STATE MINING CORPORATION ELBOWED OUT OF 14-MILLION TONNES OF COAL DEPOSITS. THISDAY REPORTER Dar es Salaam, 14th August 2007
KIWIRA Coal and Power Limited, whose majority shares are owned by a private company set up by ex-president Benjamin Mkapa and his energy and minerals minister, Daniel Yona, was controversially given control of an additional area with lucrative coal deposits that was formerly owned by the government.
Our sources say the Kabulo Coal Prospect also in Mbeya Region where the Kiwira mine is located was wrestled away from the control of the State Mining Corporation (STAMICO), a government-owned agency, and then handed over ’on a silver’ platter to Kiwira owners.
Previous studies commissioned by the government itself have shown that the Kabulo area, which lies within the East African rift valley system in south-western Tanzania, has proven reserves of up to 14 million tonnes of coal.
’’The government had in the past borrowed millions of dollars from the World Bank to study the Kabulo area. A British mining consultancy firm discovered that Kabulo had the potential to generate up to 400 megawatts of electricity from its rich coal reserves,’’ a well-placed government source told THISDAY.
He added: ’’On the basis of findings of this study, it was then agreed that TANESCO (Tanzania Electric Supply Company Limited) should start producing power from Kabulo by the year 1995. This plan was mysteriously shelved only to be revealed now that the Kabulo area has been given to owners of Kiwira on a silver platter.’’
Before Kabulo coal reserves were snatched from its ownership, STAMICO had been actively promoting the area with the intention of attracting a strategic investor to develop a coal-fired power station.
Another highly-placed government source said officials at STAMICO were ’’shocked by the decision of the ministry of energy and minerals to hand over the vast coal resources at Kabulo to the largely privately owned Kiwira company.’’
At least 85 per cent of the shares in Kiwira Coal and Power Ltd are owned by Tanpower Resources Limited, a little-known private company formed in late 2004 by the then president and his senior cabinet minister apparently with the primary objective of taking over the previously state-owned Kiwira Coal mine.
The Tanzanian government currently retains just 15 per cent of the shares in Kiwira, which only last year entered into a controversial 20-year power supply contract with TANESCO.
When tabling his ministry’s 2006/07 budget estimates mid last year, the then Minister for Energy and Minerals, Dr Ibrahim Msabaha, announced in Parliament that the government had concluded negotiations with owners of the Kiwira Coal and Power Ltd to expand power generation capacity to 200MW by ’’using coal reserves at Kiwira and Kabulo.’’
Dr Msabaha, who has now been moved to the East African Community portfolio, declared in the National Assembly that the government, TANESCO and Kiwira owners had in March 2006 signed an agreement of intent for the development of the $271.8m (approx. 340bn/-) Kiwira coal-fired power project.
’’The process of getting a formal government approval for the construction of the (Kiwira) project is already underway,’’ he added.
It has now emerged that the state mining firm was blocked from developing the Kabulo area, which was eventually given to Kiwira owners.
The state-run STAMICO was formed in 1972 by Government Notice No. 163 under the Public Corporation Act. It operates commercially on undertaking contract drilling services and investing in mineral exploration through mineral rights acquisition, grassroots exploration and joint venturing.
Investigations by THISDAY have already uncovered that Tanpower Resources swiftly assumed ownership of the previously state-owned Kiwira Coal mine after being registered by then president Mkapa and senior cabinet minister Yona, with very few other people in government even aware of what was actually going on.
Sources say details of the Mkapa-Yona company were deliberately made sketchy from the outset, with its operations and shareholding structure shrouded in such secrecy and mystery that only a handful of government functionaries, if any, knew the powerful forces behind the company.
It has also been suggested that the company’s file appeared to have been ’deliberately hidden’ at the Business Registration and Licensing Authority (BRELA) for several years and only resurfaced recently.
According to THISDAY findings, Tanpower Resources was officially registered on December 29, 2004, and within just six months had succeeded in acquiring the majority shares in the renamed Kiwira Coal and Power Ltd.
Less than a year after that, the Kiwira company entered into a huge contract with the state-run TANESCO for the supply of 200MW of electricity to the national power grid.
It has now been verified that Tanpower Resources was the joint brainchild of Mr Mkapa and Yona, formed during the later stages of the third phase government when one was still serving as president of the United Republic and the other as minister for energy and minerals, respectively.
At the time of the company’s establishment in 2004, its first listed directors were the then first lady Mrs Anna Mkapa; the then minister for energy and minerals Daniel Yona; Nicholas Mkapa (the president and Mrs Mkapa’s son); Joseph Mbuna (Nicholas Mkapa’s father-in-law); and Evans Mapundi.
Amongst many other things, some stated objectives of Tanpower Resources are to ’’carry on the business of miners of coal and iron, to process such coal and iron and generally treat, prepare, render marketable, sell and dispose of such coal and iron or by-products resulting therein in their raw or manufactured state.’’
The company was also licensed to ’’deal with coal mining in order to generate electricity for consumption and sale; to generate power generators, transmitters and general distributors; and to provide power and general projects management, project appraisers and consultants.’’
According to THISDAY findings, the multi-billion shilling contract between TANESCO and Kiwira Coal and Power Limited is now beginning to raise new questions regarding its potentially-damaging effects on the national economy, as delays continue to hamper the still-pending launch of the project.
In the light of renewed scrutiny of the contract details, there are now growing fears that the deal could eventually turn out to be another quagmire, with officials already drawing similarities with the infamous IPTL affair of 1995.
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