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Dowan's contract saga: Winners & losers - why?

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by BabuK, Feb 27, 2011.

  1. BabuK

    BabuK JF-Expert Member

    Feb 27, 2011
    Joined: Jul 30, 2008
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    Spirits are likely to be calmed in the country following the report of an offer by Dowans (T) Ltd to waive aside its right to the 94bn/- settlement awarded by an international court of arbitration, on condition of being paid close to 34bn/- in unpaid rental charges when its system was being used.
    This revelation helped to put into clearer light the sources of contract disruption, as well as laying conditions for the government to do something about ending crippling power outages. It needed a more relaxed legislature.
    Surprisingly enough, it appeared that in the course of discussions between the top Dowans (T) shareholders who also double as directors of the company, the least articulate or enthusiastic group was the Tanesco management.
    They kept distancing themselves from the visit of Sulaiman al Adawi, persistently denying knowledge of his presence or objective of his visit, etc which was a bit interesting as a strategy.
    All that needed to be explained as to why Tanesco should be the least concerned or interested in his presence.
    The more this saga draws to a conclusion the clearer the intentions or objectives of its key players come into the open, for instance to explain the palpable lack of interest in the Dowans (T) team presence,and the power cuts.
    What comes up in that regard is that the Tanesco management was in no hurry to reach an agreement about using power from the Dowans (T) system, but to avoid entering into any commitment with the company, as it means having to pay for the power supply.
    What Tanesco was gunning for is free supply.
    What that means is that the problem of procuring a generating system was that of the government in the first place, and if by some chance the government could obtain the use of the Dowans (T) system without entering into a payment element, that would be the best scenario.
    That is why the lobby concerning Dowans (T) focused on who owns the firm, and seemed to resist Al Adawi’s very presence, as they sought to create a no man’s land on the matter.
    When no clear owner exists, the plant is nationalized and none is paid. At the same time the forgoing of the 94bn/- compensation that the court of arbitration had awarded to Dowans (T) wasn’t necessarily something that everyone was relieved to hear, for to suppose that this was so is to presume that the contract was cancelled by simple error.
    If one looks at it differently, that those who cancelled the contract knew where that was leading to, it would follow they would believe they are doing the company owners a favour by bringing hefty compensation claims, and they get a good cut out of later.
    When the award is put aside, Dowans (T) loses nothing but those who were expecting a big cut.
    An additional feature came up in relation to the debt standing between
    Tanesco and Dowans (T) at the time of contract disruption, that there was 34bn/- that was supposed to be paid by Tanesco for the power supply to continue.
    It opened up another dimension to the contract disruption, that Dr Idris Rashidi, the managing director sought to play the card of patriotism by forgoing the Dowans (T) supply instead of pushing company finances to pay the debt, as at any rate the contract was ending three months later.
    So it was a matter of checking if Kidatu/Mtera can back up Kihansi and Songas, for a while.
    By creating a dispute about the status of the company and its contract, Tanesco created ideal ground for not paying for the electricity it had already used, shielded by the non-issues of why Dowans (T) obtained the power system contract in the first place.
    Was it not sufficient that it had delivered, and a contract on supply terms, periodicity and dispute resolution was signed? It would appear that the Tanesco management would believe that they had indirectly done Dowans (T) a favour by contract disruption which results in a huge cash award for them – a third or quarter could be cut out for ‘local stakeholders.’
    Despite that last minute negotiations were continuing after the 94bn/- debt waiver was announced, it remains to be seen how far the government would brave ideological hostility to Dowans (T) and insist that what is firstly needed is to use the system to back up power supply, and if possible end the systematic shedding.
    One element comes up that is slightly encouraging, for instance defeat in the CCM preliminaries of retired permanent secretary William Shelukindo in the Bumbuli preliminaries, by January Makamba, one among the flashy professionals around President Kikwete at State House.
    The tone has thus completely changed from the parliamentary committee, adding the absence of Samuel Sitta and Harrison Mwakyembe; thus the 2010 polls permit resolving the issue.
    Yet perhaps ultimately the crucial dimension to reaching an amicable solution to the Dowans (T) saga is reality itself, that two things were standing out, first that both Tanesco and Ministry of Energy and Minerals bureaucrats sought the direct purchase option.
    A number of MPs had repeatedly urged the government to do so, the reason being the usual, faulty impression that the government has money for everything and it just needs political will, that is, on the part of a minister.
    From 2007 until now there is no indication that government can afford that option. So Tanesco is stuck with Dowans (T).
    The second aspect is that the shedding arising from the non-use of Dowans (T) system and to an extent IPTL partly owing to cash flow limitations at Tanesco was assuming catastrophic proportions.
    It means that the use of shedding to exert real pressure on the government to purchase a new power system that doesn’t lead to capacity charge liability had failed. Nor have the beloved donors ready to contribute to ‘development projects in the energy sector’ opened their purses as
    Tanesco expected, leaving the company with two options: darkness or Dowans, but the evidence is they were still choosing darkness!
    The reason is they still hoped the government could ‘come to its senses’ and purchase a power plant, or in view of the dispute about the Dowans (T) status, appropriate the plant.
  2. Ndachuwa

    Ndachuwa JF-Expert Member

    Feb 28, 2011
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    Hilo deni la 34 billion kama ni la kweli si litakuwa kwenye vitabu vye hesabu za Tanesco hivyo walipwe. Kama halipo kwenye vitabu ina maana ni la kutunga lisilipwe
  3. newmzalendo

    newmzalendo JF-Expert Member

    Mar 1, 2011
    Joined: Mar 23, 2009
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    Mod hii si pahala pake,ni sihasa za dowans na richmond