Tanzania's parliament receives report on graft claims in energy

Reuters News
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Posted: Nov 16, 2014 10:22 AM

By Fumbuka Ng'wanakilala

DAR ES SALAAM (Reuters) - Tanzania's parliament has received a report on the findings of an investigation into corruption allegations in the energy sector, officials said on Sunday, an issue that has led to donors delaying aid and weakened its currency.

A group of 12 international donors have given $69 million of $558 million pledged in budget support, saying the rest would be paid only if the findings of the investigation into the alleged scam were released and appropriate action taken.

Officials did not comment on what those findings were.

Foreign grants and loans are a big source of hard currency in Tanzania, and the delay has hurt its currency, traders have said.

Tanzania has made big discoveries of natural gas, but its energy industry has been dogged by allegations of corruption in the past. Businesses have long complained graft is one of the main reasons for the high cost of doing business in Tanzania.

"The Controller and Auditor General's office has concluded its special audit into the allegations and has submitted its report to our committee," Deo Filikunjombe, vice-chairman of the parliamentary public accounts committee told Reuters.

"We are studying the report... and will present its findings to parliament on November 26."

The chairman of the committee, Zitto Kabwe, has also confirmed on his Twitter account that his committee had received the probe report.

It was not clear, however, what action parliament would then take.

The investigation, which the government ordered in May, followed claims by opposition MPs that senior government officials fraudulently authorized payment of at least $122 million of public funds to a private company.

The opposition said the money came from an escrow account held jointly by state power company TANESCO and independent power producer IPTL and went to IPTL's owner, Pan Africa Power (PAP) in 2013. PAP said the transfer was legal.

The government has denied any wrongdoing by its officials. The government's anti-corruption watchdog is also investigating the fraud allegations.

The finance minister has said Tanzania would not resort to seeking emergency loans, citing that issue of aid delay will be resolved soon.

However, the aid delay has hit Tanzania's shilling currency, which has fallen sharply over the past month.

The shilling closed trading on Friday at 1,725/1,735 against the dollar, compared with 1,691/1,696 a month ago.

A senior finance ministry official said the government would for now allow the exchange rate to be market driven.

(Editing by James Macharia and Clelia Oziel)