Tanzanian aircraft seized in Canada over $38m debt: Be careful with contracts, government cautioned

Login

Register

http://www.clubofmozambique.com/

Tanzanian aircraft seized in Canada over $38m debt: Be careful with contracts, government cautioned

9:53 CAT | 24 Aug 2017

NMG / A Bombardier Q400 Air Tanzania plane. A similar one is being held in Canada over debt.

A commercial aircraft that was expected to be delivered to the national carrier Air Tanzania in July this year has been detained in Canada after the government failed to pay $38 million (Tsh83 billion) owed to a contractor, an opposition member of parliament said on Friday.

Tundu Lissu, the Chadema MP for Singida East, told reporters that the Bombardier Q400 was seized after failure by government to pay the money it owed Canadian Stirling Civil Engineering Limited over a cancelled contract.

The firm had been contracted to construct the Wazo Hill-Bagamoyo road in Dar es Salaam but the government terminated the contract.

The contractor then went to the International Court of Arbitration and won the case.

“The government lost the case in 2010 and was ordered to pay the compensation amounting to $25 million with an interest of eight per cent,” said Mr Lissu.

He said the debt was not paid on time and had risen to $38 million as of June this year.

The failure by the government to pay prompted an order to attach the Tanzanian government assets in Canada, France, Netherlands, Belgium, England and Uganda. So the Bombardier Q400 was seized.

Be careful with contracts, government cautioned

Meanwhile, reports The Citizen of tanzania, the government has been reminded to respect country’s laws as well as international treaties when making decisions on foreign investors and contractors.

Speaking to The Citizen on Sunday (August 20), some diplomats, economists, lawyers and politicians warned that Tanzania may lose plenty of money because of terminating contracts of foreign investors and contractors.

They were speaking just a day after the government admitted that one of its planes, Bombardier Q400, has been seized in Canada due to the government’s failure to pay compensation of $38.7 million (Sh83 billion) to a Canadian firm, Stirling Civil Engineering.

The company won a tender to construct the Wazo Hill-Bagamoyo Road in the 2000s, but the government terminated the deal illegally, and the contractor filed a case at the International Court of Arbitration, which the government lost in 2010 and was ordered to compensate the company.

Some of those, who spoke to The Citizen, said the government’s decision to ban exportation of 282 tonnes of metallic concentrate might also backfire as Acacia Mining filed a notice to open a petition to protect their stakeholders interests at the International Arbitration Court.

Prof Abdallah Safari, former director of the Tanzania and Mozambique Centre for Foreign Relations (TMCFR), said properties belonging to Tanzania will continue being seized if the government does not stop violating international treaties.

“In 2009, we lost a case against a foreign company, whose vessel was seized in the Indian Ocean deep sea, the government was ordered to pay over one trillion… if we will continue like this I think we will be ordered to pay plenty of cash over the gold and copper concentrate saga,” said Prof Safari.

For his part, Prof Haji Semboja of the University of Dar es Salaam said change of regime should not change country’s policies abruptly.

According to him, the new regime should respect the country’s policies, laws and institutional frameworks.

He further added that the government should engage the investors whenever it wants to make a decision regarding agreements between the two parties.

Another economist, Prof Samuel Wangwe said so long as the government wants to protect the country’s interests, when it comes to investment agreements, it should adhere to the laws.

“Tanzania needs investors as much as they need us, so if each party will adhere to the law I don’t think there will be any conflicts,” he said.

A lawyer from Legal and Human Rights Centre (LHRC), Mr Evans Sichalwe accused the government of what he termed as “display of high level of arrogance” for failing to honour the award given to Stirling Civil Engineering by the International Court of Arbitration.

He added that if the government was in disagreement with the International Court of Arbitration, it should have appealed.

By failing to appeal, Mr Sichawale said the government has caused the amount of the penalty to increase due to interests.

The same sentiments were echoed by Dr Ahmed Mtengwa from the Centre for Foreign Relations.

According to him, the government had a room to negotiate with the Canadian firm before things spilled over.

Alliance for Change and Transparency (ACT) Wazalendo and Kigoma Urban Member of Parliament Mr Zitto Kabwe twitted that “Tanzania isn’t an island, so the government must be very careful when making such kind of decisions.”

On Saturday, the government admitted that its new commercial aircraft, Bombardier Q400, which was expected to arrive in the country last month, has been seized in Canada, but shifted the blame on the opposition, accusing it of sabotaging delivery of the plane.

However, the acting director of Information Department Services, Ms Zamaradi Kawawa, said the whole ‘Bombardier fiasco’ was part of what she termed as ‘dirty games’ engineered by some members of the opposition who “are cooperating with foreigners to sabotage the implementation of several development projects initiated by President John Magufuli.”

Source: The East African