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Fresh battle over Sh 52 billion ATCL aircraft Lease Deal

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by BabuK, Jan 1, 2012.

  1. BabuK

    BabuK JF-Expert Member

    Jan 1, 2012
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    The government has opted for thorough review of the controversial lease agreement of aircraft Airbus 320, whose bill went to a staggering amount of $32.6 million (Sh52 billion).
    The new government position came upon learning that the aircraft, leased to Air Tanzania Company Ltd (ATCL) by a Lebanese company, Wallis Trading Inc. was sold in Zimbabwe at $16 million, less than 50 percent of the leasing bill accumulated by the country's flag carrier.
    The minister for Transport Omari Nundu told The Guardian on Sunday on the sidelines of a press conference this week in Dar es Salaam that the government was not ready to pay unjustifiable debt.
    "I have no detailed information yet, but I have heard that the aircraft was sold at $16 million. We are going to make a keen follow up to establish what happened and the way forward," explained the minister.
    "As a country we can not deny paying if the debt is clear and genuine, but we can not pay if we are not satisfied with all aspects on how the debt arose and the eventual selling of the aircraft," he said.
    During the press conference, Eng. Nundu warned management officials of parastatals under the ministry against subjecting the ministry to bogus deals that end up costing the nation. Severe measures would be taken against offending officials, he asserted.
    On November 13, 2011 this paper reported exclusively that taxpayers were set to pay Sh22.64 billion for service that wasn't delivered and that the plane was sold at $16 million.
    The said money is an accrued debt of leasing the aircraft A320 for a period of 34 months, during which the same aircraft remained on the ground in France undergoing major technical maintenance, but the leasing charges were same as a flying one.
    The aircraft flew for only seven months from May to December 2008 mainly on the Dar es Salaam – Johannesburg route. It remained in the hands of ATCL for 48 months.
    Minister Nundu said that the lease act review was unavoidable even if it leads the leaser (Wallis Trading) to opt for court action against the government, as sole shareholder for ATCL.
    He said the ministry would not be excessively worried about court action as paying the current debt was worse than a proper outcome of court action, comparing the situation with the investment agreement with Rites of India for the Tanzania Railways Ltd. The two parties accepted to cancel the agreement in 2009.
    The Guardian on Sunday has reliably been informed that the selling of the aircraft (Airbus A320) in Zimbabwe at $16 million last October is a fact that Wallis Trading has been avoiding to be known to Tanzanian authorities. "They are clearly aware that this fact is serious and controversial, that is why they have attempted to ensure it remains covered until the leasing bill is paid," disclosed a well placed source at the ministry.
    As it stands today there might be a renewed battle over the debt should Minister Nundu stand by his position, as the agreement for ATCL to release the aircraft back to Wallis Trading signed in October 2011 states that the debt would be honoured by effecting payment.
    The agreement partly reads: "……additionally a lump-sum of compensation is payable to the leaser for early termination and for failure by the lessee to deliver the aircraft in the condition required under schedule 3 paragraph 6 and (10-13) of the lease agreement.
    The Other Cost remain outstanding (OA) and Total Amount (TA) amount and the period of other terms for payment have been agreed today between us, you, the Ministry of Finance and technical committee, appointed by the government agency, Consolidated Holding Corporation (CHC) subject to the letter signed by the Permanent Secretary of Ministry of Finance as per the discussion between him and Wallis Trading at the ministry on October 27th 2011 at 9.30."
    Zitto Kabwe, chairperson of the parliamentary standing committee on Public Organisations Accounts (POAC), said this week that his committee had no formal information in regard to the said debt since ATCL was under the Treasury Registrar.
    "ATCL has not appeared before our committee, the main reason being that is under the Treasury including all its liabilities since 2007. The idea to bring it under CHC (Consolidated Holding Corporation) is yet to be concluded policy-wise, thus we are not informed of its accounts," the MP underlined.
    However, he said as shadow minister for Finance he was for the idea to review the A320 leasing agreement, but the government should do more than just a review.
    "I agree that a review on the leasing agreement should be done to see if there was any discrepancy jeopardising public interests, and the aircraft releasing agreement back to Wallis should be made public," he emphasized.
    He cautioned: "Information I have as a spokesperson on Finance suggest that the Treasury is ready to effect the payment to Wallis. My position is that the payment should not be made until all associated agreements are keenly looked into so as to safeguard public interests."
    Kabwe explained that he would contact his deputy on PAOC, Deo Haule Filikunjombe for the purpose of having the A320 release agreement availed to the Committee during its meeting later this month.
    The leasing period was six years (72 months) but the plane remained in the ATCL hands for 48 months, 41 of which it was grounded for technical maintenance in France.
    An aircraft expert who spoke to this paper in November but preferred to remain anonymous said it was inconceivable that the lease rate of $370,000 per month remained the same when the plane was operating and during the maintenance, arguing that non-operational lease charges would have gone down to around $30,000 a month.
    The Guardian on Sunday's month-long effort to contact the Permanent Secretary at the Ministry Finance, Dr Ramadhan Kijjah could not bear fruit despite submitting questions in writing.
    After several calls to Finance ministry's head of media and communication, Ingiahedi Mduma as well as personal assistant to the permanent secretary Frank Mtosho they wanted this newspaper to contact the sector ministry, which in this matter is the Ministry of Transport.
    The said aircraft (Airbus 320) was leased in 2007 at a cost of $370,000 a month in the preparation for then deemed second divestiture of ATCL that was to be partly sold to a Chinese company, Sonangol. However, the Chinese firm never signed a formal contractual agreement with the Government but pledged to buy ATCL not less than five Airbus aircrafts by 2012, a pledge that was not honoured.
    In line with the then eagerly awaited ATCL's take-over by Sonangol, the ATCL management rushed to lease A320-214 from Wallis Trading, the company said to have a close working relationship with Sonangol.
    The plane had operated in Liberia before it was leased to the South American state of El Salvador.
    By the time Tanzania entered into lease agreement in October 2007 the aircraft was due to go for major technical maintenance, known as ‘Check C' plus 12 years. That intention was only established after the agreement was penned, leading to the aircraft be grounded in France for seven months.

  2. Captain22

    Captain22 JF-Expert Member

    Jan 1, 2012
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    This is just one of the many ways corrupt officials milk our economy and country.
  3. Bigirita

    Bigirita JF-Expert Member

    Jan 1, 2012
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    zigo jingine la Treasury Registrar hilo....
    I fail to understand ni kwa nini Treasury wanataka kuua CHL wakati mashirika ya umma waliyonayo wao yanafanya madudu!!!
  4. FaizaFoxy

    FaizaFoxy JF-Expert Member

    Jan 1, 2012
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    Bila kuweka sheria ya risasi za kisogoni kwa kila mwizi wa mali ya serikali, mpokea na mtoa rushwa, tutabaki kulalama maisha yote.

    Tuige marafiki zetu wa China.
  5. Narubongo

    Narubongo JF-Expert Member

    Jan 2, 2012
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    tumeshazoea bana