The Guardian reported that controversy surrounding investment at Kiwira coal mine is likely to deepen as the government plans to settle debts amounting to TZS 32.24 billion resulting from loans advanced to companies which have failed to run the potential mine for power generation situated in Rungwe district in Mbeya region.

The loans were advanced to a number of companies which for the past seven years have been changing ownership but failed altogether to achieve the primary goal of generating the planned 240 MW of electricity.

The noted geologist said: “If the government wants to take it back will be compelled to shoulder the debt and that is why we have allocated Sh40 billion to have the mine back as government property.”

Certain sources wondered why the government could not demand debt settlement from the companies involved in the “widely known controversial privatization of the coal mine.”

The Energy and Minerals minister says the Kiwira coal mine background shows that the site was in bad state prior to 2005 as the power generation capacity had dropped by 50 percent from 10 megawatts to 5 megawatts while it was owned by the State Mining Corporation (STAMICO) which failed and the property was sold to Tan Power Resources which also failed.

Kiwira coal mine was built in the early 1980s by the Chinese government at TZS 4.2 billion and was dubiously privatized in 2005. It had an initial price tag of TZS 700 million but was sold at only TZS 70 million. But it emerged later that the government property was privatized to the company Tan Power Resources whose shareholders came to be known publicly as Benjamin Mkapa and former minister for Energy and Minerals Daniel Yona, who had in the past also held the finance portfolio. A few years ago Prime Minister Mizengo Pinda told the House that the government had decided to take back its 70% shares previously sold to Tan Power Resources although under the original divestiture state had remained with 30% of shares.

Source - The Guardian

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