Govt reviewing Songas contracts, AG reveals

Dodoma. Attorney General Adelardus Kilangi told Parliament yesterday that his office has recalled contracts signed between State-run power utility Tanesco and independent power producer Songas for review following reports that the agreements contained dubious clauses.

Speaking during the winding-up of the debate for the Ministry of Energy budget yesterday, Dr Kilangi said his office would use the Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Act of 2017, which allows the government to review the contracts with investors.

Earlier on Thursday, MP Jesica Kishoa (Special Seats-Chadema) argued that the contract between Tanesco had elements of corruption.

She said even the Controller and Auditor General reports had raised queries on the contract but no action was taken by the government. “I think it involves a top government official who is untouchable,” she stated.

Dr Kilangi, elaborated that the contracts between the parties were complex and needed enough time to review thoroughly.

“In the main contract, there are other 42 sub-contracts with the firm. We will review them and advise the government accordingly,” said Dr Kilangi.

“As Ms Kishoa pointed out, the government is not getting the value per share even as it invested heavily in Songas,” he said.

The government owns 46 per cent shares through its shareholdings through Tanesco, Tanzania Petroleum Development Corporation (TPDC) and Tanzania Development Finance Limited (TDFL) in Songas Limited.

The company contributes 180 megawatts of power generated through natural gas from Songosongo to the national grid.

Globeleq, a UK-based independent power producer company, developing and operating power projects throughout Africa, owns 54 per cent of the shares in Songas Limited.

Last year, the company announced to have paid Sh11.6 billion in dividend to the government. In its last report the CAG said there were no documents that indicated the nature of government’s ownership structure in Songas Limited despite the same government having financed the Songas electricity production project by 73 per cent.

The CAG reports tabled in Parliament last month indicate that the total cost of the Songas project was euros 392 million (Sh1.1 trillion) out of which the government borrowed euros 235.1 million and invested in the project, according to the contract signed by the Tanzanian government, the European Investment Bank and Songas Limited seen by the CAG.

In addition to euros 235.1 million, the government also provided euros 0.6 million. It did not stop there. It again acquired a loan of euros 50 million that it gave to Songas in the On-Lending basis.

“The total investment made by the government in the [Songas] project amounted to euros 285.7 million which is equivalent to 73 per cent of the total project cost,” the Public Authorities and Other Bodies General Report tabled by the CAG in Parliament last week reads in part.