Dowans lawyer: Tanesco has to pay 17.6bn/- more

Former Dowans generators
The government will have to part with 17.6bn/- more in interest for a 14-month delay in paying Dowans Tanzania the 104bn/- compensation for breach of contract the emergency power firm entered with Tanesco in 2007, if the Court of Appeal decides in favour of the former.

According to an affidavit filed in the Court of Appeal by counsel for Dowans, Mr Kennedy Fungamtama (right), and seen by The Citizen yesterday, the debt has increased to $76 million (122bn/-) on November 20, this year, from $65 million (104bn/-) in September last year because it attracts 7.5 per cent interest in each day.

In 2008 the Tanzania Electric Supply Company Ltd (Tanesco) revoked a power generation contract that it entered with the Richmond Development Company Ltd in 2006 and which was later inherited by Dowans Tanzania Ltd after Richmond failed to generate emergency power to sell to Tanesco.

Dowans took the matter to the International Chamber of Commerce (ICC) tribunal that in 2010 ordered Tanesco to pay Dowans Holdings SA and Dowans Tanzania $65 million plus interest and costs after finding Tanesco guilty of wrongful termination of a power generation contract in 2008.

But Tanesco went to the High Court requesting it to block the payment. On September 30 last year, High Court Judge Elimian Mushi threw out Tanesco’s petition, saying he could not interfere with the findings of the ICC tribunal because the case was adequately addressed.

After failing in the High Court, Tanesco moved to the Court of Appeal. Dowans also filed a case at the same court to challenge Tanesco’s petition.

Yesterday, a panel of three Court of Appeal judges, namely Bernard Luanda, Natharia Kimaro and Catherine Oriyo were set to hear three applications lodged by Tanesco and Dowans but failed to proceed when it transpired that one of the judges had already heard the case previously.

 “For the interest of justice, we find it appropriate that Madam Justice Oriyo withdraw from hearing of the case which we adjourn until another panel is set up, “ said Judge Luanda.

The applications which were set to be heard yesterday included the one in which Dowans is asking the court to strike out the notice of appeal Tanesco filed with the appellate court in October last year after the High Court ordered the ICC award to be registered and enforced.

Mr Fungamtama wanted the notice be thrown out because the state-owned power company failed to lodge the notice within legally prescribed time.

“More than 60 days have passed since the decision was pronounced but no action has been taken to follow up the matter or take any other necessary steps to further the progress of the intended appeal,” argues Dowans in its application.Under Section 90 (1) of Tanzania Court of Appeal Rules, 2009, an appeal should be instituted within 60 days from the day a notice of appeal is lodged.

The Court of Appeal was also set to hear an application by Dowans seeking the revision of a ruling issued by the Commercial Division of the High Court in 2012.The third application which was scheduled for hearing yesterday was the one in which Tanesco is asking the court to temporarily stop implementation of an order to pay the $65million pending hearing and determination of an appeal to challenge the award.

In this application, Tanesco argues that allowing Dowans to collect the ICC damages would  have drastic consequences for the Tanzanian economy, so much so that the country might never recover.

Tanesco had asked the High Court not to allow Dowans Tanzania Ltd to collect the Sh104 billion until an appeal it intends to file to challenge these damages is heard and determined.

“If (this) application is not granted, we stand to suffer irreparable loss for that amount plus interest is (so) huge that if (it’s) collected it is likely to paralyse our daily operations and bring (us) to a standstill,” argues the company in its brief to the Court of Appeal.

Dowans had already initiated moves to recover the amount awarded by the ICC. Tanesco has unsuccessfully been fighting against the decision by the ICC ordering it to pay Dowans damages for breach of contract.

The public power utility firm alleges that public procurement rules were grossly flawed in 2006 when the government directed Tanesco to award the contract to Richmond, which later passed on the contract to Dowans.

According to Tanesco, the ICC deliberately disregarded evidence that the procurement of the power agreement was carried out in the absence of a valid tender after Tanesco’s tender board cancelled the initial award.
Source: The Citizen,, reported bt Rosina John in Dar es Salaam
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