By ThisDay Reporter 28th December 2009 SENIOR government officials in the Ministry of Energy and Minerals and the state-run Tanzania Electric Supply Company (TANESCO) are alleged to be sabotaging the implementation of directives by President Jakaya Kikwete that could have saved the nation billions of shillings each month in power generation costs. The presidential directives involve the conversion of the privately-owned 100MW Independent Power Tanzania Limited (IPTL) power plant in Dar es Salaam from using costly imported fuel oil to domestic natural gas. Details have since emerged of a covert scheme to sabotage the IPTL gas conversion plan in favour of other controversial power projects that could guarantee illegal kickbacks for some senior government officials. According to official figures, while it costs more than $10m (approx. 13bn/-) per month to run the IPTL power plant using its current fuel-guzzling turbines, the cost would be drastically scaled down to just $1m if the long-standing gas conversion plan was implemented. TANESCO's own power sector master plan (PSMP) listed the conversion of IPTL's power turbines from fuel to gas use as one of its priority projects initially scheduled for completion in 2006 at a cost of just $12.3m (approx. 16.5bn/-). However, well-placed government sources revealed to THISDAY how senior officials at both TANESCO and the energy and minerals ministry have been putting the IPTL gas conversion project on the back-burner for their own selfish motives. "There is no 30 per cent commission in the IPTL gas conversion project. That is why some of the officials involved are instead aggressively pushing for new power projects and the purchase of the Dowans Holdings power turbines, because that's where they can get their kickbacks," one informed source told THISDAY. Official documents show that the cost of converting the IPTL turbines to use natural gas from Songosongo has now jumped from the initial $12.3m (approx. 16.5bn/-) to $20m (approx. 27bn/-). But according to one government energy expert: "A one-off cost of $20m is still a reasonable amount to spend, considering that the government will be saving more than $100m each year if IPTL starts using natural gas now." IPTL's provisional liquidator, Theofilius Rugonzibwa, is understood to have unsuccessfully tried to source the funds for the conversion of the power turbines from the company's escrow account, but was reportedly blocked by legal manoeuvring by a maze of lawyers representing TANESCO and IPTL majority shareholder Mechmar of Malaysia. IPTL's escrow account is understood to have a balance of more than $100m (approx. 140bn/-). Said a government source: "TANESCO was supposed to have paid for the conversion of the IPTL turbines to use gas, but has been dilly-dallying on this matter. We understand that the World Bank has already made these funds available." "There are people who have still not given up on the purchase of the Dowans turbines, and are very interested in the latest TANESCO tenders for the supply of new power plants in Dar es Salaam (100MW) and Mwanza (60MW) because that's where the money is," the source added. It is said that the money spent by the government in the past few weeks to import heavy fuel oil to run the IPTL power plant in the wake of recent rolling blackouts, was actually much more than what it would have cost to convert the turbines to use natural gas in the first place. When inaugurating a new TANESCO plant in Ubungo, Dar es Salaam back in November 2008, President Kikwete publicly voiced his concern over delays in converting the IPTL power turbines to gas use, ordering an immediate resumption of the process. Government officials claimed at the time that they had purportedly halted the process because of ongoing litigation over the longstanding IPTL project. But over a year later, the IPTL gas conversion project is still yet to be implemented. When asked by THISDAY last week to explain the continued delay, the Minister for Energy and Minerals, William Ngeleja, said the gas conversion was expected to start anytime from now. Ngeleja said technicians from Wartsila Corporation on December 14 presented to TANESCO a blueprint of how the project is to be implemented. The minister asserted that the government will foot all costs for the conversion. He said the project had stalled over the years due to a pending suit filed by IPTL's majority shareholder in court. Implementation of the project was held back by the case in court, and also due to the fact that the investor (Mechmar) had not given consent for the conversion as per the agreement between the two parties, he said, adding: We have since got the investors consent, on October 13 this year, to carry on with the project. Malaysias Mechmar Corporation instituted arbitration proceedings in 2002 against TANESCO and the government over, among other things, non-payment of capacity charges. Ngeleja played down allegations that the gas conversion project was being stalled by some high-ranking officials in the ministry and from TANESCO, who are in favour of new power projects where they expect to reap money through commissions. If there is anyone planning to stall the project, he or she is doomed because I will champion the whole process myself. The conversion process is the way forward and there is no going back, declared the minister. Asked whether the government is still interested in purchasing the Dowans Holdings power turbines, minister Ngeleja remarked: On that issue I have no comment. The minister also said that he was not in a position to state exactly when the IPTL gas conversion project could take off, saying that is a technical matter.