Tuesday, 1 July 2008

Richmondgate: Feedback from the Gov


(SOURCE: Guardian, 2008-07-01 10:57:49. By Bernard Mapalala)
The curtain has finally fallen on Dowans, the controversial firm that has been pocketing a windfall 183m/-a day through a dubious power generation deal that has sparked a hot debate that still rages in Parliament.

Tanesco managing director Dr Idris Rashid announced yesterday that the power utility company had decommissioned the services of Dowans Tanzania Limited with effect from August 1, 2008.

Dr Rashid said: ``In regard to the whole process that relates to the agreement between Richmond Development Company LLC and Tanesco, which was signed on June 23, 2006, the Tanesco Board of Directors decided to seek professional advice on the legality of the contract.``

He added that a local legal firm was commissioned to undertake the task.
He said the legal consultants came with the following findings:

-The whole methodology that was applied in entering the contract with Richmond Development Company LCC violated the Public Procurement Act of 2004.

-Due to that violation, the contract between Tanesco and Richmond Development Company LLC was null and void, thus lacked legal mandate.

-It was also established that even if the agreement had been valid, the transfer of contract from REDVCO in place of Richmond Development Company LCC to Dowans Holdings SA Limited and eventually Dowans Tanzania Limited did not abide to the terms of the contract and was therefore illegal.

It should be noted that the agreement was made between Richmond Development Company LCC and Tanesco and not between REDVCO and Tanesco.

``Due to the noted anomalies, it was advised that we should decommission the services of Dowans Tanzania Limited,`` Dr Rashid said.

He added that the Tanesco Board of Directors, taking into account the recommendations of the legal consultants, agreed with the findings and forwarded their proposals to the Ministry of Energy and Minerals.

On June 29, the minister of Energy and Minerals, accompanied by ministry officials, met with the Board of Directors and the Tanesco management and deliberated in depth over the issue.

``The meeting decided to decommission the services of Dowans Tanzania Limited by August 1, 2008,`` he announced.

He said Tanesco had already communicated the decision to Dowans Tanzania Limited.

Asked to shed more light on work that was undertaken by the local legal firm, Dr Rashid said the legal consultants had found out that REDVCO was established in Texas, USA, but, for the purposes of their contract with Tanesco, assumed the name of Richmond Development Company LLC.

He added that Richmond Development Company LLC was not registered anywhere and had no legal mandate to enter into any contract.

On Dowans, Dr Rashid said the legal consultants traced the origins of the firm all the way to Costa Rica, where it was registered as having a capital of only USD 100 and had no references.

``Both these companies (Dowans and Richmond Development Company LLC) were dubious and were shrouded in mystery,`` he said.

Explaining why they had given Dowans Tanzania Limited up to August 1 to close shop, he said it was a gesture of politeness so that Dowans would get a chance to fold up and settle the claims of their employees.

Responding to a request to reveal the identity of people behind Richmond Development Company LLC, he said Tanesco was dealing with the managing director of Richmond, Mohammed Gire.

``The problem is that people know that Gire does not have the financial capacity to run such a business. There are a lot of questions as to how he was awarded this contract and who are the persons behind him?because he only owns an internet cafe` Dr Rashid said.

Pressed to name individuals who were transacting with Tanesco on behalf of Dowans, he named them as Henry Surtees, who was the company representative, and managing director Guy Picard, who rarely visited Tanesco. Both are foreigners.

On whether the impact of Dowans withdrawal from power generation would be felt by Tanesco, Dr Rashid said: ``Their absence won't be felt.``

He added that Downs Tanzania Limited were generating 100MW and now Tanesco had already installed another 100MW power generating plant of its own at Ubungo, Dar es Salaam.

Asked whether Tanesco was mulling over the possibility of purchasing the Dowans plant, he said the possibility was very slight as such an arrangement ``will not help this nation.``

He said Dowans were supposed to move all their equipment from the site now that the contract was no more.

When Dr Rashidi was queried if Tanesco was now going to shake off its back against other cost centres like the Aggreko, IPTL and Songas capacity charges payments, in accordance with recommendations of the House probe team, he declined to give any comments.

The Tanesco chief, in response to another question, said the decommissioning of Dowans` services was just the first step among those recommended by the legal firm. He said a series of legal measures were liable to be taken.

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Richmond Development Company LLC, until then falsely known as a US firm, was awarded a contract on June 23, 2006 to provide 100MW of emergency power generation, as Tanzanian electricity supplies were affected by low rainfall and low water levels at the reservoirs that supply the country?s main hydro schemes.

According to the Public Procurement Regulatory Authority (PPRA) there was remarkable `political influence` and interference by `higher authorities` in government in the awarding of the tender to Richmond.

PPRA findings show that the power utility company (Tanesco) had initially identified two bidders out of the short-listed eight - Renco SPA of Italy and Real Energy of UK - more relatively more responsive to the bid requirements than Richmond Development LLC.

Other short-listed companies included, Aggreko International (UAE), APGUM Company Limited (Germany), Globeleq Limited (UK), GAPCO (Tanzania) Limited and QUANTUS of Germany.

Although Tanesco had already rejected the company as incompetent, the government went ahead and picked Richmond without even conducting due diligence on the company.

It is believed that the selection of Richmond as the successful bidder was personally done by a top government leader on June 21, 2006.

Despite receiving USD 152,000 a day from the government, the company failed to provide electricity before the water levels had risen and power supplies had returned to normal.

Richmond's generating equipment did not turn up on time and the state power company Tanesco, recommended that the company`s services were no longer needed but the Prime Minister`s office advised the government to extend the deal, despite the fact that Richmond had sold its contract to another firm, Dowans Holdings, in 2007.

On November 11, 2007, the Speaker of the National Assembly formed a parliamentary select committee consisting of Harrison Mwakyembe, Eng. Stella Manyanya, Mohammed Mnyaa, Lucas Selelii and James Mtangi after members of parliament demanded investigation into circumstances that made the government enter into a contract with the controversial power-generating firm.

The committee was tasked to investigate who is Richmond Development LLC, who owns it, how the firm secured the power generating contract and
whether the method to acquire the contract was legal.
The team also evaluated Richmond`s contract with Tanesco.

The committee presented its report in parliament in February this year showing that the company had no experience, expertise and was financially incapacitated to carry on the task.

The committee reports also said the company had no share records or straight registration in the US or Tanzania and that the whole bidding process was marred by corruption and gross irregularities.

The committee advised the government to take action on all people involved in the controversial contract as well as terminating the contract with Dowans, the successor to Richmond company.

Following the committee`s recommendations, then Prime Minister Edward Lowassa, former minister for mineral and energy Nazir Karamagi and former minister for East African Cooperation Ibrahim Msabaha, who were all implicated in the scandal, resigned.

Dr Msabaha was the minister for energy and mineral when the controversial contract was signed in 2006.

The government had been paying Dowans USD 152,000 per day as capacity charges ever since.

(SOURCE: Guardian, 2008-07-01. 10:48:11
By Guardian Reporter)