THE government has taken over operations and business at the Kiwira Coal and Power Limited (KCPL), which has failed to meet its contract obligations, including failure to pay salaries to its 500 workers for over a year. The statement was read in the National Assembly by the Minister for Energy and Minerals, Mr William Mganga Ngeleja, who sought to clear a long-standing rumour over the ownership and operations of Kiwira Coal Mines. Grapevine is widely said to narrow on retired president Mr Benjamin Mkapa, who is often alleged to have held shares in the Kiwira coal mines project but who has since refuted the claims even though the rumour still lingers on.
However, Mr Ngeleja, did not mention names nor allude to the former president in his statement yesterday. He said the leadership of Kiwira has determined that it was logical that the company, which mines for coal and produces electricity, hands back the operations to the government on mutual understanding that it would repay all costs incurred by KCPL once proved to be correct and fair.
Mr Ngeleja said the government is currently weighing up the best options to run both the coalmines and electricity plants. One possibility is for the government to engage a Management Consultant who would take over the firms operations.
Under the agreement, the contractor would be required to enhance the capacity of State Mining Corporation (Stamico) and Tanesco to enable them operate the mines and the utility plants. The minister said the governments initial move would have to ensure that all workers were paid their dues so they could continue working when the projects restart.
Mr Ngeleja told a hushed House that KCPL had plans to generate 400MW of electricity, on which it had already spent 3.9bn/- in consultation fees. The company had also spent money on plant spare parts for mining and electricity generation plants — along with other repairs on existing infrastructure.
To boost coal production, the firm had also planned to procure and install electricity plants, for which it had since carried out an environmental impact statement (EIS) to generate at least 200MW of electricity. The feasibility study for this was carried out by an international consultant PB Power.
The contract between the government and KCPL (on coal mining at Kiwira ) was signed on March 24, 2006 vide an Agreement of Intent. Further, there were also Power Purchase Agreement (PPA) contracts; Implementation Agreement; Escrow Agreement; Transmission Line Facilities Agreement and Facility Transfer Agreement.
These contracts were signed in August, 2006, according to Ngeleja. Coal mining at Kiwira took off on November 1, 1988 with Kiwira Coal Mines Limited (KMCL) envisaging that electricity would be produced from coal for the purpose of running the mines. Surplus coal was sold to Mbeya Cement Factory and Southern Paper Mills (SPM) Mgololo and only surplus electricity was sold to Tanesco.
The feasibility study had indicated that there were at least 35.14 million tons of coal deposits at Kiwira and that mining would continue profitably for 65 years starting in 1988 — at a mining rate of 300,000 tons a year.
Unfortunately, KMCL could produce only 80 tons of coal a year before it was privatized because it was a loss factor. Construction of the Kiwira coal mining infrastructure took off in 1983, and was accomplished in 1988 through joint efforts of Tanzania and Chinese governments all at a total cost of 4.29bn/-.
Daily News
Post published in: Economy