How govt property was sold off in fishy manner: No tender process or public auction PSRC, finance ministry in spotlight
THISDAY REPORTER
Dar es Salaam
AN expensive government property in Dar es Salaam's city centre, worth around 1.85bn/- but sold for less than a quarter of its real market value, was given to a private developer by the Parastatal Sector Reform Commission (PSRC) without following proper procedure, THISDAY has learnt.
Well-placed sources familiar with the May 2007 deal say the choice piece of land on plot number 162/38 at the junction of Mirambo Street and Samora Avenue, was sold without a formal tendering process or public auction - which are standard procedures for the sale of state-owned assets.
''The PSRC is required by law to sell state assets through a competitive tender process, or by public auction. In this case, the plot was sold to a private company without observing these rules,'' said a source with government links.
PSRC officials have so far been unavailable to comment on the deal and its alleged improprieties, although they promised to respond to THISDAY queries today.
Investigations by THISDAY have revealed that both the Ministry of Finance and the Ministry of Planning and Economic Empowerment were from the outset opposed to the sale of the prime plot to the private El-Hillal Minerals (Tanzania) Limited company, which apparently followed a formal PSRC request.
The Permanent Secretary in the Ministry of Planning and Economic Empowerment, Enos Bukuku, is understood to have officially informed PSRC executive chairman Ally Karavina in March last year, that the plot previously owned by the state-run National Food and Agriculture Corporation (NAFCO) should be returned to the government.
Bukuku advised the PSRC to hand the plot over to a government ministry or institution that could develop it for office accommodation purposes.
In October last year, the Ministry of Finance also informed the PSRC that the plot should not be sold to a private firm, but be developed to provide government office accommodation.
''We wish to inform you that since there is a huge shortage of accommodation for government offices and there is such a huge rent bill for offices now being rented for (government) ministries, the minister for finance has instructed that the property should not be returned to PSRC as requested, and instead be reserved for the construction of government offices,'' said part of a finance ministry letter to PSRC boss Karavina.
Sources say that after failing to convince the ministry of finance to approve the sale of the property, El-Hillal Minerals (Tanzania) Limited chairman Hillal Hamad Hillal sought an audience with Prime Minister Edward Lowassa to canvass his help in pushing through the deal.
''The prime minister then instructed PSRC to assist Hillal in the matter, within the procedural and legal limits,'' said one source.
In February this year, Hillal contacted the finance ministry again and this time put forward his offer to purchase the plot for no more than 440m/-.
And in an abrupt u-turn just two months later (April 2007), the finance ministry informed the PSRC that it was now authorising the sale of the prime government property to El-Hillal Minerals (Tanzania) Limited.
However, the ministry also instructed PSRC to immediately carry out a valuation of the property and negotiate a fair price for it.
Subsequently, a valuation commissioned by the PSRC in May this year put the market value of the plot at around 1.85bn/-.
But surprisingly, the PSRC sold the property in the same month for a mere 440m/-, which was exactly the same price offered by El-Hillal Minerals (Tanzania) Limited but less than a quarter of the official valuation estimate.
It remains unclear why the finance ministry reversed its original decision to hang on to the plot rather than sell it to a private developer. And also still unexplained is the PSRC's bizarre decision to sell the plot for just a fraction of its actual value.
The plot in a low density area, with a total size of around 2,942 square metres, is currently being used as a temporary parking lot for Bank of Tanzania (BoT) staff members in the city's central business district.
According to the PSRC valuation report, each square metre of the property was valued at $457 (approx. 594,100/-). But the PSRC ended up selling each square metre for just 149,500/-.