Issue No.

004/11

Can Richmond, Dowans to Symbion power move Tanzania from dark ages?
As Tanzanians economy and citizens continue grappling with persistent power rations, life and doing business has become quiet tough yet it now appears the power blues are here to stay. Can Richmond, Dowans and Symbion move us from the dark ages?
Electricity shortage is one of the biggest challenges affecting Tanzania. The problem has been around for quite some years and now it is evident that permanent solutions needs to be found towards revamping the countrys power generation and steering away the country from darkness. In 1994, during President Ali H. Mwinyis tenure, Tanzania for the rst time embarked on emergency power generation as a solution to the deteriorating electricity situation. The government looked towards private power generation companies and the Independent Power Tanzania Limited (IPTL) project was the rst to join the cue. As fate was to befall it, before it started generating watts of power, IPTL, turned out to be a white elephant and money guzzler. Slowly, it became public that the contract which brought IPTL into Tanzania was faulty. The company had received substantive exemptions but also the cost of the company to Tanzania was exorbitant. Towards the end of 2005 it was discovered that the company was demanding approximately Tsh 6billion every month as capacity charge from Tanzanias Electricity Company (TANESCO), irrespective of whether it generated power or not. The contract required the government to pay this amount in capacity charges until 2015. Obviously, this was too high for TANESCO to pay, since the company was already broke and struggling to meet its nancial obligations. How was President Benjamin Mkapa involved in the power saga? Then came ANBEN Company. The company came to limelight during the third phase of Tanzanians leadership under President Benjamin Mkapa. ANBEN took over the formerly state owned Kiwira Coal

power plant promising to generate coal power. Like its predecessor, this project did not take off and later the companys ownership was controversial and surrounded with reports of corruption and abuse of power by a sitting President. Kiwira was later withdrawn from ANBEN management and some of the companys directors including a former Minister, at the time of publishing this brief, were facing charges of corruption and inuence peddling in Tanzanian courts. President Jakaya Kikwetes regime dominated with power blues The fourth era of President Jakaya Kikwete has been dominated with hot debates and twists in the quest for emergence power generation. Indeed, it is this phase that has experienced the highest number of emergence power solution projects. Most of these projects have been controversial and surrounded with reports of dubious corrupt deals and inuence peddling, tainting their credibility and ability to perform. Some of these companies are Richmond, Dowans Consolidated Ltd, Aggreko and lately Symbion power Ltd. The twists in the power generation companies have been mystical as has been the stories on how they secured the contracts in the rst place. Regardless of the continuous shift and transfer of names and contracts from one company to another, Tanzania still continues to face power shortages. The impact of power rationing on Tanzanias economy is devastating. The rampant power outages have affected production and industries and business go for long hours without power. The total cost of production costs has also increased as companies and industries spend a lot of money on petroleum fuel to run generators for power. The cost of power outage to small business like kiosks, super markets, barber shops, studios, and stationery shops has been enormous. As indicated by Brian Cooksey (June, 2011) in a study The Africa Power and Politics report: Public goods, rent and business in Tanzania citing The Global Economic Forums 2009 African Competitiveness Report nearly three-quarters of Tanzanian entrepreneurs identied electrical power as the most serious constrain on doing business, compared to the an average for African countries of 20 percent and a low income average of 30 percent. It is also estimated that the rampant power outages may be contributing towards the high costs of fuel (petrol and diesel) since more people are now forced to purchase more fuel to run the generators. Electricity leads among top 10 serious constrains perceived by entrepreneurs

Source: Global Economic Forum 2009 (Brian Cooksey, 2011: Public goods, rents and business in Tanzania, DfID and Irish Aid)
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As the electricity shortage becomes acute and the costs of lack of power bittes harder, citizens are asking, what is happening? There are questions in regards to the validity of the contracts that brought these companies into country on one hand and on the other, the cost involved in acquiring and maintaining the equipments for emergency power generation. The available reports indicate that the costs of power generation were inated and aimed at eecing the country. As stated in the Shadow Budget 2011/12 presented by the opposition camp in Tanzanias parilament; mfumuko wa bei unaongezeka kwa wastani wa asilimia 0.8 kila mwezi. Hali hii inaelezwa ni kutokana na ongezeko la bei za umeme, gesi na chakula (literary meaning that ination is increasing at a rate of 0.8 per month, following price increase in electricity, gas and food). Could corrupt procurement be a major cause for Tanzanias power blues? The procurement process for these companies has also been faulted as corrupt and bedeviled with lack of transparency. Insiders views that both corruption and incompetence (on the part of the politicians) and inefciency (on the part of bureaucracy) helped compromise the policy process Brian Cooksey (June, 2011) If calculated, the amount spent on subcontracting and paying these companies to supply emergence power Tanzania so far could enable TANESCO to accomplish bigger power projects that would generate power for many years to come. One sad thing to note is that most of these scandals that the Tanzanian energy sector has gone through had a hand of politicians. Subsequent reports (Parliamentary and Auditor Generals) shows top Tanzanian government ofcials and successive ministers in the Ministry of Minerals and Energy deliberately and for corruptive motives either sidelined or coerced the TANESCOs management to accept signing shoddy contracts with private emergence power generation companies. It is also said that the local TANESCO experts have been sidelined in some key decisions relating to emergence power generation and the countrys future energy needs. The Richmond and Dowans case have been the major widely discussed cases which show the extent to which the energy sector has been murky. Both of these companies were linked to big politicians, who may have proted out of the dubious and suspicious deals, funded by Tanzanian taxpayers money. The Richmond case was the ice breaker. It was Richmond case that led to the resignation of the rst Prime Minister in the fourth government, Mr. Edward Lowassa and other two ministers, Dr. Ibrahim Msabaha and Mr. Nazir Karamagi both from Ministry of Minerals and Energy. Their resignation followed the release of a parliamentary select committees ndings that was presented in the parliament by Dr. Harrison Mwakyembe, a member of parliament from Kyela. The report found that the Prime Minister and his ministers had corruptly inuenced the tendering process and led the government into signing a contract with a brief case company whose track record and capacity to generate power was nonexistent. The parliamentary report recommended the Prime Minister, his ministers and key government ofcials be disciplined for outing tendering laws.

How did shadowy Richmond evolve into Tanzanias Nightmare? Following, the Parliamentary Committee report, Richmonds contract was terminated for failure to deliver services and yet at the same time continue invoicing government for payment. Seeing that the ground had been tilted against its favour, Richmond opted for a soft exit by selling its contract to a controversial company, Dowans Holding SA. Dowans was tasked with ring up the gas generators imported into the Country and producing power. A task which had proven a failure under Richmonds contract. Shortly, after its takeover of Richmonds Contract, Dowans Holding SA was thrown into controversy. The true ownership and track record of Dowans SA was unknown. Like its predecessor Dowans Holding SA was linked to famous Tanzanian politicians, specically Mr Rostam Aziz and his political associates. However over three years, Rostam Aziz, denied being associated with Dowans. But, on January 24th 2011 the Corruption Tracker accessed a Power of Attorney document that gave legal powers of the company to Mr. Aziz to act in Dowans interest. The document reads in part; It is resolved to appoint Rostam Aziz, who accepts, as the Companys Attorney-in-fact to manage the Companys affairs outside the Republic of Costa Rica. The appointment was made on November 28th 2005. The jig saw puzzle over the ownership of Dowans ended after the arrival of a Yemenian Rtd Brigadier General Al Adawi who claimed ownership of the company and said he had come to inspect the Dowans machines. Mr. Adawi declined being taken photographs and only spoke to a few journalists handpicked from specic media houses. There was no genuine reason given for his decline to be taken photographs. Whether intentional or not his actions and conduct were suspicious and raised more questions whether the person who came to Tanzania was the actual Mr. Al Adawi or an imposter? Mr. Adawi said he had established interest in Tanzanias telecommunications sector and that Dowans had an aim of providing a high quality state of the art bre optic network throughout the country. I needed someone to represent and promote my planned bre optic project on a regular basis in Tanzania. Hence I asked my friend of many years, Mr Rostam Aziz, to assist and set up the project. Since Mr Aziz had sufcient authority to represent my company, in 2005, I granted him power of attorney he said. According to Mr Adawi, the project did not materialize after Tanzania secured assistance from China to set up the net work. But in 2006 when Tanzania was facing serious power shortage, Mr Rostam Aziz approached him in 2006 and persuaded him to come to the companys assistance. It was then that Dowans agreed to take over from Richmond, Mr Adawi said, and using sections from the ICC ruling to justify that the contract between Tanesco and Dowans was neither awed nor was his

companys performance unsatisfactory. Mr Adawi was in the Country on what he described as two pronged mission to clear the misinformation about Dowans SA Holdings and to nd an amicable solution on the payment of USD64Billion (Tsh 94billion) ICC award to Dowans by the Tanzanian government. Was ICCs payment legitimate and was Adawi a bonade beneciary? An analysis of Dowans documents and Mr Adawis visit however reveal some questions. From the documents, the power of Attorney to Mr Rostam Aziz was granted in 2005 but Tanzanias emergence power problems and signing of a contract between Tanesco and Richmond was entered in 2006. The controversy surrounding Dowans and its takeover of Richmonds contract didnt come to light until 2006 and 2007. In the documents Mr Rostam Azizs names appear to have been type written with a different font and appear to have been super imposed on someone elses name. The documents were signed by Costa Ricans Mr Bernai Zamora Arce and Mrs Noemy del Carmen Cespedes and notarized by a Notary Public identied as Carlos Alberto Echeverria Alfaro, but there is no ofcial stamp from the Public Notarys legal rm. Surprisingly, the Costa Rican Government Register of Companies had written to Tanzanias parliament stating that there was no such a Company (Dowans) in Costa Rican company register, so was this document a forgery? So the emerging question is, were the documents backdated to indicate that Dowans SA Holding was established in 2005? If the power of attorney was factually signed in 2005, did Dowans anticipate that its predecessor Richmond LLC would fail to deliver on its contractual obligations with Tanesco and this contract would be taken over by Dowans? Why did Mr Rostam Aziz remain silent on this matter for so long and deny any engagements with Richmond and Dowans SA Holdings, at one point claiming that he was a victim of a political smear campaign? Mr Adawis visit also raised more questions. At the climax of Dowans saga, Mr Adawi had been reported by the media as having denied any knowledge or involvement with Dowans SA Holdings, why did he make a u-turn on the matter and even conduct a name clearance visit to Tanzania after the ICC ruled in favor of Dowans? Mr Adawi claims the power of attorney granted to Mr Rostam in 2005 were in regards to his telecommunication and bre optic business but the documents availed to the Tanzania Corruption Tracker system (CTS) indicates to the contrary. The power of attorney granted to Mr Rostam Aziz was extensive, never mentioned any bre optic business and were never signed by Mr Adawi. From these facts, was Mr Adawi the real owner of

Rtd. Brigadier General Al Adawi

Dowans SA Holding or a con man and hidden treasure hunter

on money minting mission to Tanzania? Dowans SA Holdings had been at the centre of a legal dispute with the Tanzanian government in regards to payment of a whopping 94 bn/- (Equivalent to USD 63 million) for breach of contract whose source was technically described by legal scholars as awed ab initio. The contract involved supply of emergence power to Tanzanias Electricity Supply Company (Tanesco) and sale of power generating turbines which was blocked by the Tanzanian government. The appointment of Mr Rostam Aziz into the board and his motive of joining the board of this company were also surrounded with controversy. According to ofcial documents availed to the Tanzania Corruption Tracker System (CTS), Mr Rostam Aziz was appointed and granted power of Attorney to represent Dowans interests in 2005. The Dowans Holdings S.A board of directors resolution appointing Mr Rostam Aziz as Attoney-in-Fact was signed by the Boards president Mr Bernal Zamora Arce and its Secretary, Mrs Noemy del Carmen Cespedes Palma. The resolution grants Mr Rostan Aziz extensive powers to manage the companys affairs outside the Republic of Costa Rica. It is resolved, to authorize as they are hereby authorized, Mr Bernal Zamora Arce and Mrs Noemy Del Carmen Cespedes Palma, directors of the company to grant, in the name and on behalf of the company, a power of attorney in favour of Rostam Aziz according to the following powers To transact, manage, carry on and do all and every business matters and things requisite and necessary or in any manner connected with or having reference to the business and affairs of the Company and for such purposes, to conduct all correspondences appertaining to such business and affairs. Mr Rostam had powers to create, sign, execute, deliver, register, acknowledge or perfect in any way required by any applicable law such things as mortgages, charges, liens or encumbrances over the assets and any ancillary assets, properties and developments so acquired by the company for such consideration and on such terms and subject to such conditions as the Attorney shall consider necessary or desirable in his absolute discretion. The resolution gave Mr Rostam powers to commence, prosecute, enforce, defend, answer or oppose all actions and other legal proceedings and demands touching any of the matters aforesaid or any other matters in which the company is or may hereafter be interested or concerned Mr Rostam also had powers to open and close bank accounts, to deposit funds and securities in our accounts whether existing or to be opened, to dispose of any funds or securities deposited in the proper ofce and or registry in any part of the world and to procure to be done any and every other act

Mr. Rostam Aziz

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and thing whatsoever which may be in anywise requisite or proper for authenticating and giving full effect to this power of Attorney as fully and effectually as could the company. By reading through these provisions, Mr Rostam Aziz became a de facto owner of all Dowans Holdings SA operations in Tanzania. According to the documents, the powers of Attorney were to remain valid until notice of revocation was delivered to the Attorney. There is no evidence to show that these powers of attorney were either revoked or altered when the controversy surrounding Dowans SA Holdings operations and its involvement in a controversial takeover of Richmonds emergence power supply contract with Tanesco and the Tanzanian government came to the limelight in 2006. So what and where next for Tanzanias power future? Shortly, before the Dowans saga was cleared, the contract was transferred to a new American company, called Symbion Company Ltd. The selling of Dowans to Symbion raises a number of questions on the deal. But most of all, why did Symbion buy power plants owned by Dowans, whose ownership and legitimacy and business, it knew was now clearly controversial and image tainted before the public? Was this a good deal and what were the stakes? The visit by the US Secretary of state Ms Hillary Clinton to the power plants and her blessing of the company also raised more questions. Why was a US top diplomat interested in the affairs of a small company like Symbion? Why did she choose to visit the site even after she knew that the history to the company was tainted and dotted with reports of corruption? Does Hilary Clinton have stakes in the company? Symbion has its headquarters in Texas, Hilary Clintons home state. As Hilary Clinton departed for home and Symbion power appears to be positioning itself to run the Dowans power plant, the emerging question, is can Symbion do what others have failed to do? Can Tanzanians put their trust in Symbion as savior or continue waiting in agony for 2015 as when the Countrys power blues will history? How much will the US Secretary of state Ms Hillary Clinton country have lost in foregone economic growth by then? Will the Energy Minister pay the price?

Pending/prospects projects
Name of the Project Ruhudji hydropower Plant Mchuchuma Coal red Power Plant-Phase I Mchuchuma Coal red Power Plant-Phase II Rusumo Falls (33% for Tanzania) Stiglers Gorge Power Project Phase I Stiglers Gorge Power Project Phase II Stiglers Gorge Hydro Power Project Phase III Kakono Hydro Power Project - 53 MW Upper Kihansi with addition at Lower Kihansi Hydro Power Project Mpanga Hydro Power Project Masigira Hydro Power Project Songwe Hydro Power Project Taveta - Mnyera Hydro Power Project Igamba Hydro Power Project Rumakali hydropower Plant New Kinyerezi Gas Based Power Plant Total MW produced MW Produced 358 MW 200 MW 200 MW 62 MW Location Njombe District, Iringa region Ludewa District, Iringa region Ludewa District, Iringa region Tunduma, Kigoma Ruji District, Pwani region Ruji District, Pwani region Ruji District, Coast region Kagera region Ruji District, Coast region Description To generate power using Water (Hydro) To generate power using Coal fuel To generate power using Coal fuel To generate power using Water (Hydro) To generate power using Water (Hydro) To generate power using Water (Hydro) To generate power using Water (Hydro) To generate power using Water (Hydro) To generate power using Water (Hydro) Time Frame 2015 2018 2011 Beyond year 2015 or earlier Beyond earlier Beyond earlier Beyond earlier Beyond earlier Beyond earlier year 2015 or year 2015 or year 2015 or year 2015 or year 2015 or

300 MW 600 MW 1200 MW 53 MW 120 MW

144 MW 118 MW 340 MW 145 MW 8 MW 222 MW 240 MW

Ruji District, Coast region Ruhuhu Songwe, Mbeya region Taveta, Mnyera Igamba Makete District, Iringa region Kinyerezi, Temeke District Dar es Salaam

To generate power using Water (Hydro To generate power using Water (Hydro) To generate power using Water (Hydro) To generate power using Water (Hydro) To generate power using Water (Hydro) To generate power using Water (Hydro) To generate power using natural gas

Beyond earlier Beyond earlier Beyond earlier Beyond earlier Beyond earlier 2018 2013

year 2015 or year 2015 or year 2015 or year 2015 or year 2015 or

4310 MW

Source: Tanesco website

Beyond year 2015 or earlier

This brief was prepared by Michael J. Dalali on behalf of Agenda Participation 2000(AP2000) based on information obtained from the Tanzania Corruption Tracker System (CTS) whose website is www.corruptiontracker.or.tz AP2000 is a Tanzanian Non Governmental Organisation engaged in promoting good governance and hosts the Tanzania Corruption Tracker System. The CTS is supported by the Finish Embassy and the Swiss Agency for Development Corperation (SDC)

Agenda Participation 2000 5th Floor, Ubungo Plaza, P.O Box 55756, Dar es Salaam, Tanzania Tel: + 255 22 2460036/ 2460039, Fax: + 255 22 2460040, Cell: 0754 844410 Email: info@corruptiontracker.or.tz Website: www.corruptiontracker.or.tz

ISSN No. 978-9987-9441-3-2

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