Je, Mkapa na Yona watalipa Mkopo wa bilioni 10 waliopewa na NSSF? | JamiiForums | The Home of Great Thinkers

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Je, Mkapa na Yona watalipa Mkopo wa bilioni 10 waliopewa na NSSF?

Discussion in 'Jukwaa la Siasa' started by BAK, Jul 20, 2009.

  1. BAK

    BAK JF-Expert Member

    Jul 20, 2009
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    MPs query 10bn/- NSSF loan to Kiwira mine company


    THE opposition camp in Parliament has demanded explanations from the Government over the circumstances surrounding a $7m (approx. 10bn/-) loan given to the Kiwira Coal and Power Company Limited by the state-owned National Social Security Fund (NSSF).

    Lawmakers noted that the short-term loan issued in 2007 was supposed to be repaid in full with interest within six months, but the privatised Kiwira mine company has so far defaulted on the payments.

    ’’It is surprising that the Government offered to guarantee this loan because it is the people, including NSSF members, who will be forced to shoulder this burden if the Kiwira company cannot pay,’’ the Shadow Minister for Labour and Youth Development, Salim Abdallah Khalfani, declared in Parliament yesterday.

    Khalfani, the legislator for Tumbe Constituency in Pemba on a CUF ticket, was presenting the opposition camp’s rejoinder to the Ministry of Labour, Employment and Youth Development’s 2009/10 budget proposals presented by Minister Prof. Juma Kapuya.

    NSSF, the country’s biggest pensions fund, falls under the portfolio of the labour ministry. The opposition camp demanded clarifications from the Government on overall expenditures amounting to more than 72bn/- made by NSSF in the previous financial year.

    Khalfani echoed a catalogue of audit queries previously raised by the Controller and Auditor-General (CAG) on the hugely controversial NSSF loan to Kiwira Coal and Power Company Limited.

    According to the CAG’s latest annual report, NSSF offered the hefty loan to the company running the Kiwira coal mine in Mbeya Region without any backing through collateral.

    Thus NSSF, as the lender, has no entitlement to any Kiwira Coal and Power Company assets in the event of the borrower failing to repay the loan.

    The July 10, 2007 loan agreement does not specify any collateral offered as security, besides generally stating under section 10.15 that all properties and business should be kept insured.

    According to the CAG’s report, NSSF issued the unsecured investment loan to the company contrary to the pension fund's own regulations.

    Section 2.4.1 of NSSF’s investment manual directs that security to investment loans should be first charged on fixed and immovable assets, which can be easily sold to cover any risk of default.

    The loan to Kiwira Coal and Power Company, which was formed to run the mine following its 2005 privatization and hand-over to private company TANPOWER Resources in much-documented circumstances, was guaranteed 75 per cent by the Government.

    Available records show TANPOWER Resources to be the current main shareholders in the privatised mine, holding a 85 per cent stake while the Government continues to retain the remaining 15 per cent.

    The records also show TANPOWER Resources to be a private company whose senior shareholders include close relatives of ex-president Benjamin Mkapa and ex-energy and minerals minister Daniel Yona.

    According to previously-published THISDAY findings, the 2005 ’fast-track’ privatisation exercise which ultimately saw TANPOWER Resources assume control of the mine was apparently jointly engineered by Mkapa and Yona, in their capacities as president and minister responsible for minerals at the time.

    The subsequently-formed Kiwira Coal and Power Company Limited then entered into a lucrative, $271m (approx. 380bn/-) deal with the state-owned Tanzania Electric Supply Company Limited (TANESCO) to supply up to 200 megawatts of coal-fired electricity to the national power grid.

    Prime Minister Mizengo Pinda recently announced in Parliament that the Government will regain 100 per cent ownership of the Kiwira mine, thus effectively reversing the dubious privatisation process.

    The upcoming 2009/10 budget proposals of the Minister for Energy and Minerals, William Ngeleja, are expected to shed more light on exactly how the Government will go about re-nationalising the mine.