9 May 2019

Tanzania Government Drops Kenyan Firm in Sh418 Billion Cashew Nut Deal

Dar es Salaam — The government says the deal in which a Kenyan firm was to buy 100,000 tonnes of cashew nuts is off.

Industry and Trade minister Joseph Kakunda told The Citizen on Monday that Indo Power had failed to implement provisions of the contract on time.

On January 30, the government - through the Cereals and Other Produce Board - signed an agreement with the little-known firm under which the company was to purchase 100,000 tonnes of cashew nuts worth $180.2 million (about Sh418 billion).

Indo Power chief executive Brian Mutembei said during the signing ceremony that the company would directly pay the Bank of Tanzania for the raw cashew nuts, adding that shipment to Kenya would begin on the first week of February.

Mr Kakunda said, however, that the company had failed to finalise important legal procedures, adding that government had signed agreements with six other firms that would purchase the merchandise instead.

"Forget about the company that signed a contract with us in Arusha (Indo Power) because it failed to honour the agreement. We have signed contracts with six other firms, which are now in the process of fulfilling provisions of the agreements. Those that will make payments first are the ones that will collect the merchandise," he said.

Mr Kakunda declined to name the companies, noting, however, that two of them are local, while the rest are foreign-owned.

He noted that if the six companies fulfilled their contractual obligations, all the 222,000 tonnes of raw cashew nuts produced last season would have been purchased.

"Last week, representatives of two foreign companies visited the country to inspect infrastructure, including roads and ports, before sending feedback to their respective countries. Generally, they expressed satisfaction," he said.

On quality assurance, Mr Kakunda said the produce was being stored in ventilated warehouses, noting that the cashew nuts could be kept in good condition until July or August.

The new development confirmed initial suspicions about the capacity of the Kenyan firm.

There were fears that Indo Power could be too small for the deal, with some pundits pointing out that the Kenyan firm may have merely acted as a broker for a third party.

Reports on the shadowy nature of Indo Power Solutions were revealed in early February by The EastAfrican newspaper, which raised questions regarding the company's registration, ability and authenticity of the officials behind the lucrative deal.

It carried a background check following the announcement that the firm had won the contract and concluded that Indo Power Solutions was "virtually unknown".

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