Transport minister Dr. Harrison Mwakyembe

As the ministry of Transport prepares to engage in fresh discussion with the head of China Sonangol International Limited (CSIL) over the stalled divestiture of Air Tanzania Company Ltd (ATCL) and construction of the proposed Terminal III at Nyerere International Airport in Dar es Salaam, it has emerged that the Chinese firm wanted Williamson Diamond Mine at Mwadui, Shinyanga, as part of the two deals, The Guardian on Sunday has learnt.

Sources privy to the ministry of Energy and Minerals told this paper that CSIL, the strategic Chinese instrument in acquisitions of precious resources globally, eyed the diamond mine as a potential resource, but its plans seemed to have collapsed two years ago.

Williamson Diamond Mine, established in 1940 by a Canadian geologist, Dr Williamson, remains Africa’s oldest diamond mining site outside South Africa and is currently co-owned by Petra Diamond of South Africa (75 percent) and the Tanzania government (25 percent). Sources say Sonangol wanted total acquisition of the mine.

The mine is located in Shinyanga region about 160 kilometres south of Mwanza city on the shores of Lake Victoria and has been in continuous operation since 1940, making it one of the oldest operating diamond mines in the world.

Over its lifetime it has produced over 19 million carats (3,800 kg) of diamonds. What happened in 2010 is explained by the ministry of Transport as CSIL’s withdrawal from the much needed investment in the troubled national airline.

“Basically China Sonangol agreed to partner with the government to implement a long-term plan that would enable ATCL to purchase modern aircraft with a view to its extending both its domestic and international network.

However, the firm changed its position on investing in ATCL as talks on the matter stalled,” said Transport minister Dr. Harrison Mwakyembe this week in the House when responding to a question by Kheri Khatibu Ameir (Matemwe - CCM) with regard to the Chinese partner.

When responding to a supplementary question, Mwakyembe added: “I do not want to work on, or give a statement on, hearsay information. When the Sonangol official visits this country next time I’ll request for information as to why he pulled out of the proposed deal”.

The government has never publicly explained the reasons leading to a collapse of the negotiations with Sonangol on its investment in ATCL and construction of Nyerere International Airport’s Terminal III almost five years down the line since the said talks begun in 2007 and eventually collapsed three years later.

“Sonangol looked determined to invest in Tanzania based on the historical relations between China and Tanzania, but the deal could not be concluded after top government authorities balked on approving the proposed investment agreement,” noted a source at the ministry of Energy and Mineral who talked on condition of anonymity.

The source added: “They really wanted to purchase a number of aircraft and invest a substantial amount of money in the construction of Terminal III. They were also ready to pay about $5 billion (over Sh8 trillion) to the government for the acquisition of Williamson Diamond Mine,” affirmed the source.

Sonangol ended up buying two used Bombardier Dash 8 aircraft instead of the envisaged brand new ones following negotiations which did not involve the ATCL management, according to a Controller and Auditor General’s report for fiscal year 2010/11.

The Chinese firm was also involved in the controversial lease of the Airbus 320 aircraft, which ended up causing a Sh320 billion debt to the government and remains unpaid to date. Another source within the Transport ministry told this paper that another key reason for the failed negotiations was the short time frame demanded by Sonangol in fulfilling the agreement, which could not be met by the government.

“In principle the proposed agreement for Sonangol’s investment looked appealing, but due to the government practice on sensitive matters such as this one, the agreement document had to go through a lengthy process, beginning with the cabinet secretariat, the government technical committee composed of permanent secretaries and, finally, to the cabinet for approval,” the source said.

When contacted, former commissioner for minerals, who is now the Igunga constituency legislator, Dr Peter Kafumu, declined to comment on the matter.

Last October The Guardian on Sunday reported exclusively that the government had decided to pull out of a memorandum of understanding with China International Fund Limited, the funding tool for Sonangol subsidiary companies, thus jeopardizing realization of the planned Chinese company’s investment in ATCL and Terminal III.

The reason for the government’s backtracking on the deal was stated as the Chinese company’s demand for acquisition of one of Tanzania’s gemstone mines.

It was then reported that the government was finalizing a financial facility from the UK-based HSBC bank, adding that it (government) was focusing on a Dutch company, Interbeton BV, as one of the potential contractors for the project.

The paper also said that Sonangol had dished out $6 million which was used for construction of a VIP building at Terminal II in 2010 as an expression of its financial muscle and a bait for the acquisition of the gemstone mine. Minister Mwakyembe told this paper that he had decided to perform his duties on the principle that he only look forward and not bother about the past.

“There are many speculations about this matter (collapse of the Sonangol deals). I’ll gather all the key information from various sources and discuss with the company’s official so as to have a clear picture so as to chart the way forward,” he said.

On April 19, 2012 then Transport minister Omari Nundu told the National Assembly that Sonangol pulled out of the ATCL investment deal because they had no confidence in the airline’s management.

Nundu was responding to a supplementary question from Kabwe Zitto (Kigoma North - Chedema), who wanted to know whether there could be a connection between the government’s decision to cancel an MoU on oil exploration in the Lake Rukwa basin, which was initially inked between it and Sonangol.

Although its official documents indicate that Sonangol’s chief executive officer is Alain Fanale, China Sonangol International Ltd is controlled by one Sam Pa, who is reported to have visited Tanzania several times and met almost all government top leaders.

The company has numerous oil operations in Angola and several media reports have indicated that Sam Pa is a personal friend of Angolan President Eduardo dos Santos. Other Sonangol operations are in Zimbabwe, Madagascar and Guinea .

According to information published on its official website, the company was established in 2004. China Sonangol International Holding Limited mainly engages in oil, gas and mineral investment and exploration, crude oil trading and large-scale construction projects. With a head office in Hong Kong, the company also has branch offices in other Asian countries, Africa and Latin America .

Its stated mission is to bolster South-South cooperation; to consider win-win situations as key while pursuing profits; to sincerely share experiences and achievements of China’s economic reforms with developing countries; to explore a new framework for Chinese enterprises to expand overseas; to introduce laudable concepts and worth-learning ideas from other developing countries into China .