Tanzania to probe power deal


JF-Expert Member
Feb 11, 2007
Tanzania to probe power deal

A private-public partnership deal involving Canadian giant Energem Resources Ltd, Infrastructural Development Finance PTY of South Africa and the state-owned Rufiji River Basin Development Authority (Rubada) is to be investigated by the Office of the President to determine whether the parties followed public procurement rules when signing the contract.

Speaking to The EastAfrican, the chairman of Rubada, Professor Raphael Mwalyosi, confirmed that the Office of the President had ordered the authority to block the deal pending further direction from the government.

“Yes, we have been ordered to block the Canadian firm because of technical irregularities,” he said.

He spoke as sources revealed that the officials of both the Canadian and South African firms had jetted into Dar es Salaam over the weekend to lobby for the project.

In May this year, the Canadian company announced that it had executed a Memorandum of Understanding with Infrastructural Development Finance (Pty) Ltd (IDF) under an arrangement where it acquired a 40 per cent interest in a proposed 900 megawatt hydro-electric scheme, the Stieglers Gorge Hydro-Electric Scheme in Tanzania.

Under the deal, the Canadians were to advance a short term loan of $1.2 million to fund feasibility studies on the project.

In the early 1980’s, through a Norwegian government initiative, a detailed feasibility study of the project was undertaken and completed.

Under the agreement, Energem was to advance the loan to IDF in order to update the historic feasibility study to achieve a bankable status.

The Norwegian funded study, while qualifying at the time in respect of all engineering and environmental considerations, was shelved due to insufficient regional electricity demand at the time to justify economic viability.

The sponsors of the project believe that this position has now changed with demand for electricity in the region showing considerable growth at a time when current infrastructure is unable to meet existing demand.

IDF, Energem’s principal partner in the project, has been granted the rights to the project by the Tanzanian government to update the feasibility study and thereafter potentially develop and construct the scheme, which would be based on the Rufiji river at the Stieglers Gorge site in the Selous Game Reserve.

IDF is a private company with expertise in hydro-electric power stations.

Under the arrangement, Energem was to acquire a 40 per cent stake in the project and IDF 20 per cent, with the remaining shares going to a local private engineering consortium.

Energem has appointed consulting engineers Jeffares & Green to examine the historic feasibility studies relating to the project.

Last month, the Canadian company announced that Jeffares & Green have to date concluded that the historic studies were comprehensive and of a high standard and would require limited updating to bring them up to current standards for internationally acceptable bankable level.

Energem also announced that based on a recent review of the information available from the historic feasibility, the construction of the proposed dam would have very limited environmental impact.

The studies had also found that the game reserve requires no resettlement of local communities and can provide substantial downstream irrigation and flood control benefit to agricultural development in the area, situated approximately 200 kilometres southwest of the port of Dar es Salaam and reasonably well served by road and rail infrastructure, both inland and to the port.

The current estimated capital cost of construction, subject to updating of the studies, is about $2 billion with an estimated five-year construction period.

Under the deal, Energem was to seek to assist in the management, financing and logistics support to the construction of the scheme.
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