Local News

400 laid off at Kiwira Mines

The Permanent Secretary in the Ministry of Energy and Minerals, Mr Eliakim Maswi.

ALL the 400 employees of the ailing Kiwira Coal and Power Limited (KCPL) have been retrenched in a bid to relieve the government of the financial burden it has been bearing in connection with the defunct coal mine project, it has been announced.

The government has since 2008 been paying salaries and meeting other costs for the project after Tanpower Resources Limited, which acquired a 70 per cent stake in the venture in 2005, failed to develop the mine and pay salaries to its workers.

The Permanent Secretary in the Ministry of Energy and Minerals, Mr Eliakim Maswi, told journalists in Dar es Salaam on Tuesday that the government would pay the workers a total of 1.3bn/- in severance and other payments.

"The government has decided to retrench the workers from June 30, this year, since it cannot continue paying salaries and footing other bills while the project remains dormant. The decision followed a cabinet meeting of April 23, this year," he explained.

The PS, who was flanked by State Mining Corporation (STAMICO)'s Director General, Mr Gray Mwakalukwa and the Acting Commissioner for Minerals, Mr Ali Samaje, said preparations for the payments were being done. "I want to assure all the workers that they will receive payments by next Monday (July 9, this year)," the PS said.

Mr Maswi said a team of experts from the ministry met with the management and trade union representatives of the company on June 7 and 8, this year and deliberated on the workers' benefits.
"After a thorough analysis, the experts found out that they were a total of 398 workers. The team was also charged on working on total benefits that the workers were entitled to," said the soft-spoken PS.

It came to light yesterday that the government had spent about 4.5bn/- to pay salaries and arrears since it repossessed the project in 2008 from Tanpower Resources Limited. The project has now been placed under STAMICO.

Tanpower Resources Limited, which has been linked to former President Benjamin Mkapa and former Energy Minister during his time, Mr Daniel Yona, is said to have acquired the project a mere 700m/-, despite the fact that valuation carried out in 1991, put its value at 7bil/- by then.

The investor had entered into a partnership agreement with the government in 2005, in which the latter held 30 per cent stake, with a prospect of developing the coal mine for electricity generation. It, however, failed to develop the project and forced the government to reclaim it in 2008.
 
"During discussions with the investor he had wanted to be reimbursed 75 million US dollars for the 70 per cent stake it held, but the government refused since it had incurred cost which was supposed to be settled by the investor," he explained.

He also rubbished claims that the investor had been paid 40bn/- as compensation for the 70 per cent stake, stressing that "the investor has not been given a single shilling."  "Nonetheless, the government has set aside 32bn/- which the investor had borrowed on a government guarantee from the National Social Security Fund (NSSF), Public Sector Pension Fund (PSPF) and CRDB Bank," the PS said.

Speaking at the event, the STAMICO boss, Mr Mwakalukwa, said his corporation had the capability of running the mine if it acquired loans. "In absence of loans to enable us run the project would scout for a strategic investor," Mr Mwakalukwa said, adding that the Minister for Energy and Minerals would shed more light on the matter while tabling his ministry's budget estimates in the National Assembly in two-weeks to come.

Mr Mwakalukwa was optimistic that the project would be in a position to generate 200 mega watts from coal by December, next year.