Caspian says Tancoal has failed to settle a $6.2 million (over Sh13 billion) payment claim accrued from leased mining equipment due to mismanagement of the company and its revenue, a source from Caspian told The Citizen this week. Caspian, therefore, wants the company be placed under an administrator to ensure that revenue accrued from Tancoal activities are well managed for the interests of debtors and shareholders, the source further said.
Dar es Salaam. Caspian, a local mining contractor, has said its decision to demand for the appointment of an administrator to manage Tancoal does not mean that it wants to control the coal mining firm.
Caspian says Tancoal has failed to settle a $6.2 million (over Sh13 billion) payment claim accrued from leased mining equipment due to mismanagement of the company and its revenue, a source from Caspian told The Citizen this week. Caspian, therefore, wants the company be placed under an administrator to ensure that revenue accrued from Tancoal activities are well managed for the interests of debtors and shareholders, the source further said.
On Monday Intra Energy Tanzania Corporation (IETL), which is the parent company of Tancoal, issued a statement revealing that Caspian has gone to court to seek the appointment of an administrator after Tancoal failed to pay Caspian billions of shillings in a contractual dispute. The legal dispute is in the Commercial Division of the High Court and is set for hearing later this month.
“It is true that we have gone to court to seek the appointment of an administrator to manage Tancoal because we believe the company has failed to pay our debts due to mismanagement. We do not seek control of Tancoal. The fact that we have proposed the name of the administrator does not mean that we want to manage it ourselves or to control its affairs,” the source said.
In March 2017 the two companies had entered a machine lease agreement in which Caspian was to provide Tancoal with mining equipment. But Tancoal had failed to pay Caspian about $6.2 million (more than Sh13 billion).
Intra Energy, which is listed on the Australian Stock Exchange, owns 70 per cent of shares in Tancoal, while the government of Tanzania, through the National Development Corporation (NDC), owns the remaining 30 per cent.
The decision to contract Caspian came after a government order that coal production at the Ngaka coal mine in Ruvuma Region should be improved to meet rising demands.
“We signed the deal with Tancoal in March 2017 on condition that we will be paid after government taxes and salaries have been paid, but as we speak, they only cleared the invoice of the first month,” says the source within Caspian.
Management issues with Tancoal were also raised in the 2016/17 report of the Controller and Auditor General (CAG) who among other things recommended that NDC should enhance supervision in the operation of the joint venture to ensure that all financial reports are correct and realistic.
The CAG report has it that there were some ineligible expenditure amounting to Sh940.3 million and $3.36 million respectively that were incurred by Tancoal.
According to the report, review of payment vouchers for three years (2014, 2015 and 2016) noted that Tancoal incurred expenditure amounting to Sh940.34 million which was not directly related to mining and other operational activities in accordance with the joint venture agreement.
“More scrutiny of the same indicated that since 2011 to 2016 a total of $3.36 million was paid to meet expenses for mining operations for Tanzacoal in Malawi which is an IntraEnergy Subsidiary Company, whose activities do not relate to Tancoal’s operations,” read the audit report.
