Sospeter Muhongo, Tanzania’s minister of energy and minerals, has become the third senior government official to lose his job over the alleged illicit payment of public funds to a private power company. Muhongo – who denies any wrongdoing – announced his resignation on Saturday. He will be replaced by George Simbachawene, the deputy minister of land, housing and human settlement development. For Tanzania’s potential LNG investors – already frustrated by the country’s regulatory uncertainty and the government’s slow decision-making process – Simbachawene’s appointment will do little to boost confidence. Simbachawene worked as deputy energy minister between 2012 and the end of 2013, but “has comparatively limited experience in the gas sector given his previous focus on electricity during his time at the energy ministry”, said Paul Gabriel, East Africa analyst at Control Risks. “Given the focus on [Tanzania’s] constitutional referendum and the elections there is likely to be little movement on the regulatory front. A highly anticipated update to the law governing the gas sector is likely to be delayed until after the elections [scheduled for October this year], when we are likely to see more changes in the energy ministry,” Gabriel added. Muhongo – along with the permanent energy secretary, Eliakim Maswi – had been under pressure to stand down since November, when a report submitted to parliament implicated him in the scandal. The report accused Muhongo of authorising the illicit transfer of at least $122 million of public funds from an escrow account held jointly by Tanesco, Tanzania’s state power company, and Independent Power Tanzania Ltd (IPTL), to IPTL’s owner Pan Africa Power (PAP) in 2013. PAP maintains the transfer was legal (see Distracted government weakens outlook for Tanzania LNG, 22 January 2015). “I have decided to resign to bring a conclusion to this never-ending debate so the nation can focus on other important issues for national development,” Reuters reported Muhongo as saying at a news conference on Saturday. “I did not do anything wrong and I did not steal any money. My record speaks for itself – I am incorruptible.” Following the scandal, a group of 12 international donors – including the UK’s Department for International Development – said they would withdraw budget support worth nearly $500 million if the findings of the investigation are not published and properly acted upon. “Muhongo’s resignation is a step towards winning back donor trust. However, so far we have only seen a minor cabinet reshuffle and much of the [cabinet’s] character remains the same,” said Gabriel. “In addition to personal changes, donors will likely want to see procedural changes designed to prevent similar misuse of funds in the future,” he said. Frede
I'm sure we will not need to revert to small print and all will go through as planned. Tanzania is an important part of Solos portfolio and keeping a good relationship with the operator and major percentage owner of the project will also be very important. It would be very silly for NR to stand on any toes especially as Solo is only an investment company and not a standalone operator. As always....just my thoughts.
Although I am appreciative of the benefit that AEX would receive (clear the debt due 2015) from receiving the funds from Solo in exchange for 13% of the field, if it were not to be concluded by the 30th I would be less concerned were the deal to fall through than I would be for us to extend the closing date yet again.
As long as all the T&C's of the original deal have been met, and if they were all met then there would be no contractual reason not to complete, were AEX to roll over again and allow Solo a further extension, I feel that not only I, but also the market, would see this as a point of weakness.
An additional point, and one I cannot remember seeing confirmation of, is has AEX received the funds yet from Solo for the initial 6.5% of the field ? My interpretation of the sale agreement (most recent revision in the RNS dated 17th December) stated that it was only the second tranche of 6.5% of the field that still awaited sign off on (by the 30th January 2015 deadline). The T&C's for initial 6.5% tranche of the field had been met when the Tanzanian Ministry of Energy and Minerals that the Minister has no objection to the proposed transfer of assignment for the sale, which it confirmed. The only wiggle room, though contractually I do not believe that it holds any contractual credibility, is if Solo argued that it was not as yet obligated to pay for the initial 6.5% tranche, as although the approval has been agreed the signing of the formal Deed of Assignment may still be outstanding. But given that confirmation has already been received from the Tanzanian Ministry of Energy and Minerals that no objection would be forthcoming, then that alone in the eyes of the courts would be sufficient for the court to believe that all the outstanding T&C's had been met, as the original terms had only detailed that " written approval from the Tanzanian authorities to the assignment" was required, and not that the Deed of Assignment need necessarily be signed.
All of the above is IMHO, and as always I promote that all DYOR.
I fully expect Solo to take up the offer of their full 13% share, even if NR has to raise for it. They are missing out if they don't but we will retain a greater percentage of the profits so all good for us. I'm sure Jay would soon raise the funds needed to clear our debt with a small loan as part of our Ruvuma RBL.
Solo taking 13% of Kiliwani appears to be part of a bigger plan to tackle Ruvuma together. NR is leaving it to the very last moment though !!
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.