Govt: We goofed on 1.85bn/- deal

[Fundi Mchundo]

Private buyer in prime government plot deal says: No hanky-panky involved at all




THISDAY REPORTER
Dar es Salaam

A LOCAL businessman behind the purchase of a prime government plot in the Dar es Salaam city centre, Hillal Hamad Hillal, has finally stepped forward to explain the controversy behind the deal, saying there was no hanky-panky involved in the transaction.

’’This was a clean deal, which followed all government laws and regulations. There was absolutely no corruption or any wrongdoing involved,’’ he declared yesterday in an interview with THISDAY in the city.

He said the government had initially agreed to sell the expensive real estate property to his company, El-Hillal Minerals (Tanzania) Limited, for 440m/- on the understanding that it would be allocated at least 1,300 square metres of office space, free of charge, for five full years after completion of the construction of a high-rise building on the property.

The plot in question with registration number 162/38, situated at the junction of Mirambo Street and Samora Avenue in the city’s central business district, is currently being used as a temporary parking lot for employees of the Bank of Tanzania (BoT).

Hillal however, admitted that, following complaints highlighted in a series of THISDAY reports to the effect that the government had sold the property far too cheaply, terms of the sale agreement were abruptly changed.

He said the now defunct Presidential Parastatal Sector Reform Commission (PSRC) had originally signed a sale agreement with his company on May 14 last year, in which he was to pay 440m/- cash and provide the government with rent-free office accommodation for five years as part of the deal.

But on September 24, PSRC Executive Chairman Ali Karavina informed Hillal by letter of the changes to the sale agreement, where he would now be required to pay up an extra 1.41bn/- in addition to the 440m/- that had already been paid.

He said he was told this would increase the sale price to 1.85bn/-, which was the true value of the property according to a valuation earlier commissioned by the same PSRC.

Hillal told THISDAY that although he was initially required to pay the outstanding balance by October 4 last year - and later given a deadline extension to December 31 - he asked for more time to pay the extra 1.41bn/- because of the short notice he had been given about the new conditions.

’’The government agreed to my request, and we assigned ’Addendum Number 1’to the May 14, 2007 sale agreement on December 21, 2007,’’ he said.

The addendum signed by Karavina and Hillal effectively extended the deadline for the property buyer to pay the remaining 1.41bn/- to June 30, 2009.

Hillal said since PSRC legally ceased to exist on December 31 last year, he would now be sending pay cheques to the state-run Consolidated Holding Corporation, which has taken over remaining operations of the defunct privatisation agency.

He reiterated that the transaction as a whole was ’’completely above board,’’ explaining that the initial 440m/- price tag plus the approximately $1.56m (around 1.8bn/-) worth of rent that the government would have been provided free of charge for five years was fair compensation for the currently-barren plot.

’’I would like to reiterate that this transaction was approved by all relevant government authorities and followed all procedures,’’ said Hillal, who is proprietor of El-Hillal Minerals (Tanzania) Limited.

The company runs a diamond mine in Shinyanga Region, near the Mwadui-based Williamson Diamond Mine owned by South Africa’s giant De Beers company.

Hillal confirmed the company’s plans to build an international market for raw diamonds on the Dar es Salaam plot in question. ’’My intention is to develop a high-rise building with 12 floors of office accommodation,’’ he said.

’’Apart from a diamond auction market, I have also reached an agreement with a highly-reputable international bank to open its branch in the same building,’’he added.

He said design work is already underway for the planned construction project, which is expected to cost in the region of $12m (approx. 15.6bn/-) in total. The construction work itself will commence once the company has received all necessary permits from the government and city council, Hillal explained.

Huu mradi unanikumbusha ule wa Maktaba ya Taifa. Mwekezaji ( Raha Towers) alipewa kibali kuongeza ghorofa juu ya maktaba kwa makubaliano ili kuwaongezea kipato Maktaba. Kilichotokea ni jengo kuharibiwa kimandhari (maoni yangu binafsi) na maktaba kupoteza matumizi ya lift, na kupewa kiofisi uchochoroni kwenye ghorofa mpya. Sehemu kubwa ya parking ya mbele ikachukuliwa na mwekezaji ambaye hakuwa nayo (chache zilizokuwepo aliishazigeuza ofisi) kwenye jengo lake lililojirani. Kwa kifupi, maktaba walikula hasara na jamii kubwa zaidi maana maktaba ( kwa wenzetu ni sehemu muhimu sana katika jamii) haijaweza kurudi kwenye enzi zake za miaka ya sabini. Vile vile jiji letu likapoteza moja ya majengo machache ambayo tungeweza kujivunia.

Huyu jamaa hajasema hizo square metre 1300 zitakuwa wapi na zitakuwa na facilities gani! Watapewa parking kiasi gani? Watachangia kiasi gani kwenye gharama za kuendesha jengo ( ulinzi, usafi wa mazingira, ukarabati wa jengo n.k.) na nani atakayeamua gharama hizi n.k.? Wamesema, at least 1300, bila kuainisha nani atakayeamua kiasi kamili. Hivi hii ina maana serikali wataweza kudai hata mara kumi ya hizi? Kuna maswali mengi ambayo yanastahili majibu.

Huyu jamaa amelenga kwenye hizo ghorofa za maofisi. Hivi kweli huu ni wakati wa kuongeza idadi ya watu watakaokuwa wanaingia na kutoka katikati ya jiji kila siku? Tuna infrastructure ya kubeba hili? Kwa nini serikali ya jiji isifungue CBD nyingine ambako maghorofa kama haya yatajengwa baada ya kuwekeza kwenye infrastructure? Master Plan ya jiji inasema nini kuhusu hili? Mkurugunzi wa mambo ya Kale anasema nini kuhusu effect kwenye mandhari ya kihistoria ya jiji?

Hilo la soko la almasi ni danganya toto! haliingii kichwani kama ilivyokuwa Tancut!

 

[DawaKali]

Tancut? Labda umechanganya, nimeongelea TANSORT.

Ndio, what am talking about hali ingiliani na hili la kiwanja. It's probably meant for a whole new thread.

Nilikua nasema tu kwamba yale yote walio wazushia TANSORT wakati ule, chanzo chote jibu linapatikana kwenye pale nimeku-qoute. I know it is out of this topic but I could not resist maanake sidhani kama hile issue ilieleweka vizuri judging by wengi nilio ongea nao.

 

[Fundi Mchundo]

Tancut? Labda umechanganya, nimeongelea TANSORT.

Ndio, what am talking about hali ingiliani na hili la kiwanja. It's probably meant for a whole new thread.

Nilikua nasema tu kwamba yale yote walio wazushia TANSORT wakati ule, chanzo chote jibu linapatikana kwenye pale nimeku-qoute. I know it is out of this topic but I could not resist maanake sidhani kama hile issue ilieleweka vizuri judging by wengi nilio ongea nao.

Mkuu, nilikuwa nazungumzia kakampuni kakukata almasi kalilkokuwa Iringa na kalikuwa kanaitwa Tancut kama sijakosea.

You are absolutely right kuwa hii issue ya Tansort. Ni uozo mtupu na ninashangaa kwa nini halijachangamkiwa. Uko sasa hihi tena kwa unganisha hii international auction centre na hiyo ofisi ya London ambako wauzaji wetu wa almasi inaelekea wanalipa royalties. Inatisha ndugu yangu.

High Power Costs Threaten Tanzanian Diamond Mine

A JOINT REPORT
THE EASTAFRICAN

MWADUI, TANZANIA'S most productive diamond mine, located in Shinyanga region in the Lake Victoria zone, faces imminent closure unless the government acts to reduce the high costs of mining.

Mwadui is one of the biggest diamond mines in the world, but produces low grade diamonds for lack of appropriate mining equipment, which cannot be bought at the moment because of its high cost.

The company's majority shareholder, De Beers of South Africa, says the cost of mining had risen, making it impossible to sustain the operation of the mine. The company projects that the grades mined at Mwadui will drop from the current nine carats per hundred tonnes of dump material to six carats by next year, owing to inefficiency at the current production plant.

The 60-year-old Mwadui mine is operated by a De Beers subsidiary, Williamson Diamonds Ltd (WDL), which has a 75 per cent stake in the mine, while the Tanzania government owns the remaining 25 per cent.

The mine's production manager, Mr Johanny Velloza, told The EastAfrican recently that to overcome the problem, WDL needs $1.5 million to purchase a new machine with the capacity to process 600 tonnes of dump ground per hour.

Mr Velloza blamed the high production cost on high electricity tariffs that account for up to 19 per cent of total expenses. He said that for the mine to be profitable, these charges should drop to nine or eight per cent, as is the case in other countries.

The firm says that, until the September 11 New York and Washington DC terrorist attacks, the diamond market was predictable. But the situation has changed, thus the need to reduce the royalties to cope with fluctuations in demand for the gemstone.

Seventy-five per cent of the world's diamonds sales are through the New York market, with half the sales by Arab countries. The firm pays mandatory royalties to a London-based Tanzanian sorting firm, Tansort, at $4.5 per carat.

Between 1994 and 2000, the firm paid $4.05 million to Tansort for sorting 901,300 carats. Production (in carats) for seven years was: 1999 (20,800), 1995 (35,000), 1996 (121,500), 1997 (121,000), 1998 (87,500), 1999 (196,5000) and 2000 (319,000).

However, it was difficult to establish how much money has been paid to Tansort since the early 1940s, when Williamson Diamond Mine at Mwadui started operations. The acting principal secretary, Mr B. Mrindoko, and the ministry's acting commissioner of minerals, Mr G. Nyelo, said Tansort was a government department, but declined to give details.

Government sources said that few people, if any, had access to Tansort's books.

"It is even difficult to establish why WDL is paying money directly to a government department in London instead of transferring it through the Treasury," the source said.

A director, a Tanzanian national, appointed to Tansort in the early 1960s still runs the outfit to this day. He was supposed to have retired many years ago, but since few people are aware of his existence, he has stayed on.

During a recent visit to Mwadui, the deputy minister in the Ministry of Minerals and Energy, Dr Ibrahim Msabaha, ackowledged the problems the government was facing in collecting the money. He said that the government had begun working on ways of ensuring that the money reached the Treasury.

"We appreciate Dr Msabaha's visit and his promise, but discussions over the problems have taken over two years without any concrete action from the government," a WDL director, Mr Mark Stanley, said.

Mr Nyelo confirmed that his ministry had been informed of the WDL problems.

"The government is informed of their problems; we are working on them," he said. He said WDL would have to inform the government in advance of the decision to close the mine.

On the issue of high electricity tariffs, Mr Nyelo said it was not possible to reach a decision overnight. In the past two months, WDL lost $500,000. It was expected to pay $15 million in loans at the end of this year, he said.

According to Mr Stanley, there were at least five options if Mwadui were to survive. These are: a recovery in the world diamond market; buying a new crusher; increasing the capacity of the plant; looking for new alluvial gravel; and procuring an IPJ (inland pressure jig).

 

[Mabbyjr]

Kama juhudi zake za mwanzo zilikumbana na ukuta inakuwaje disgraced PM atoe maagizo ili huyu so called mwekezaji kupata hilo eneo?????????

 

[DawaKali]

Mkuu, nilikuwa nazungumzia kakampuni kakukata almasi kalilkokuwa Iringa na kalikuwa kanaitwa Tancut kama sijakosea.

You are absolutely right kuwa hii issue ya Tansort. Ni uozo mtupu na ninashangaa kwa nini halijachangamkiwa. Uko sasa hihi tena kwa unganisha hii international auction centre na hiyo ofisi ya London ambako wauzaji wetu wa almasi inaelekea wanalipa royalties. Inatisha ndugu yangu.

Ndio, was not talking about Tancut ambayo ilikua ni shirika la umma ambalo lilisha filisiwa zamani ile.

Nilikua naongelea hio TANSORT ambayo ilikua formed enzi za 60s kwasababu Nyerere alijua kwamba kuuza diamonds zetu, tunaitaji kuchakarika nao huko huko kweye Diamond Markets kupata bei nzuri na ku-deal na hawa yatu at a level playing field. Na kama ulivyosema, you cannot have a diamond market kwenye hizi nchi zetu masikini na kufikiria kwamba mtu atakufwata bongo nakukupa bei nzuri.

Hao TANSORT wanalipwa hio royalty kutoka kwa De Beers kwa diamonds walizo zitoa TZ na kuzikagua kutizama bei ambayo zinaweza ku fetch according to the markets huko huko kusudi TZ ipate due share inzuri nakuto tapeliwa.

Na hio complain kwenye paste nikisingizio tu na tricks za hio kampuni kuhusu high running cost of electricity bla bla. Ni trick kama hizo zilizo tuingiza wabongo enzi zile mpaka tumefikia kwenye 25% ownership. Selekali had a 50 50 share of ownership kabla yakuuza 25% yake to make De Beers majority shareholder sasa. Wali-claim mgodi auna kitu na kwamba auingizi kitu and they are ready to go, afalu baada ya mda hapo wakauziwa 25% ya selekali kwa bei ya njugu utacheka. Sasa wako 75%, making all decisions nakuchimba mi-diamonds mingi wakati before wali-claim there is nothing there. Hii ya high running cost ni ku-dodge wasilipe what is due to the government, the usual abuses ya hizi mining companies.

Na bado walitaka kuing'oa hile TANSORT kule London, ata kwa kile kidogo inayo collect kule kusidi they should have total control. You are right, haya mambo ya madini yanatisha. Ngoja tungojee ripoti zao hizi tuone wanasema nini.