2009-11-02 Govt's IPTL pledge fails to materialise Pedestrians work past the IPTL power plant in Dar es Salaam yesterday. The plant did not start producing power yesterday as promised by the Government for reasons that were not clear. By Florence Mugarula and Bernad James THE CITIZEN The IPTL power generators yesterday did not begin power production as earlier promised by the Energy and Minerals Minister, Mr William Ngeleja in a bid to curb power rationing which has been hitting the country for one month now. The minister toured the power plant in Tegeta area two weeks ago and gave the assurance but a spot check yesterday revealed that was not the case. There was no official available to shed light on what may have caused the hitch as the compound was secured with security personnel allowing no one inside. Telephone calls to Minister Ngeleja, his deputy Adam Malima or the Chairman of the Parliamentary Committee on Energy and Minerals William Shelukindo to find out if they were aware of the problem were futile as all their lines were not accessible. Tanzania Electric Supply Company (Tanesco) managing director Dr Idris Rashid on his part declined comment and referred any queries to the company's communication manager Ms Badra Masoud who was however not available. The IPTL power supply was expected following directives by President Jakaya Kikwete clearing for a quick contract to ease current electricity rationing that affected all areas served by the national grid. Engineers last week started preparing the IPTL plant ready for the service while heavy furnace oil used at the factory arrived last week. Reports by the state radio-TBC1 on Friday quoted government sources as confirming that some Sh15 billion had been released to IPTL for the initial supply. However yesterday residents of Salasala where the IPTL plant is located told The Citizen at the scene that they have not heard the noise that usually accompanies the generators when they are in operation, suggesting even test runs may have not been carried out. A guard at the plant who did not want his name to appear in the paper said there were no any officicals in the office and that the machines were off. He said cleaners and other low ranking attendants were the only people inside. There is no any officer here, even technicians are not available, after all nothing is going on, the generators are not operating and we have no idea when the production starts, said the guard. Efforts to reach Tanesco lawyers and those of IPTL to establish if their ongoing dispute in court had affected the production agreement did not yield any meaningful explanation. One of the lawyers representing a minority party in the case and who sought anonymity expressed surprise that the plant was not operating. "Something must have happened. All I know is that IPTL was meant to start supplying electricity to Tanesco today (Yesterday)" he said. Early last week there were queries in court by legal officials representing IPTL's bankers, Standard Chartered (Hong Kong) over the planned move to generate power while a dispute with Tanesco was still pending in court. The party asked the High Court in Dar es Salaam to bar the plans arguing it would infringe on a status quo slapped by the same court until the principal case was heard and determined. IPTL and Tanesco are currently embroiled in a legal tussle over billions of shillings that were paid to the private company in capacity charges in their previous seven-year business relation that was, however, abruptly terminated by Tanesco last year. The state power agency is disputing Sh3.3 billion that was paid every month to IPTL over the period in extra charges not related to power sale. But a falling supply of electricity owing to a growing demand and poor generation at Tanesco;s traditional hydro-electric dam sources has forced the government to seek for an emergency arrangement with IPTL's appointed administrator. VIP Engineering and Marketing Company, the minority shareholder in IPTL is separately opposing the prayer by Standard Chartered Bank, saying the bank has no legal right to object the reactivation of the power plant. This is contained in an application VIP filed on Friday, asking the court to order the bank to deposit $5,625,883 (over Sh7.4 billion) or not less than $3,375,530 (over Sh4.4 billion) as security cost before a petition the bank filed in the same court for an administration order is heard. In the application, VIP also wants the court to grant them a permission to join the provisional liquidator of IPTL. The application came just a day after Standard Chartered Bank strongly opposed willingness by the administrator general to switch on the diesel power plant in Dar es Salaam to ease the country's power crisis. Counsel for the bank, Mr Charles Morison on Thursday complained that allowing the plant to restart commercial operations was contrary to the court order. Last December Justice Katherine Oriyo appointed an administrator general as provisional liquidator of the company pending determination of the winding up application filed by VIP. Justice Oriyo then ordered the liquidator to protect the company against further deterioration and placed all affairs and assets of IPTL under the management of the liquidator. Except for the legal battle, The Citizen has established that all indication was that IPTL was willing to enter into the new contract with Tanesco for a potentially lucrative business deal for the interim electricity supply. Our sister paper Sunday Citizen revealed yesterday that the Malaysian owned firm would be handed a Sh103.5 billion deal to generate power for six months when Tanesco's own power generation will have stabilised. The staggering figure was contained in a letter from Tanesco's managing director Dr Idris Rashidi to the Ministry of Energy and Minerals that is coordinating the contract. He said the total interim running cost would be $77.8 million (Sh103.5 billion), comprising $11.3 million (Sh15 billion) fixed interim cost for operating the plant and $66.5 million (Sh88.5 billion) other charges that include the cost of buying the generated power. The figure is Sh50 billion over and above what IPTL would have earned for the same period of six months when it was not at war with Tanesco. The firm used to pocket Sh3.3 billion in capacity charges every month and another Sh4.5 billion in energy charges before the dispute with Tanesco arose. The total earnings in the past therefore worked out to only Sh48 billion over the same six months. Last month Minister Ngeleja said the switching on of the Independent Power Tanzania Limited (IPTL) generators and commissioning of a new 45MW gas-powered plant owned by Tanzania Electric Supply Company (Tanesco) would ensure the availability of enough power to end the rationing, which began earlier October.