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By The Citizen Reporter
Jan 9, 2011
The long running, controversial Tanesco emergency power generating saga involving Richmond Development Company (RDEVCO) and Dowans Holdings SA, has now degenerated into a subject of another multimillion-dollar battle, to be fought out in a US court.
This time around, the Costa Rican-based Dowans Holdings SA and Dowans Tanzania Ltd (DTL) have sued the US-based RDEVCO over ownership of a $7.5million (about Sh11 billion) turbine installed at the Ubungo site in Dar es Salaam in October 2006.
In the suit filed in a Texas court on February 4, 2010, Dowans and DTL are requesting the court to declare that DTL the exclusive, lawful and rightful owner of the turbine and that RDEVCO does not own or otherwise have any interest whatsoever in the turbine.
According to the suit filed by attorneys for Dowans Holdings SA and DTL, and seen by The Citizen yesterday, the turbine was air freighted to Tanzania and installed at the Ubungo site in late October 2006, and was commissioned in January 2007.
The suit has come to light in the wake of an order by the Paris-based International Chamber of Commerce (ICC) to Tanzania Electric Supply Company (Tanesco) to pay Dowans Holdings SA and DTL a whopping Sh185billion for breach of contract.
The ICC ruling made on November 15, last year, by ICC co-arbitrators, Swithin Munyantwali and Sir Jonathan Parker, held Tanesco responsible for the breach of the agreement and ordered it to pay the claimants some $24 million plus simple interest of 7.5 percent per year from June 15, 2010 to the day of payment which adds to over $19 million. *
The two co-arbitrators also ordered Tanesco to pay $39.9 million plus 7.5 percent interest on aggregate principal total of* some $36.7 million from the same date.
However, the ICC ruling has generated mixed feelings in Tanzania with some quarters suggesting that the money should not be paid while others maintain that the government must bear the consequences.
In the suit filed n the US District Court for the Southern District of Texas Houston Division, Dowans is also asking the court to declare that DTL is entitled to recover attorneys fees expended in establishing DTLs ownership of the turbine.
In June 2006, RDEVCO and Tanesco entered into an agreement for an emergency supply of power whereby the former was to design, construct and operate a gas-based generating plant at Tanescos site at Ubungo, according to the suit.
It said Tanesco was to purchase power produced at the Ubungo site from RDEVCO pursuant to the terms and conditions of the power purchase agreement (PPA).
In order to fulfil RDEVCOs contractual obligations under the PPA, Richmond and a US-based Vulcan Power Group, LLC entered into a purchase order agreement whereby Richmond was to buy a mobile gas turbine from Vulcan, added the suit.
The suit said on October 14, 2006, Dowans and RDEVCO entered an agreement in which RDEVCO assigned its PPA to Dowans, an assignment that occurred before the turbine was air freighted to Tanzania.
In connection with the assignment of the PPA to Dowans, RDEVCO and Dowans entered another assignment and assumption agreement called the Vulcan Assignment Agreement effective October 14, 2006, said the suit.
It added that in that agreement, RDEVCO assigned Dowans all rights and obligations under Vulcan agreement, namely the right to buy and receive the turbine from Vulcan.
The suit noted that to satisfy its obligations under the PPA, Dowans was required to establish, and established, DTL, a wholly owned subsidiary of Dowans Holdings SA organised under the laws of Tanzania.
In March 2007, Dowans assigned to DTL the PPA and Dowans assets in Tanzania, including the turbine, it said. Since its delivery, the turbine has been owned and operated exclusively by Dowans and/or DTL, the suit further says.
RDEVCO did not contribute to the purchase price paid to Vulcan for the turbine, nor did RDEVCO ever possess or otherwise operate, maintain or control the turbine, said the suit.
It added that in October 2008, Dowans and DTL began negotiating the sale of DTLs assets at the Ubungo site to Tanesco, including, but not limited, to the turbine.
The suit said after learning of these negotiations, RDEVCO, through its counsel, sent a letter to Tanesco purportedly putting Tanesco on notice of the fact that Dowans does not own the turbine and claiming that the turbine is owned by RDEVCO.
RDEVCO made these false allegations knowing that it had had assigned any and all rights it may have had to the turbine to Dowans pursuant to Vulcan assignment agreement, and that Dowans was, in fact, the exclusive, lawful and rightful owner of the turbine, said the suit, adding:
Ultimately, the transaction with Tanesco did not occur.
The suit says Dowans and DTL are currently negotiating the sale of DTLs assets at the Ubungo site with another potential buyer.
RDEVCOs prior statements about the turbine are potentially affecting this transaction, and Dowans and DTL anticipate that RDEVCO will continue to improperly claim ownership of the turbine, said the suit.
Jan 9, 2011
The long running, controversial Tanesco emergency power generating saga involving Richmond Development Company (RDEVCO) and Dowans Holdings SA, has now degenerated into a subject of another multimillion-dollar battle, to be fought out in a US court.
This time around, the Costa Rican-based Dowans Holdings SA and Dowans Tanzania Ltd (DTL) have sued the US-based RDEVCO over ownership of a $7.5million (about Sh11 billion) turbine installed at the Ubungo site in Dar es Salaam in October 2006.
In the suit filed in a Texas court on February 4, 2010, Dowans and DTL are requesting the court to declare that DTL the exclusive, lawful and rightful owner of the turbine and that RDEVCO does not own or otherwise have any interest whatsoever in the turbine.
According to the suit filed by attorneys for Dowans Holdings SA and DTL, and seen by The Citizen yesterday, the turbine was air freighted to Tanzania and installed at the Ubungo site in late October 2006, and was commissioned in January 2007.
The suit has come to light in the wake of an order by the Paris-based International Chamber of Commerce (ICC) to Tanzania Electric Supply Company (Tanesco) to pay Dowans Holdings SA and DTL a whopping Sh185billion for breach of contract.
The ICC ruling made on November 15, last year, by ICC co-arbitrators, Swithin Munyantwali and Sir Jonathan Parker, held Tanesco responsible for the breach of the agreement and ordered it to pay the claimants some $24 million plus simple interest of 7.5 percent per year from June 15, 2010 to the day of payment which adds to over $19 million. *
The two co-arbitrators also ordered Tanesco to pay $39.9 million plus 7.5 percent interest on aggregate principal total of* some $36.7 million from the same date.
However, the ICC ruling has generated mixed feelings in Tanzania with some quarters suggesting that the money should not be paid while others maintain that the government must bear the consequences.
In the suit filed n the US District Court for the Southern District of Texas Houston Division, Dowans is also asking the court to declare that DTL is entitled to recover attorneys fees expended in establishing DTLs ownership of the turbine.
In June 2006, RDEVCO and Tanesco entered into an agreement for an emergency supply of power whereby the former was to design, construct and operate a gas-based generating plant at Tanescos site at Ubungo, according to the suit.
It said Tanesco was to purchase power produced at the Ubungo site from RDEVCO pursuant to the terms and conditions of the power purchase agreement (PPA).
In order to fulfil RDEVCOs contractual obligations under the PPA, Richmond and a US-based Vulcan Power Group, LLC entered into a purchase order agreement whereby Richmond was to buy a mobile gas turbine from Vulcan, added the suit.
The suit said on October 14, 2006, Dowans and RDEVCO entered an agreement in which RDEVCO assigned its PPA to Dowans, an assignment that occurred before the turbine was air freighted to Tanzania.
In connection with the assignment of the PPA to Dowans, RDEVCO and Dowans entered another assignment and assumption agreement called the Vulcan Assignment Agreement effective October 14, 2006, said the suit.
It added that in that agreement, RDEVCO assigned Dowans all rights and obligations under Vulcan agreement, namely the right to buy and receive the turbine from Vulcan.
The suit noted that to satisfy its obligations under the PPA, Dowans was required to establish, and established, DTL, a wholly owned subsidiary of Dowans Holdings SA organised under the laws of Tanzania.
In March 2007, Dowans assigned to DTL the PPA and Dowans assets in Tanzania, including the turbine, it said. Since its delivery, the turbine has been owned and operated exclusively by Dowans and/or DTL, the suit further says.
RDEVCO did not contribute to the purchase price paid to Vulcan for the turbine, nor did RDEVCO ever possess or otherwise operate, maintain or control the turbine, said the suit.
It added that in October 2008, Dowans and DTL began negotiating the sale of DTLs assets at the Ubungo site to Tanesco, including, but not limited, to the turbine.
The suit said after learning of these negotiations, RDEVCO, through its counsel, sent a letter to Tanesco purportedly putting Tanesco on notice of the fact that Dowans does not own the turbine and claiming that the turbine is owned by RDEVCO.
RDEVCO made these false allegations knowing that it had had assigned any and all rights it may have had to the turbine to Dowans pursuant to Vulcan assignment agreement, and that Dowans was, in fact, the exclusive, lawful and rightful owner of the turbine, said the suit, adding:
Ultimately, the transaction with Tanesco did not occur.
The suit says Dowans and DTL are currently negotiating the sale of DTLs assets at the Ubungo site with another potential buyer.
RDEVCOs prior statements about the turbine are potentially affecting this transaction, and Dowans and DTL anticipate that RDEVCO will continue to improperly claim ownership of the turbine, said the suit.
