DAR ES SALAAM, (Reuters) – Symbion Power is seeking $561 million from Tanzania’s state power supplier TANESCO via international mediation, accusing it of breach of contract, the U.S. firm said yesterday. Symbion owns a 120 MW thermal power plant in Tanzania’s commercial capital Dar es Salaam and is one the handful of independent producers that sell power to state-owned utility Tanzania Electric Supply (TANESCO). Tanzania has reserves of over 57 trillion cubic feet (tcf) of natural gas but faces chronic power shortages due its reliance on hydro-power dams in a drought-prone region, forcing its utility to buy from the private firms.
Symbion’s spokesperson Julie Foster said it sued TANESCO at the International Chamber of Commerce’s International Court of Arbitration in Paris on March 13, saying it had failed to honour a 15-year agreement. “The power purchase agreement is now terminated and the amount claimed is $561 million. Since the case is a very simple case to adjudicate, we hope that it will not take too long for the arbitration to come to a conclusion,” Foster told Reuters.
Foster said Symbion filed for arbitration because it ran out of options “after trying to resolve the dispute … in a friendly manner for more than a whole year.”
TANESCO declined to comment, saying the matter was under court proceedings.
Tanzanian president John Magufuli, nicknamed “the Bulldozer” for his infrastructure projects and strict leadership style, launched his reform drive after he was elected in 2015, promising to transform an economy hobbled by bureaucracy and corruption.
But some foreign investors have said they could scale back their operations or expansion plans because of tougher demands, including higher tax bills, as part of the president’s drive to overhaul the economy.
“The concern however is that such short-term thinking, and ensuing polices, only reinforces a growing investor sentiment that Magufuli’s government is anti-business,” Ahmed Salim, vice president of consultancy Teneo Intelligence, said in a note to clients on March 6.
