I rarely agree with IMF policies or advises, but this time I do. IMF hits at long-term govt deals with private investors SEBASTIAN MRINDOKO Dar es Salaam THIS DAY THE International Monetary Fund (IMF) has advised the government to rethink the long-term contracts entered with foreign investor companies, citing questionable deals like the infamous 20-year IPTL power generation agreement. The IMF senior Resident Representative to Tanzania, David Robinson, also yesterday cautioned the government to stop taking the seemingly-lucrative offers made by foreign private investors at face value, saying such deals usually come with strings attached. He was speaking at an IMF seminar for non-governmental organisations in Dar es Salaam. On existing long-term contracts now costing the government heavily, Robinson mentioned energy sector agreements like the Independent Power Tanzania Limited (IPTL) and the Songas gas-to-electricity deals as key examples. He said the government had agreed to sign such lengthy pacts of 20 years or more without duly considering the consequences to the countrys future economic growth during all these years as the world economy itself undergoes regular periods of drastic change. The government should not enter into such long-term contracts. Most of them have hidden agendas that have far-reaching consequences to the country as a whole�like what has happened to TANESCO with IPTL, he said. The IMF country representative advised the authorities to adopt clearly-defined, short-term contracts ranging from between five and 10 years, while constantly looking at the economic impact of the clauses in the agreements as time wore on. According to Robinson, investors have a habit of sweet-talking governments with very huge offers at the negotiation table, showing billions of dollars in returns that appear quite beneficial to the country. He said despite the rosy pictures painted of possible revenue projections and benefits of a given project, thorough, independent and intelligible studies should be conducted by government to verify the figures presented by investors, before reaching a decision to sign any contract. Robinson advised government officials involved in contract negotiations with investors to visit other countries that have managed to enter into beneficial contracts with the same companies, so as to learn from their experiences. He said the Tanzanian Government should always measure the costs to the nation of each individual project before signing such contracts. He noted the increasing evidence of much-hyped foreign direct investment projects that promise billions of dollars in returns to the government, but ultimately end up being burdens to the whole nation. He stressed that contracts signed under emergency crisis situations, such as national power shortages due to drought and the like, should definitely not be long-term agreements lasting for up to 25 years - as indicated in some of the existing deals. Although Tanzania is greatly in need of public-private partnership for the countrys economic growth, it should remain keen to offers brought by various investors because not all are healthy to the economy, he said. Likewise, the IMFs assistant director and mission chief for Tanzania (African department), Roger Nord, said the government requires experts and specialists to make intelligible studies of the various contract offers from foreign investors, before signing them. This is serious when referring to the country�s long-term economic plans, because in the short-term such deals will be seen as a grace to national economic growth, but in the long run they will turn out to be a disgrace, he said. On the general state of the countrys economy, Nord said the government has to improve the existing business environment by easing the regulatory burden and reducing infrastructure bottlenecks, particularly the financial viability of the Tanzania Electric Supply Company Limited (TANESCO). He said infrastructure and power supply were among key sectors in any economy which attract more investment, but again urged the government to be careful and avoid making the mistake of signing more bad contracts. Echoing Robinsons remarks, Nord asserted that behind many of the glossy project proposals, there were usually hidden traps that local authorities must be keen to avoid at all times.