Controversial government property sale: Buyer now gets tough conditions


JF-Expert Member
Feb 11, 2007
Controversial government property sale: Buyer now gets tough conditions

Dar es Salaam

IT has now emerged that the private company that acquired a prime piece of government land for a ridiculously cheap price earlier this year has now been given stringent new conditions to fulfil before the transaction is finally concluded.

According to THISDAY's latest findings, apart from being told to pay an extra 1.41bn/- to match the final purchase price with the property's stated true value (1.85bn/-), El-Hillal Minerals (Tanzania) Limited will now also need to produce documentary proof of its stated intentions in the deal.

The issue at hand is the controversial sale of the plot, number 162/38 at the junction of Mirambo Street and Samora Avenue in Dar es Salaam's central business district, to El-Hillal Minerals despite opposition from at least two key government ministries.

It has been established that sometime last year, Prime Minister Edward Lowassa had an audience with El-Hillal Minerals proprietor Hillal Hamad Hillal, and afterwards directed the Presidential Parastatal Sector Reform Commission (PSRC) to ''assist'' Hillal as per existing laws and regulations after his previous attempts to buy the plot had come to nought.

Sources familiar with the deal say Lowassa's instructions to PSRC executive chairman Ali Karavina were sent in writing through the PM's private secretary, B. Olekuyan, in August last year.

The letter from the Prime Minister's Office (PMO) says in part: ''Mr Hillal came to see the honourable prime minister so that the government may assist him to acquire a plot for the construction of a building to house a bank and a diamond cutting centre. In the discussions with the Hon. prime minister, he (Hillal) explained that he was ready to pay for the costs of the plot that will enable him put up his investment.''

It concludes by saying: ''The Hon. prime minister has instructed that you should receive Mr Hillal and listen to him, and see how the PSRC can assist him based on existing laws and regulations.''

It is understood that both the Ministry of Finance and the Ministry of Planning and Economic Empowerment (PSRC's parent ministry) were initially opposed to the sale of the plot to El-Hillal Minerals (Tanzania) Limited.

According to the sources, the transaction was finally concluded in May this year with El-Hillal Minerals acquiring the plot for 440m/-, which it turned out was less than a quarter of its actual market value.

A valuation report commissioned by the PSRC itself a few weeks before the sale had put the market value of the property at 1.85bn/-.

Speaking in defence of the deal, various government sources contacted by THISDAY have argued that it would have long-term benefits to the economy, given the private developer's plans to construct a 12-storey building and establish an international diamond auction on the plot.

''An international diamond market like the one being planned should ultimately boost our economy and attract more foreign investors,'' said a senior government official on condition of not being named.

The documentary proof that El-Hillal Minerals has now been asked to produce includes an agreement or any written contract between the company and an international bank to set up a country branch office within the envisaged building once built.

The company is also required to provide proof that it has ordered the necessary equipment for the proposed international diamond market. According to a reliable government source, ''should the company fail to produce such proof by the end of this month (December), the government reserves the right to repossess the plot.''

It has also been verified that the ownership of the plot in question is still under the long-defunct National Food and Agriculture Corporation (NAFCO), and no transfer of ownership has ever been made.

After the state-run NAFCO was wound up, the property was returned to the government through the Treasury registry in the Ministry of Finance, and ended up in the PSRC's hands.

There have been allegations of improprieties in the sale of the plot, said to have been carried out without a formal tendering process or public auction - both of which are standard procedures for the sale of state-owned assets.
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