Mlalahoi
JF-Expert Member
- Aug 31, 2006
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Bank `covers` govt over gas turbine imports
THISDAY REPORTER
Dar es Salaam
A local banking giant, CRDB Bank, has moved in to provide a safety net for the importation and installation of gas turbines on behalf the state-run Tanzania Electric Supply Company (TANESCO), THISDAY has learnt.
The importers, Messrs Richmond Development Corporation RDC) of Houston, United States, apparently couldnt get a bank guarantee after failing a due diligence test back home � and subsequently failed to open a letter of credit to facilitate importation of the turbines � until the CRDB came along.
However, CRDB Managing Director, Dr Charles Kimei is categorical that his bank isnt covering for the RDC, which he says are not the banks clients.
An LC is opened to protect the importer, so that if the supplier (RDC) fails to deliver then the money will not be paid to him. This therefore means that TANESCO (and the government by extension) have covered themselves well against any possibility of Richmond failing to deliver goods, Dr. Kimei said in part, clarifying earlier press reports that his bank had covered the US firm.
Further responding to queries about his companys involvement in the deal, Dr. Kimei retorted: �Who told you Richmond were our customers? Our customers on the contrary are TANESCO.�
To cover the state utility firm against non-delivery of the turbines, the CRDB has a $100m (or 130bn/-) letter of credit on the strict understanding that the goods are delivered.
In that case, he said, the money will not be paid to the suppliers. They will only be paid if they deliver according to the purchase agreement, Dr. Kimei said in a written statement to THISDAY.
Kimeis explanation comes in the wake of mounting criticism against the bank and Ministry of Energy and Minerals for contracting the US firm to supply TANESCO with power supply even after it had failed to beat the deadline for importing and installing a 20MW gas turbine earlier this month.
Investigations by THISDAY reveal that its not the first time that the RDC had failed to deliver on projects contracted by the power utility firm: only last year, it failed to file a feasibility study on the Dar es Salaam-Mwanza oil pipeline � and subsequently lost out on a tender floated then.
It was also reported to have failed to meet tender specifications for the supply of gas fired turbines � again forcing TANESCO to cancel a tender for the supply of the same.
Reliable sources say that the RDC is now one among four firms to supply gas turbines to TANESCO as a matter of urgency because all the other bidders, who included Rousant International of South Africa, Renco Spa of Italy and Gapco Tanzania Ltd, did not meet the tender specifications.
The RDC is jointly owned by a Tanzanian-born businessman, Mohammed Gire and Pakistani economist, Mohammed Huque.
In its bid, the RDC couldnt set a date, or even commit itself, as to when their gas turbine power station would be installed or what the tariffs are likely to be, the sources told THISDAY.
When first contacted for comment a week ago, Dr Msabaha dithered: You better come to my office. I dont give interviews over the phone.
But when THISDAY visited the ministers office, his aides demanded a written questionnaire. However, the minister has yet to respond to the written questions.
THISDAY REPORTER
Dar es Salaam
A local banking giant, CRDB Bank, has moved in to provide a safety net for the importation and installation of gas turbines on behalf the state-run Tanzania Electric Supply Company (TANESCO), THISDAY has learnt.
The importers, Messrs Richmond Development Corporation RDC) of Houston, United States, apparently couldnt get a bank guarantee after failing a due diligence test back home � and subsequently failed to open a letter of credit to facilitate importation of the turbines � until the CRDB came along.
However, CRDB Managing Director, Dr Charles Kimei is categorical that his bank isnt covering for the RDC, which he says are not the banks clients.
An LC is opened to protect the importer, so that if the supplier (RDC) fails to deliver then the money will not be paid to him. This therefore means that TANESCO (and the government by extension) have covered themselves well against any possibility of Richmond failing to deliver goods, Dr. Kimei said in part, clarifying earlier press reports that his bank had covered the US firm.
Further responding to queries about his companys involvement in the deal, Dr. Kimei retorted: �Who told you Richmond were our customers? Our customers on the contrary are TANESCO.�
To cover the state utility firm against non-delivery of the turbines, the CRDB has a $100m (or 130bn/-) letter of credit on the strict understanding that the goods are delivered.
In that case, he said, the money will not be paid to the suppliers. They will only be paid if they deliver according to the purchase agreement, Dr. Kimei said in a written statement to THISDAY.
Kimeis explanation comes in the wake of mounting criticism against the bank and Ministry of Energy and Minerals for contracting the US firm to supply TANESCO with power supply even after it had failed to beat the deadline for importing and installing a 20MW gas turbine earlier this month.
Investigations by THISDAY reveal that its not the first time that the RDC had failed to deliver on projects contracted by the power utility firm: only last year, it failed to file a feasibility study on the Dar es Salaam-Mwanza oil pipeline � and subsequently lost out on a tender floated then.
It was also reported to have failed to meet tender specifications for the supply of gas fired turbines � again forcing TANESCO to cancel a tender for the supply of the same.
Reliable sources say that the RDC is now one among four firms to supply gas turbines to TANESCO as a matter of urgency because all the other bidders, who included Rousant International of South Africa, Renco Spa of Italy and Gapco Tanzania Ltd, did not meet the tender specifications.
The RDC is jointly owned by a Tanzanian-born businessman, Mohammed Gire and Pakistani economist, Mohammed Huque.
In its bid, the RDC couldnt set a date, or even commit itself, as to when their gas turbine power station would be installed or what the tariffs are likely to be, the sources told THISDAY.
When first contacted for comment a week ago, Dr Msabaha dithered: You better come to my office. I dont give interviews over the phone.
But when THISDAY visited the ministers office, his aides demanded a written questionnaire. However, the minister has yet to respond to the written questions.
