Court hears IPTL case

Independent Power Supply Tanzania Limited (IPTL) minority shareholder, VIP Engineering and Marketing Ltd, has outlined issues for other parties to address for the company to withdraw an ongoing case at the Court of Appeal.

VIP Engineering had sued IPTL at the High Court in 2002 and subsequently sought dissolution of the company, citing mismanagement and persistent conflicts with Mechmar, a Malaysian firm. 

In its September 21, 2012 submission at the Court of Appeal of Tanzania Dar es Salaam Registry, VIP Engineering and Marketing Ltd wants 125 million US dollars (about 200bn/-) from the 262.9 million US dollars (about 420.64bn/-) as payment by Camel Oil or any other investor that may be interested in the venture.

Part of the submission reads: "The payments from Camel or any other interested investor should also see the liquidator for other creditors getting 7.8 million US dollars; Mechmar/SCB should get USD 75m for its 70 per cent ownership."  Camel Oil has shown interest in the shares.

VIP also stipulates other conditions before it withdraws the case. They include  the government and Tanzania Electric Supply Company (Tanesco) to extend IPTL's Power Purchase Agreement (PPA) and generation licence for another term of 20 years.

"The government and IPTL liquidator should also release to the new investor 120 million US dollars from the Tegeta escrow account at the Bank of Tanzania (BOT)," reads part of VIP's submission. The Standard Chartered Bank Limited was also required to withdraw all cases against Tanesco and the government at International Centre for Dispute Resolution (ICSID) among other conditions.

The bank is the project finance lender to IPTL, having financed the construction of the 100MW power plant. But, Mechmar turned down all those conditions, arguing that all terms in the contract governing IPTL operations should remain the same.   

In a rejoinder, Mechmar Corporation, which owns a 70 per cent stake in IPTL, says the amount demanded by the minority shareholder is just too huge for someone who owns just 30 per cent of the total shares.

Mechmar asks the Court of Appeal to issue an order for invalidating the winding up petition, which, it said has been premature hence improperly instituted and entertained by the High Court in breach of Article 18 of the shareholders agreement and the provisions of the Law of Contract Act and Arbitration Act.
Source: The Daily News, 
Share on Google Plus

About Abduel Elinaza

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.