Wednesday, November 11, 2009

Firm sues Government on mining contracts

By Bernard James

A constitutional petition has been filed in the High Court, seeking to have all the mining contracts entered into by the government without Parliament's approval declared null and avoid, in an effort to curb the plunder of the country's natural resources. A Dar es Salaam-based environmental and human rights activist, Mr Rugemeleza Nshala, and a company called Mtetezi Limited, have sued the minister for Energy and Minerals and the Attorney General.
They want the court to immediately stop the operations of the holders of special mining licences and mining companies that have signed Mining Development Agreements (MDAs) with the government "because their activities are unconstitutional". The petitioners claim that the powers conferred on the minister for Energy and Minerals to sign MDAs are unconstitutional, as they interfere with the duties of other ministries, councils, agencies and departments.
The petitioners are challenging the Mining Act No 5 of 1998 that gives the minister powers to sign MDAs on behalf of the government. They now want the court to declare that all the MDAs signed with the holders of the special mining licences, which were not approved by Parliament in line with the mandatory requirements of articles 63 (3) (a-e) of the Constitution, be scrapped. The article gives the National Assembly powers to deliberate on and ratify all treaties and agreements to which the United Republic of Tanzania is a party, and lists provisions, which require ratification. It also empowers Parliament to put any questions to any minister concerning public affairs.
The petitioners are accusing the energy minister of granting mining concessions to foreign mining companies of unlawfully, and allocating large areas that were initially owned by villagers and artisanal miners to foreign firms. They assert that the allocations are responsible for the forceful displacement of millions of agriculturalists, peasants, pastoralists and artisan miners from their lands, in total disregard of their land and property rights enshrined and protected in the Constitution. The petitioners want the court to order that all the people displaced to pave the way for large-scale mining be resettled on their land and paid compensation.
"We feel that our country's mineral resources are being squandered, as the current exploitation is only benefiting the foreign mining companies and yet the current mining and its taxation legal regime are not only illegal, but also unconstitutional," they argue. The petitioners are also arguing that the granting of mining concessions to foreign companies through local affiliates under the guise of Section 10 (1) and (2) of the Mining Act No 5 1998, not only grants unconscionable incentives to those firms, but also purports to supplant the laws of the land, and curtail the legislative powers of Parliament.
The section prevents Parliament from passing any law that might in "one way or another interfere with their tax, social and economic obligations that they found at the time they came to invest in the country". The petitioners argue that "the curtailment of the parliamentary powers is not only wantonly violates Article 13, which calls for equal treatment under the law, but also the entire democratic framework enshrined in the Constitution." Article 63 (3) (a) to (e) grant Parliament powers to oversee, monitor and supervise the workings and operations of the government, including the ratification of all agreements signed in the name of the United Republic of Tanzania.
"Yet the respondents have never presented any Mining Development Agreement (MDAs) signed with foreign mining companies to Parliament for deliberation, review, ratification or rejection." The petitioners are also accusing the government of granting "generous and unwise incentives", including tax-holidays, tax exemptions, "unlimited immigration quotas for their so-called experts", and the fuel levy, all of which, they claim, have led to the plunder the country's mineral resources.
To back up their petition, the petitioners are citing the tax-free sale of several mining companies. These include Lusu gold mine, which was sold by Samax Resources of Canada to Ashanti Goldfield in 1998, at $213 million, the Bulyanhulu gold mine disposed of by Sutton Resources of Canada to Barrick Gold, at $348 million in 1999, and Nyabigena and Nyabirama mines in Tarime district that were sold by East Africa Gold Mine to the Placer Dome at $252 million.
During the hearing, the petitioners say they will demand that the minister and the AG produce in court all the documents on the sale of those assets by the foreign mining companies. They say they will also to rely heavily on the findings of commission on mining management (the Bomani team) appointed by President Kikwete in 2007. According to the Bomani report, while the foreign mining companies were raking in millions of dollars from Tanzania?s mineral resources, they paid no income tax and still enjoyed a lot of tax waivers.
The petitioners will show to the court how six foreign mining companies were granted an Excise duty waiver of Sh39.8 billion and Sh59.0 billion in 2006/07 and 2007/08, respectively. The petitioners also challenge Section 10 (1) and (2) of the Mining Act No. 5 1998, which allows the minister to limit environmental management responsibilities of the holders of special mining licences, the obligations of which are demanded by sectoral environmental legislation and the Environmental Management Act No 20, 2004. Mr Nshala and the company are also challenging the dispute settlement procedure by way international arbitration, as set out in the Mining Act 1998.
It is their contention that the procedure voids the jurisdiction of domestic courts in determining mining investment disputes, contrary to Article 107 (1) of the Constitution, which vests in the Judiciary the powers to hear and determine all disputes arising in the country.
The petitioners are accusing the government of abdicating its responsibility of policy design, formulation and implementation and becoming an agent of the World Bank, implementing the latter's dictates, including the Strategy for African Mining, 1992, which paved the way for enactment of the Mining Act, No 5, 1998.
TRA seizes Dowans power plant

By The Citizen Reporter
The Tanzania Revenue Authority (TRA) yesterday seized assets of a power production company, Dowans, including its gas-fired turbines. The properties were seized by TRA agent Majembe Auction Mart on the grounds that the company had not remitted Sh9,120,611,746 in taxes to TRA. Majembe Auction Mark marketing manager Dixion Kitime confirmed last night that Dowans assets had been seized.
"We have seized various Dowans assets, including its power generating turbines for their failure to settle tax claims," he said. He named some of seized property as eight containers used to store fuel and other equipment.
Mr Kitime said the property has been seized to compel the company to settle the taxes. He said if the company failed to settle the debt, the seized properties would be auctioned after ten days from today. Dowans came in the country several years ago and bought a emergence power contract between Tanesco and a controversial Richmond Development Company.
But its contract was terminated prematurely by the government last year after it came to light that the original company, Richmond, has lied to the government.
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Firm sues Government on mining contracts

By Bernard James
A constitutional petition has been filed in the High Court, seeking to have all the mining contracts entered into by the government without Parliament's approval declared null and avoid, in an effort to curb the plunder of the country's natural resources. A Dar es Salaam-based environmental and human rights activist, Mr Rugemeleza Nshala, and a company called Mtetezi Limited, have sued the minister for Energy and Minerals and the Attorney General.
They want the court to immediately stop the operations of the holders of special mining licences and mining companies that have signed Mining Development Agreements (MDAs) with the government "because their activities are unconstitutional". The petitioners claim that the powers conferred on the minister for Energy and Minerals to sign MDAs are unconstitutional, as they interfere with the duties of other ministries, councils, agencies and departments.
The petitioners are challenging the Mining Act No 5 of 1998 that gives the minister powers to sign MDAs on behalf of the government. They now want the court to declare that all the MDAs signed with the holders of the special mining licences, which were not approved by Parliament in line with the mandatory requirements of articles 63 (3) (a-e) of the Constitution, be scrapped. The article gives the National Assembly powers to deliberate on and ratify all treaties and agreements to which the United Republic of Tanzania is a party, and lists provisions, which require ratification.
It also empowers Parliament to put any questions to any minister concerning public affairs. The petitioners are accusing the energy minister of granting mining concessions to foreign mining companies of unlawfully, and allocating large areas that were initially owned by villagers and artisanal miners to foreign firms. They assert that the allocations are responsible for the forceful displacement of millions of agriculturalists, peasants, pastoralists and artisan miners from their lands, in total disregard of their land and property rights enshrined and protected in the Constitution.
The petitioners want the court to order that all the people displaced to pave the way for large-scale mining be resettled on their land and paid compensation. "We feel that our country's mineral resources are being squandered, as the current exploitation is only benefiting the foreign mining companies and yet the current mining and its taxation legal regime are not only illegal, but also unconstitutional," they argue.
The petitioners are also arguing that the granting of mining concessions to foreign companies through local affiliates under the guise of Section 10 (1) and (2) of the Mining Act No 5 1998, not only grants unconscionable incentives to those firms, but also purports to supplant the laws of the land, and curtail the legislative powers of Parliament.
The section prevents Parliament from passing any law that might in "one way or another interfere with their tax, social and economic obligations that they found at the time they came to invest in the country". The petitioners argue that "the curtailment of the parliamentary powers is not only wantonly violates Article 13, which calls for equal treatment under the law, but also the entire democratic framework enshrined in the Constitution." Article 63 (3) (a) to (e) grant Parliament powers to oversee, monitor and supervise the workings and operations of the government, including the ratification of all agreements signed in the name of the United Republic of Tanzania. "Yet the respondents have never presented any Mining Development Agreement (MDAs) signed with foreign mining companies to Parliament for deliberation, review, ratification or rejection."
The petitioners are also accusing the government of granting "generous and unwise incentives", including tax-holidays, tax exemptions, "unlimited immigration quotas for their so-called experts", and the fuel levy, all of which, they claim, have led to the plunder the country's mineral resources. To back up their petition, the petitioners are citing the tax-free sale of several mining companies. These include Lusu gold mine, which was sold by Samax Resources of Canada to Ashanti Goldfield in 1998, at $213 million, the Bulyanhulu gold mine disposed of by Sutton Resources of Canada to Barrick Gold, at $348 million in 1999, and Nyabigena and Nyabirama mines in Tarime district that were sold by East Africa Gold Mine to the Placer Dome at $252 million. During the hearing, the petitioners say they will demand that the minister and the AG produce in court all the documents on the sale of those assets by the foreign mining companies. They say they will also to rely heavily on the findings of commission on mining management (the Bomani team) appointed by President Kikwete in 2007.
According to the Bomani report, while the foreign mining companies were raking in millions of dollars from Tanzania?s mineral resources, they paid no income tax and still enjoyed a lot of tax waivers. The petitioners will show to the court how six foreign mining companies were granted an Excise duty waiver of Sh39.8 billion and Sh59.0 billion in 2006/07 and 2007/08, respectively. The petitioners also challenge Section 10 (1) and (2) of the Mining Act No. 5 1998, which allows the minister to limit environmental management responsibilities of the holders of special mining licences, the obligations of which are demanded by sectoral environmental legislation and the Environmental Management Act No 20, 2004. Mr Nshala and the company are also challenging the dispute settlement procedure by way international arbitration, as set out in the Mining Act 1998. It is their contention that the procedure voids the jurisdiction of domestic courts in determining mining investment disputes, contrary to Article 107 (1) of the Constitution, which vests in the Judiciary the powers to hear and determine all disputes arising in the country.
The petitioners are accusing the government of abdicating its responsibility of policy design, formulation and implementation and becoming an agent of the World Bank, implementing the latter's dictates, including the Strategy for African Mining, 1992, which paved the way for enactment of the Mining Act, No 5, 1998.
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Envoy faults Govt, donors on power crisis

By Florence Mugalura

Norwegian Ambassador Mr Jon Lomoy,blames government on power crisis facing Tanzania. As the country continues to grapple with power crisis, the Norwegian Ambassador Mr Jon Lomoy, has blamed lack of adequate investment in the power sector to poor policies.
Mr Lomoy also believes that donors who fund over 34 per cent of the country?s development budget have failed in their role to help the country find a lasting solution to its electricity problem. The ambassador told Sunday Citizen in an exclusive interview this week that both the Government and its development partners share the blame for the current crisis.
He said the Government was lagging behind in formulating suitable policies to guide local and foreign investments in the energy sector, citing Uganda as a shining example of a country with good energy policies. ?Donors too have not done enough to put pressure on the Government to set priorities right and save the country from the recurrent power problem that badly affects the economy," he said.
He said in countries such as Norway, governments had clear programmes on generating electricity which is given the first priority as the basic pillar in economic development. Parliament last year passed the Electricity Act and Rural Energy Act to spur growth by putting to an end generation and distribution monopoly enjoyed by the Tanzania Electric Supply Company (Tanesco).
However players in the sector argue the formulation of relevant regulations to implement the law has done little to encourage business as prospective investors are still worry of the investment risks, with some citing ?political? interference as their main fear for doing business. According to the ambassador, the Government needed to create a conducive environment for foreign investors to come and do business without any fears. ?I believe foreign investors can invest in power generation here in the country but the Government must create room for them to feel secure to do business; in other words, there must be an environment that will assure the investors of security of their business,? said Mr Lomoy.
He noted that Uganda has already managed to attracting foreign businesses that have helped the country overcome, to a large extent, a similar power supply crisis. He said Tanzania was facing power problem because there was no additional power to the national grid.
Tanzania needed to add at least 100MW every year to the national grid, he said. ?The only solution is to have different projects and programmes to ensure there is enough power generation in the country,? said Mr Lomoy.
He added that Tanzania like other countries need to use different means of generating power instead of depending on water which is always affected by climatic changes. The envoy said the country could use coal, gas, water, wind and even solar energy to generate power that would be connected to the national grid. He said the government must collaborate with private sectors in solving the problem
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El Nino threat; authorities to face disaster empty handed

By Sunday Citizen Team
As countries in the region brace for floods that could displace thousands of people and devastated infrastructure, the country has virtually no budget set aside to specifically deal with the potential El Nino threat.
The weatherman has warned that the floods could fall any time now while the United Nation has listed Tanzania among counties in the East and Central Africa that will be badly affected by the phenomenon whose destruction in 1998 is unparalleled. El Nino is a weather phenomenon associated with abnormally heavy rains. According to experts, it is triggered by the warming of water over the Pacific Ocean.
Should the floods occur, the UN Office for the Coordination of Humanitarian Affairs says the food supply situation that is already critical in some countries will worsen while the humanitarian crisis may require that governments spend more funds to mitigate some of the negative consequences.
Ms. Elizabeth Byrs of the UN office says in a posting on the organisation?s website that Tanzania was among countries that assured a meeting of ten countries in the region in Nairobi, last October, that early measures have been taken in preparation as the country awaits the inevitable. She said an estimate of 50,000 people would require immediate aid when the floods hit in the country.
But away from the planning meetings, the reality on the ground is that little effort was being done by authorities to reflect high levels of awareness of the magnitude that the flooding could cause. A survey and inquiries by Sunday Citizen in some areas prone to flooding and that were badly affected in 1998 show that the flood may actually catch us napping.
There is no national allocation made by the Government to mitigate the effects of El Nino while regional governments and local councils were also grappling with funds shortage to think of setting aside enough resources for emergencies like El Nino. Even though the Tanzania Meteorological Agency has predicted that Lake Zone areas would be worst affected, other cities, like Dar es Salaam and Tanga, with low sea levels, are easily overwhelmed by torrential rains, let alone El Nino. The Minister of State in the Prime Minister?s office responsible for disaster management, Mr Philip Marmo, confirmed the disaster management coordination department under his watch did not have funds set aside for El Nino. ?We do not have funds at the department. What they do is prepare guidelines and sensisitise the public and the local authorities what to do in case of such emergencies,? said Marmo last week in Dodoma.
The Minister however said should need for emergency arises, the ministry would rely on the ministry of finance to provide contingency funding under emergency certification. The acting director for disaster management coordination Mr Joseph Shiyo reinforced the minister?s statement and said his office has no specific budget for El Ni񯮍? I am saying this clearly so that everybody could understand, our department has no money, we depend on requesting fund from the Treasury when such incidents occur,? said Mr Shiyo.
He said while they sometimes received funds for disaster, there was no allocation at the moment. The officer however said the department has already taken some measures and that it was in good position to face any challenges. He said a meeting with all stakeholders to discuss and set strategies had been held with bodies such as the Tanzania Red Cross Association, Fire brigade, Police and health officers. ?We have written to all councils and regions requiring them to adjust their budgets to tackle the matter because there could be no addition money from our office,? said Mr Shiyo.
He added that public awareness education was another important measure that have been taken by his office on which television, radio programmes and newspapers were used t spread the knowledge on the matter. ?We are preparing people to face the problem, every person must understand what is likely to happen and what he/ she should do after seeing that situation,? he said. But some interviewees and several individuals who called Sunday Citizen have expressed concern that there was nothing visible that local councils were doing to safeguard their infrastructures from total destruction by the floods. ?We know the Dar es Salaam situation when it rains and expected that the El Nino warning would trigger activity to open alleyways, dig trenches and fix broken sewers. But I am worried the city will stand stills because I have not seen anything happening,? a resident of Ubungo said. But the Ilala, Kinondoni and Temeke Executive Directors appeared resigned to fate and said they would only do the bits they could with little resources at their disposal.
The three councils that are responsible for an estimated 4 million city dwellers have a combined budget of not more than Sh50 million set aside for disaster preparedness. The Ilala Municipal Director Gabriel Fuime said the council has set aside Sh25 million from its own income to address any emergencies while the Kinondoni Municipality Engineer Faustin Mosha revealed just Sh13 million was available for their use in preparedness. Temeke Municipal Director Stephen Kongwa only said they would rely on the regional director?s office for such funding. ?What we have set aside is not enough as we cannot tell the kind of destruction that is coming, the available cash will be used in some notorious areas in our municipality. We have issued a warning to the residents on eruption of diseases like cholera should the floods come,? he said adding that there were enough medical supplies to prevent the outbreaks.
Engineer Mosha said hi priority has been to open drainage systems in a continued programme while warning that residents who have inhabited areas prone to flooding should move out or secure their own properties as the government could not carter for everyone. A survey in the regions showed that local authorities are either too broke to afford raising needed money or are withholding negligible funds from their small budgets in case they were hit.
In Arusha, Regional officials who spoke to Sunday Citizen said although they have been notified, so far they have not received funds for any emergency. Henry Shekiffu, the Manyara regional commissioner said from Babati that residents of the region, now reeling from severe drought, were aware of the anticipated excessive rains but were yet to feel endangered. "El Nino rains must not necessarily be destructive so it is wrong to conclude that they will cause major disaster once it started falling" he said. The RC added that in case of any emergency during the rains, the region would communicate with the PMOs on what should be done. "At the moment, we have not embarked on anything because the rains are yet to fall," he said. Officials of the neighbouring Arusha region also said they were not aware of new budget directives . "When will these rains start falling?" asked one senior official at the regional block, admitting that the region was still pre-occupied with the raging drought which has killed hundreds of livestock and left many families without food.
Karatu district commissioner Mathew Sedoyeka said besides grappling with drought and distribution of relief food to the severely affected families, the district was busy establishing disaster management teams at district, ward, and village levels to mitigate against any possible calamity. "We have told wananchi to get prepared and volunteer in case of destruction of structures such as bridges and public buildings" he explained.
He further hinted that not all residents of the district have negative perceptions of El Nino. "Many of them have been waiting for rains for a long time. To make it worse, the district did not get even the short rains" he said. Reported by Zephania Ubwani, Arusha, Florence Mugalura Da es salaam