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What Richmond got from the big rip-off

Discussion in 'Jukwaa la Siasa' started by Iteitei Lya Kitee, Nov 12, 2009.

  1. Iteitei Lya Kitee

    Iteitei Lya Kitee JF-Expert Member

    Nov 12, 2009
    Joined: Jan 2, 2008
    Messages: 589
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    [FONT=&quot]What Richmond got from the big rip-off [/FONT]
    [FONT=&quot]THE controversial Richmond Development Company LLC tried to rake in more than $115m
    (approx. 150bn/-) from the government under dubious circumstances within two years of its presence in Tanzania, it has been established.

    Government sources have told THISDAY that while the company targeted to squeeze more than $100m out of the government via its later-discredited emergency power supply contract, it ended up receiving around $46m (approx. 62bn/-).

    This however, still represents a hefty profit for Richmond, considering that the company spent just $30m to install a 100-megawatt power plant in Dar es Salaam.

    According to the government sources, Richmond was subsequently paid more than $42m in the form of capacity and energy charges under its two-year contract signed in June 2006.

    The government also paid an additional $4,865,000 (approx. 6bn/-) to Richmond being costs of airlifting some of the power generators, consumables, and other accessories from the United States to Tanzania.

    While Richmond invoiced the state-run Tanzania Electric Supply Company (TANESCO) for the huge air freight bill, what it actually brought from the US were only 20MW of power generating sets, out of the total contractual requirement of 100MW.

    In other words, the $4.8m Richmond shipment airfreighted from the US to Tanzania at government expense comprised only one-fifth of what was actually needed and had been agreed by the two parties in the contract.

    Moreover, various logistical experts have hinted to THISDAY that the amount of money paid was inflated by almost 10 times of the actual freight costs for the shipment in question.

    ”There are a number of factors that affect the cost of air freight, such as cargo size and weight, origin, destination, and also the type of commodity being shipped,[/FONT]
    [FONT=&quot]�[/FONT][FONT=&quot] explained one seasoned government logistics man, adding:

    [FONT=&quot]�[/FONT][FONT=&quot]But in this case...for Richmond to charge the government in excess of $4.8m as air freight costs for bringing just a[/FONT][FONT=&quot] small fraction of the power plant from America to Dar es Salaam...that is totally absurd. It’s daylight robbery.”

    It is understood that while the power generators brought by Richmond from the US had a capacity of just 20MW, the remaining 80MW power generating sets were sourced from South Africa.

    A government technical team was sent to Cape Town, South Africa in December 2006 to assess the trailer-mounted turbines, and is said to have discovered some of the equipment to be rusty. This team included senior officials from TANESCO and the Ministry of Energy and Minerals.

    This was after Richmond had - just six months after signing the emergency power generation agreement with the government (through TANESCO) and subsequently failing to come good on it - abruptly re-assigned it to Dowans Holdings SA.

    Moreover, the Cape Town power generating sets were shipped to Dar es Salaam by sea - which is
    considerably cheaper than air freight.

    The formal termination of the contract between Richmond/Dowans and the government earlier this year (2009) paved the way for certain well-connected heavyweights behind the company to set in motion yet another plan to squeeze an additional $69m (approx. 91bn/-) from the government.

    This apparently involved selling the used 100MW power generators to the government outright.

    The plan was pushed forward from the outset by both Energy and Minerals Minister William Ngeleja and TANESCO Managing Director Dr Idris Rashidi, with prominent opposition legislator Zitto Kabwe chipping in with his personal backing. All this was despite the whole idea being totally in violation of the country’s own public procurement regulations.

    Eventually, it was only the fierce opposition to the proposal mounted by the parliamentary energy and minerals committee chaired by William Shellukindo, for one, that blocked it from going ahead into the implementation phase.

    Years before, a Cabinet decision for the government to similarly purchase 100MW power generators from external suppliers had been overturned under controversial circumstances, eventually leading to the emergency power generation lease contract being awarded to Richmond/Dowans.

    Then prime minister Edward Lowassa and senior ministers Nazir Karamagi and Dr Ibrahim Msabaha all resigned their Cabinet positions last year as a direct result of the findings of the parliamentary probe team on the Richmond scandal. Also heavily implicated in the same findings was Igunga Member of Parliament Rostam Aziz, a prominent businessman-cum-politician.

    All four retain their seats in the National Assembly, albeit as backbenchers.[/FONT]