DUBIOUS PRIVATISATION OF KIWIRA COAL MINE:
Mr Clean played `uzawa` trick to silence critics
THISDAY REPORTER
Dar es Salaam
FORMER president Benjamin Mkapa and his energy and minerals minister, Daniel Yona, played the indigenization card (Uzawa in Kiswahili) to sell the state-owned Kiwira coal mine in 2005 to a locally-registered private company jointly formed with members of their immediate families, THISDAY can reveal today.
At a time when there was a political storm over the privatisation of state-owned assets to foreign investors, the ex-president and his minister tactfully used these public sentiments at their own advantage by selling the lucrative coal mine to their own firm, Tanpower Resources Company Limited, at a ridiculously cheap price.
While the coal mine and its vast infrastructure were constructed at an estimated cost of 4.29bn/- in the 1980s, the Mkapa-Yona company bought the entire assets currently worth tens of billions of shillings for a mere 700m/- in 2005.
The ex-president and his minister did not publicly declare their personal business interests in Tanpower Resources -- an obvious violation of public leadership ethics -- and went on to award the privatisation of the government coal mine to their private company.
Latest THISDAY findings reveal that Tanpower Resources Company Ltd deliberately touted itself as a private business entity formed by indigenous Tanzanians, apparently to silence would-be critics of the sale of the mine at such a remarkably low price.
Mkapa, who had built up a reputation as Mr Clean over his ten-year administration (1995-2005), had quietly teamed up with his then energy and minerals minister in 2004 to form Tanpower Resources Company Ltd.
With a clear intention to take over Kiwira mine from the outset, Mkapa, Yona and other owners of Tanpower Resources licensed the company to deal with coal mining in order to generate electricity for consumption and sale; to generate power generators, transmitters and general distributors; and to provide power and general projects management, project appraisers and consultants.
On December 15, 2004, Evans Mapundi, who co-owns Tanpower Resources with Mkapa, Yona and others, wrote a letter to Yona as the then energy and minerals minister requesting permission to visit Kiwira mine in Mbeya Region for an assessment of the mines economic potential.
After being granted permission by Yona to visit Kiwira, Tanpower Resources wrote another letter to its shareholder-cum-energy and minerals minister on January 4, 2005, making a formal offer to buy 70 per cent of the governments shares in the mine for just 700m/-.
Just two months later, Yona as a government minister wrote to his own company jointly owned with Mkapa and others (Tanpower), informing them that the government had agreed to go into joint venture partnership with the company in running the mine.
In the same March 24, 2005, letter, Yona announced that the government had formed a four-member team chaired by Treasury Registrar Agnes Bukuku to fast-track the privatisation of the coal mine to the privately-owned company.
Yona copied the letter to then Finance Minister Basil Mramba, Planning and Privatisation Minister Abdallah Kigoda, Attorney General Andrew Chenge, Chief Secretary Marten Lumbanga, PSRC Executive Chairman John Rubambe and Kiwira coal mine board chairman Rumisha Mambo.
Other members of the Kiwira fast-track privatisation team were Omar Chambo, the then Acting Commissioner for Minerals, J.J. Ngelime, a senior consultant with the now defunct Presidential Parastatal Sector Reform Commission (PSRC) and B. Sahel, a state attorney from the AGs chambers.
Chambo currently serves as permanent secretary in the Ministry of Infrastructure Development.
Insiders say when the Treasury Registrar and her team were ordered by Yona to speed up the sale of Kiwira mine to Tanpower Resources, little did they know that the company had such high-powered owners including then president Mkapa, First Lady Anna Mkapa, Yona himself and their immediate family members.
Thanks to the fast-tracked privatisation of Kiwira personally pushed by Mkapa and Yona using their powerful positions in government, PSRC signed an agreement with Tanpower Resources on June 8, 2005, for the sale of 70 per cent of the shares in the state-owned coal mine to the private company.
Tanpower Resources then quickly increased its stake in the mine to 85 per cent and in March 2006 signed a controversial $271.8m (approx. 340bn/-) contract with the Tanzania Electric Supply Company (TANESCO) for the supply of 200 megawatts of electricity to the national power grid.
The remaining 15 per cent shares in the Kiwira company are still formally held by the government of the day.
Official documents show that Tanpower Resources was asked to pay just 70m/- on the date of the signing of the agreement, with the remaining balance of 630m/- payable within six months from the date of signing of the agreement.
It remains unclear if the Mkapa-Yona company has paid up the outstanding balance to date.
Investigations by THISDAY have established that at the time of the registration of Tanpower Resources in 2004, its first listed directors were the then first lady, Mrs Anna Mkapa; minister Yona; Nicholas Mkapa (the president and Mrs Mkapas son); Joseph Mbuna (Nicholas Mkapas father-in-law); and Evans Mapundi.
Yona and his son, Danny Yona, are also prominent shareholders of Tanpower Resources through a private company called DEVCONSULT Limited, in which Yona senior owns 90 per cent of the shares while Yona junior holds the remaining 10 per cent.
Mkapa and the former first lady also have shares in the same Tanpower Resources company through their own private firm, ANBEM Limited, which was registered in 1999 while the couple was still at State House.
Apart from the shares held by ANBEM Limited, Mr and Mrs Mkapas son, Nicholas Mkapa, has his own shares in Tanpower Resources and hence Kiwira through another company going by the name of Fosnik Enterprises Limited.
The ex-presidents son owns Fosnik Enterprises on a 50-50 basis with his wife, Ms Foster (Mbuna) Mkapa.
At the same time, Nicholas Mkapas father-in-law Joseph Mbuna, is also one of the shareholders and major figures in the renamed Kiwira Coal and Power Limited.
Mbunas stake in the company is under the name of Choice Industries Limited in which he is the majority shareholder.
An assessment made by Chinese geologists in the late 1970s established that the mine had economic coal reserves of up to 35.14 million tonnes, with proven coal reserves of 22.14 tonnes.
Tanpower Resources had pledged to invest more than 46bn/- in the coal mine and power plant when it bought a controlling stake on the cheap but has reportedly been struggling to raise funds.