Bagamoyo EcoEnergy takes govt for arbitration

16Sep 2017
The Guardian Reporter
The Guardian
Bagamoyo EcoEnergy takes govt for arbitration

A private agro-industrial development company—Bagamoyo EcoEnergy Limited has filed a case against the government at the International Court for Settlement of Investment Disputes (ICSID) over contract termination.

Minister for Industry, Trade and Investment Charles Mwijage

Registered in 2007, the company’s mission was to develop a modern sugar cane plantation and factory producing sugar, ethanol and power for the Tanzanian market.

Filed on September 11, 2017 (ICSID Case No. ARB/17/33), the claimants include Agro-EcoEnergy Tanzania Limited (Tanzanian), Bagamoyo EcoEnergy Limited (Tanzanian), Eco Development in Europe AB (Swedish) and EcoEnergy Africa AB (Swedish).

They are represented by Mannheimer Swartling Advokatbyrå AB of Stocklom and   Prof. Dr. Kaj Hober of London, while the government is represented by the  Attorney General’s Chambers.

Reached for comment, the Minister for Industry, Trade and Investment Charles Mwijage failed to provode details on the matter, referring this reporter to the AG.

Attorney General, George Masaju told The Guardian that he has not been notified by the respective ministry (Industry, Trade and Investment) on any move about the contract with Bagamoyo EcoEnergy Limited.

Masaju stated that there are alternative dispute resolutions to amicably settle the dispute before a company has to go for arbitration, as stipulated in the contract.

“Every contract has a segment that binds both parties who are in the agreement on how to end conflicts that may arise between them,” said Masaju, noting that if Eco energy has decided to go for arbitration, it is part of observing terms of the agreement.

At full capacity the Bagamoyo sugar project was expected to produce 150,000 tonnes of sugar each year, plus 14000 cubic meters of ethanol and 12MW surplus electricity for the national grid.

The government gave EcoEnergy 20,400 hectares of land whereby 8,000 ha were to be developed for irrigated sugarcane production.

Extensive consultation took place between the government and EcoEnergy from  2006, where in 2013 the government provided a 99-year certificate of occupancy for the future site of the nucleus estate in Bagamoyo, along with environmental certificates and permit for access to water needed for the project to take off.

The government was to initially hold a 10 percent share of the company, rising to 25 percent after 18 years of operations, and receive earnings from the investment.

Some key issues that were yet to be resolved according to EcoEnergy are obtaining the green light from government to the African Development Bank (AfDB) on the project, and issuance of a general notice on the boundary of the Sadaani National Park.

Others outstanding requirements were the finalization of implementation and shareholding agreements between the government and Eco Energy, along with finalization of a power purchase agreement between EcoEnergy and TANESCO for the purchase of surplus electricity generated by the sugarcane processing facility

So far EcoEnergy had secured some permits including the Cane Growers Registration no F.5.03/0001 for sugar cane issued on 28 February 2008 by the Sugar Board of Tanzania (SBT).

The Vice-President’s Office provided the Environmental Impact Assessment certificate, No EC/EIS/089 for the estate in 2009, while SBT provided the sugar manufacturer certificate SMR.NO.BE/SMR/A.05 to EcoEnergy in 2011. The Tanzania Investment Center (TIC) provided a certificate of incentives required under section 17 of the Tanzanian Investment Act on February 2012.

In August 2013, the Wami Ruvu River Basin Water Office provided the final water permit (no WA 0169), which lays out how much water can be used and how much must be left for downstream users, including the Saadani National Park.

On August 26, 2013, TIC signed the performance contract with Eco Energy confirming the government’s approval for the project during meetings by the National Investment Steering Committee (NISC) in 2011, 2012 and 2013. The climate of negotiations to finish the process grew slower and less understanding as time went on, leading to the request for arbitration by EcoEnergy.