder, Mechmar Corporation (Malaysia) Berhard, did so since 2010.

Mr Rugemalira said the handing over of IPTL affairs, including the power plant to PAP would facilitate the latter's commitment to convert it into dual gas and heavy fuel firing, thus making the tariffs the cheapest in the country among electricity producer companies.

The Executive Chairman and Chief Executive Officer Managing of PAP, Mr Harbinder Sing Sethi, was quoted in a statement recently that his company would cooperate with the government to address the persistent shortage of power.

"PAP is thankful to VIP for selling its 30 per cent stake in IPTL on August 19, this year and for having taken the bold step of giving consent to PAP to buy from Mechmar Corporation (Malaysia) Berhard other 70 per cent shares to make PAP the 100 sole owner of IPTL," he said.

He states that PAP has learnt with astonishment that presently the government and Tanzania Electric Supply Company Limited (Tanesco) were buying to independent power producers and emergency power producers shocking tariff of between 33 to 55 US cents per unit.

According to him, his company has assured the workers of IPTL and the Ministry of Energy and Minerals that from now going forward, IPTL would operate as a private commercial entity so that all persons who have any claims should bring them with evidence.

The dispute surrounding IPTL has been pending for several years without being determined. Mr Sethi thanked the Minister for Energy and Minerals, Prof Sospeter Muhongo, for initiating and firmly convincing VIP to withdraw the petition for winding up of IPTL in the public interest.

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