Mkapa's role in Kiwira deal
By ThisDay Reporter
18th May 2010
CONTROVERSY over the dubious privatisation of the Kiwira coal mine in 2005 has resurfaced following claims by former President Benjamin Mkapa that he had no shares in the property.
Mkapa told reporters on the sidelines of the World Economic Forum (WEF) in Dar es Salaam recently that he has no links whatsoever to the shadowy company that bought the mine.
"I have no shares in the Kiwira mine," said the ex-president in his first public statement on the long-running scandal.
But, while the former president tried to wash his hands of the controversial privatisation of the coal mine, official government documents seen by THISDAY reveal the extent of his personal involvement in the deal from the outset.
Government records show how a private company (TANPOWER Resources Limited) set up by Mkapa and one of his cabinet ministers, Daniel Yona, swiftly assumed ownership of the previously state-owned Kiwira Coal Mine Limited with very few other people in government even aware of what was going on.
Both Mkapa and Yona used their powerful positions in government to fast-track the privatisation of the mine and authorise its sale to their own company for a mere 700m/-. This is despite the fact that an official valuation carried out in 1991, put the value of the mine at 7 billion/- by then.
According to THISDAY investigations, TANPOWER Resources Ltd was registered on December 29, 2004, and within just six months (mid-2005) acquired majority shares in the renamed Kiwira Coal and Power Limited company.
In March 2006, the privatised Kiwira company entered into a huge, $271.8m contract with the state-run Tanzania Electric Supply Company (TANESCO) for the supply of 200 megawatts of electricity to the national power grid.
The company has thus far failed to supply even 5 MW of electricity to the national power grid, despite receiving billions of shillings from the government to invest in a power plant.
It has since been verified that TANPOWER Resources was the joint brainchild of Mkapa and Yona, formed during the later stages of the third phase government when one was still serving as president of the United Republic and the other as minister for energy and minerals, respectively.
At the time of the company’s establishment, its first listed directors were the then first lady Mama Anna Mkapa; the then minister for energy and minerals Daniel Yona; Nicholas Mkapa (the president and Mama Mkapa’s son); Joseph Mbuna (Nicholas Mkapa’s father-in-law); and Evans Mapundi.
Amongst many other things, some stated objectives of Tanpower Resources are to "carry on the business of miners of coal and iron, to process such coal and iron and generally treat, prepare, render marketable, sell and dispose of such coal and iron or by-products resulting therein in their raw or manufactured state."
The company was also licensed to "deal with coal mining in order to generate electricity for consumption and sale; to generate power generators, transmitters and general distributors; and to provide power and general projects management, project appraisers and consultants."
For chronological purposes, the beginning of the story of Kiwira's privatisation can be traced way back to 1999, when Mkapa and the first lady founded a private company called ANBEM Limited while they were still occupying public office at State House.
Following is a chronology of key events and happenings, backed by a paper trail of evidence, on the privatisation of the coal mine:
JUNE 22, 1999
While serving as sitting president and first lady of the United Republic, Mr and Mrs Mkapa officially registered ANBEM Limited in Dar es Salaam as a private company in which they were sole directors, shareholders and 'entrepreneurs', as described in the company documents.
From 1999 to 2005 - when Mkapa completed his second and final term in office as per national constitution the private business affairs of ANBEM Ltd were conducted from registered offices at Plot Number 15, Luthuli Road, which is a building within the official State House walls in Dar es Salaam.
When ANBEM Limited was three years old and with its sole shareholders still occupying public office at Ikulu - the company applied for and was granted a loan of $500,000 (approx. 650m/-) from the National Bank of Commerce (NBC) Limited. This loan came on the heels of a heated national debate over the privatization of the previously state-owned bank, which was fiercely opposed, amongst others, by the Father of the Nation, Mwalimu Julius Kambarage Nyerere, until his death in 1999.
A few months after securing the NBC Ltd loan, ANBEM Ltd landed another big credit-line in the form of a 250m/- loan granted by CRDB Bank Limited. During the same year, the then president Mkapa announced a cabinet reshuffle which included the appointment of senior cabinet minister Daniel Yona to head the crucial energy and minerals portfolio. As the minister for energy and minerals, Yona’s duties included overseeing the then still state-owned Kiwira Coal Mine Limited, and coordinating its pending privatisation process.
The registration of TANPOWER Resources Company Limited - a private firm formed by the then president Mkapa, energy and minerals minister Yona and some close family members.
TANPOWER Resources enters into a joint venture with the government and acquires up to 85 percent of the shares in Kiwira Coal Mine. The president’s son, Nicholas, is appointed a member of the renamed Kiwira Coal and Power Limited company board of directors, while his father-in-law Joseph Mbuna becomes board chairman. Other shareholders of TANPOWER Resources, Wilfred Malekia and Evans Mapundi, are also named on the new Kiwira board.
President Mkapa retires from office at the end of his second and final term in office, as per national constitution. Yona also announces his retirement from active politics.
On the basis of fast-tracked negotiations already concluded by the Mkapa administration, the fourth phase government under President Jakaya Kikwete signs a 20-year power purchase deal worth $271m with the privatised Kiwira company.
THISDAY begins publishing exclusive reports on the Mkapa-Yona link in the Kiwira coal project. The TANPOWER Resources file, which had been missing in public records, mysteriously resurfaces, but with a one-page resolution now inserted inside which purports to show that ANBEM Ltd (the company owned by the ex-president and his wife) forfeited its 200,000 shares in TANPOWER Resources on January 10, 2005. However, the former president’s son Nicholas continued to sit on the Kiwira board, while Yona also remained a shareholder.
President Kikwete's government announces the decision to regain 100 percent ownership of the Kiwira coal mine. The Controller and Auditor General's (CAG) office is currently assisting the government to establish whether or not the Mkapa and Yona families would be required to pay back to the state more than 17bn/- disbursed to the investor company, TANPOWER Resources Ltd, for investing in the coal mine and its associated power plant.
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