IPTL DEAL [TOTAL NEGLIGENCE!]

By, Brian Cooksey

In short, "...Without IPTL, the Ubungo turbines would now be running on natural gas. (The Songo Songo project was purposely held up by IPTL intrigue). Not that it matters: three of the Ubungo turbines have been ‘shut down and need a staggering (sic) 4bn/- for repairs, Tanesco engineers told the Daily News..." (December 14th).

"...The current rains have raised water levels in the dams. Curious therefore that Tanesco should decide to shut down one of Kidatu's 50 megawatt turbines - for ‘routine maintenance' - just as water levels are rising. Why not wait for a few months until water levels begin to fall? … Tanesco may soon be forced to spill water from our dams in order to keep IPTL chugging along as planned..." Source: East African, February 18, 2002

Hardly two months after IPTL start power production, its minority shareholders VIPEM file a suit in the Tanzanian High Court to wind up the company unless they receive thirty percent of IPTL equity. VIP are concerned that they may not receive their ‘fair share' of the dividends from IPTL over the project's twenty year life span. VIP estimate the net present value of their share of these dividends at $100 million. They enter into negotiations to sell their interests in IPTL to the National Social Security Fund for this amount.

The commissioning of IPTL passes almost without comment. The pros and cons of the project are no longer an object for public discussion. The press, business associations, donors and ‘civil society' are deafeningly silent over the catastrophe that is IPTL. This is a sure sign that, at least for the moment, the ‘system' has won. One donor argues that for ‘ Tanzania not to meet its external commitments' would send the wrong signals to potential investors! But Tanzanian electricity is the most expensive in central and southern Africa . IPTL could help seal the fate of Tanzania 's already uncompetitive manufacturing industry.

Epilogue
The direct and opportunity costs of IPTL to the Tanzanian economy are extremely high. Without IPTL, the country would already be exploiting its huge resources of natural gas and saving on imported kerosene for the Ubungo turbines. The losses to the Tanzanian economy as a result of the power shortages of 1997 could have been avoided had Songas been implemented on time rather than sidelined by IPTL. Huge private investments in stand-by generators were another avoidable cost. The amount of time, energy and travel wasted by government officials in chasing after IPTL, including international arbitration, particularly by Patrick Rutabanzibwa, could have been put to much better use.

Countries like Tanzania will never be able to aspire to the rates of economic growth and social development achieved by countries like Malaysia in the absence of ruling élites whose rent-seeking strategies contribute to rather than subtract from the public good. It is one thing for politicians and bureaucrats to take a cut from a valid investment that generates significant employment, turns out useful products, and contributes to government revenue. It is

NB: The author of the article--Dr. Brian Cooksey is the founder of Tanzania Development Research Group (TADREG) as well as Transparency International (TI). To read the entire report entitled: THE POWER AND THE VAINGLORY: Anatomy of a $100 Million Malaysian IPP in Tanzania; please vist: Transparency International's site: http://www.transparency.org

God BlessTanzania!

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