Chinese firm 'gifted' oil licences

With Chinese firms operating in Tanzania already in the spotlight in the wake of the World Bank banning of three of them over a bribery scandal in the Phillipines, it has now emerged that some senior officials acted inappropriately in giving oil exploration rights to China Sonangol International Holding Ltd in exchange for the latter’s purchase of 49 per cent shares in the national airline.

The officials acted against the government procurement regulations and procedures by in effect granting three oil exploration licenses on the soil of Tanzania as a sweetener to induce the Hong Kong-based firm to purchase the shares in the troubled Air Tanzania Corporation (ATCL) for $21 million.

Sources in government told The EastAfrican in Dar es Salaam last week that the Tanzania Petroleum Development Corporation (TPDC) offered the Chinese government-owned Sonangol International rights for exploration in Rukwa outside normal tendering process, and this contravenes procurement procedures.

In return, the sources said, the Chinese injected $21 million into ATCL, which was used to purchase two used Bombardier 70-seater Dash 8 Q400 turboprop aircraft from Bombardier Aerospace Inc. of Canada for $16.2 million each. The remainder of the funds for the purchase of the aircraft came from the government.

However, Yona Killagane, managing director of the Tanzania Petroleum Development Corporation, told The EastAfrican that the oil exploration rights given to the Chinese had no link whatsoever to the ATCL share sale.

Mr Killagane said the Chinese firm was offered the oil exploration rights two years ago in a memorandum of understanding signed by the government with the firm.

“The Chinese were supposed to come and conclude the deal with the TPDC, but to date there is nothing to that effect,” he said, complicating further an issue on which parliament is seeking clarification starting this week.

Chinese President Hu Jintao will this February lead a visiting delegation of 140 senior government officials and businessmen to Tanzania.

The EastAfrican has been informed sign the agreement to acquire the 49 per cent shares of the national carrier among other things.

The other agreement scheduled to be signed during the visit, The EastAfrican has been informed, will be for the construction of the $46 million, 560-metre Kigamboni Bridge, which was previously to be constructed by the National Social Security Fund with financing from the African Development Bank.

Already, an unnamed Chinese firm has tendered an architectural design to the government under a build, operate and transfer (BOT) arrangement in which the construction work is expected to take three and half years.

The new controversy, which is already being intensively investigated, could derail Sonangol International’s plans to invest in the airline, as it has further emerged that key procurement guidelines were not followed by the investor.

The Parliamentary Parastatal Organisations Accounts Committee (POAC) has already found serious discrepancies that undermine performance of several public utilities, including ATCL, and the government is expected to give a detailed account to parliament this week on what transpired during the signing of the agreement.

Zitto Kabwe, chairman of POAC, told The EastAfrican last week that there were fundamental questions that remain unanswered by the authorities in the case of ATCL, which is seeking to recuperate from years of loss making.

Mr Kabwe said that one of the key issues is how the Chinese got the ATCL deal.