12 June 2017

Tanzania: What Next After Ewura Boss' Removal?

Photo: Daily News
Businessmen James Rugemalira and Harbinder Singh Sethi (second and third left, respectively) in a police vehicle at Kisutu Resident Magistrate's court compound in Dar es Salaam.

Dar es Salaam — The midnight suspension of Ewura Director General Felix Ngamlagosi has rekindled debate about Independent Power Tanzania Limited (IPTL), with the focus now firmly on how President John Magufuli will deal with the scandalous power generating company.

Mr Ngamlagosi's dramatic suspension was announced in a brief statement released from the State House, a few minutes past 1am on Saturday.

The statement signed by President Magufuli's spokesperson Gerson Msigwa said Prime Minister Kassim Majaliwa had dropped the Ewura boss with immediate effect.

No reason was given for the suspesion. Questions also remained why it was Mr Msigwa and not the PM's communication unit who issued the statement in the odd hours.

However, it is highly likely that Mr Ngamlagosi may have lost his job over the agency's handling of an application by IPTL to renew its power generating licence. Ewura yesterday abruptly halted the licence application process which it launched last week via a public notice calling for views in support or objection of the application.

The agency said in a statement that the ministry of energy and minerals recommended further consultations within the government and other players in the energy sub-sector on the IPTL licence application.

"Subsequently, Ewura has stopped processing the application including the call for public views in support or opposition until further notice," read the statement.

The PM's unusual suspension of the Ewura boss and the halting of the IPTL licence application drew wide spread debate yesterday, especially on social media, as it mirrored the sacking of then Tanzania Electric Supply Company (Tanesco) managing director Felchesmi Mramba.

President Magufuli sacked Mr Mramba in circumstances linked to Ewura's raising of electricity tariffs by 8.5 per in January 2017. The sacking came a day after the new tariff was rescinded by former energy and minerals minister Prof Sospeter Muhongo. Then, President Magufuli speaking at a church function in Kagera region said neither he nor Prof Muhongo were consulted by Tanesco or Ewura in arriving at the decision to raise power tariff. The President said the move would frustrate his industrialisation plans.

But yesterday's development brought to the fore what analysts say is the 'elephant in the room', in that it was the first time President Magufuli's administration was openly showing a direct hand in attempt to tackle the IPTL saga.

For more than 20 years, IPTL morphed into one of Tanzania's most controversial power deals that continues to cost the country billions of shillings. The private power firm, despite its highly scandalous repute and its mounting cost on the economy, outlived presidents Benjamin Mkapa and Jakaya Kikwete administrations' efforts to resolve. In its wake, IPTL spewed out scandal after scandal, sweeping in its wake ministers and other top officials besides seeing Tanzania pay billions of shillings in endless litigation over its business dealings.

In 2014, IPTL was at the centre of the Tegeta Escrow sandal in which more than Sh300 billion in both private and public money was illegally siphoned from the Bank of Tanzania and ended up in individuals' pockets. Even though Parliament probed the monumental scandal and recommended several actions against its perpetrators, nothing so far has publicly come out of it.

IPTL, despite Parliament declaring its change of ownership to Pan Africa Power Solution (PAP) fraudulent and asking that its assets be seized, continued to operate and has reportedly been receiving $4 million (Sh8.8 billion) every month from its lucrative contract with Tanesco.

Both Tanesco and IPTL are currently at the international Centre for Settlement of Investment Disputes (ICSID) in London to challenge a ruling that the state utility pays $130m (Sh286 billion) to Standard Chartered Bank (SCB) Hongkong for breach of contract. The Hong Kong bank is involved in a long court battle with Tanzani's VIP Engineering that owned shares in IPTL before reportedly selling it to PAP for $75 million.

VIP owner is millionaire businessman James Rugemalira who during escrow investigations was found to have paid millions of shillings into personal bank accounts of ministers, high ranking government officials and other personalities. The investigation would later cost the jobs of ministers Anna Tibaijuka and Muhongo as well as AG Frederick Werema among others.

President Magufuli is on record lamenting the high cost the country was paying to service Tanesco contracts with private producers, including IPTL. Other than dropping Mr Mramba, Dr Magufuli's highly publicised anti-corruption crusade has largely given the power sector a wide berth.

Analysts who spoke to The Citizen yesterday said it will remain to be seen if Ngamlagosi's fate is linked to IPTL crackdown or not. Kigoma Urban MP Mr Zitto Kabwe said President Magufuli is yet to demonstrate commitment to end the IPTL scandal.

"As a president who has positioned himself as an anti-corruption crusader, it is surprising that he has not acted on Parliament's report on escrow scandal," said Mr Kabwe from London where he is on a private trip. The MP who chaired the House committee on escrow warned the President could be facing sabotage from a clique of government officials benefitting from IPTL.

University of Dar es Salaam senior lecturer Dr Benson Bana said it was possible that Mr Ngamlagosi is paying the price over the handling of the IPTL licence. "We all understand about the IPTL scandal few years and allowing it to continue work would have a negative political consequence on the government and CCM," said Dr Bana.

Ruaha University College don Prof Gaudence Mpangala said: "I don't think it is a coincidence... but I feel this might be a strong reason for his suspension." But he condemned the manner in which top state officials continue to lose their jobs.

UDSM's senior economics lecturer, Dr Haji Semboja, felt it would be improper to suspend the Ewura boss over a legal process. He said IPTL's contract was with Tanesco and not Ewura. He warned that the government would shoulder some cost even if the licence is not granted, according to the contract agreement. He asked that the licence be granted to more companies to help lower the cost.

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