Identifier
Created
Classification
Origin
09DARESSALAAM120
2009-02-26 02:42:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Dar Es Salaam
Cable title:
APR ENERGY: TANZANIAN GOVERNMENT READY TO SETTLE?
how-toVZCZCXRO2758 RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN DE RUEHDR #0120 0570242 ZNR UUUUU ZZH R 260242Z FEB 09 FM AMEMBASSY DAR ES SALAAM TO RUEHC/SECSTATE WASHDC 8288 INFO RUCPDOC/DEPT OF COMMERCE WASHDC RUEATRS/DEPT OF TREASURY WASHINGTON DC RUEHLMC/MCC WASHINGTON DC RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE RUEHNR/AMEMBASSY NAIROBI 1167 RUEHKM/AMEMBASSY KAMPALA 3329 RUEHLGB/AMEMBASSY KIGALI 1257 RUEHJB/AMEMBASSY BUJUMBURA 2813
UNCLAS DAR ES SALAAM 000120
SIPDIS
SENSITIVE
AF/E FOR JLIDDLE, AF/EPS FOR ABREITER, INR/RAA FOR FEHRENREICH
PASS USTR FOR PATRICK COLEMAN, WILLIAM JACKSON
COMMERCE FOR BECKY ERKUL
TREASURY FOR REBECCA KLEIN
NAIROBI PASS FCS
E.O. 12958: N/A
TAGS: PGOV ECON EINV ETRD TZ
SUBJECT: APR ENERGY: TANZANIAN GOVERNMENT READY TO SETTLE?
REF A: Dar es Salaam 71, B: 2008 Dar es Salaam 130
UNCLAS DAR ES SALAAM 000120
SIPDIS
SENSITIVE
AF/E FOR JLIDDLE, AF/EPS FOR ABREITER, INR/RAA FOR FEHRENREICH
PASS USTR FOR PATRICK COLEMAN, WILLIAM JACKSON
COMMERCE FOR BECKY ERKUL
TREASURY FOR REBECCA KLEIN
NAIROBI PASS FCS
E.O. 12958: N/A
TAGS: PGOV ECON EINV ETRD TZ
SUBJECT: APR ENERGY: TANZANIAN GOVERNMENT READY TO SETTLE?
REF A: Dar es Salaam 71, B: 2008 Dar es Salaam 130
1. (SBU) Minister of Energy and Minerals William Ngeleja called in
Charge Feb. 25 to discuss the latest GOT discussions on the ongoing
tax dispute with Florida-based APR Energy, LLC (background in ref
a). Ngeleja told CDA and Poloff that he is paying attention to the
issue. He said that at the last Parliament session (early Feb.),he
had convened a meeting with Finance Minister Mkulo to discuss the
matter. He said the relevant government bodies were now working on
the issue with the aim of finding an amicable resolution. Ngeleja
commented that, as a lawyer by profession, the original contract
left a lot to be desired, but that APR's argument had some
justification. He said he was thankful APR had been patient and not
taken the matter to court. (Comment: This may be somewhat
disingenuous, since the initiation of court proceedings would most
likely result in APR's equipment being kept in Tanzania
indefinitely. End comment.) Ngeleja agreed that APR should not be
penalized because of public perceptions about other power deals
(i.e., the Richmond scandal, ref b).
2. (SBU) Charge told the Minister that the U.S. sought a fair and
just resolution of the dispute that would permit the export of APR's
plant. Charge expressed his appreciation for recent GOT efforts,
noting that a quick solution would be in the interest of all sides.
3. (SBU) Prior to the meeting, APR gave us a similarly positive but
more detailed readout of a Feb. 24 meeting with representatives from
the Ministries of Energy and Finance, plus Tanesco and the Tanzania
Revenue Authority (TRA). The parties will work from the framework
agreed in late 2008 (from which the GOT withdrew its consent),with
the additional step of calculating the VAT and corporate tax (which
APR has consistently rejected paying). In the meantime, the threat
to auction APR's plant will remain on hold. APR informed us that
permission to export the plant is fundamental to any agreement. At
the same time, TRA continues to insist on receiving payment.
4. (SBU) Comment: President Kikwete's convening of a new review (at
our urging) seems to have motivated the relevant ministries to seek
a deal. At the very least, the sides have pulled back from the
threat of auction and legal action. However, it is still too early
to say that the GOT will organize itself sufficiently to find its
way to a deal acceptable to APR.
ANDRE
SIPDIS
SENSITIVE
AF/E FOR JLIDDLE, AF/EPS FOR ABREITER, INR/RAA FOR FEHRENREICH
PASS USTR FOR PATRICK COLEMAN, WILLIAM JACKSON
COMMERCE FOR BECKY ERKUL
TREASURY FOR REBECCA KLEIN
NAIROBI PASS FCS
E.O. 12958: N/A
TAGS: PGOV ECON EINV ETRD TZ
SUBJECT: APR ENERGY: TANZANIAN GOVERNMENT READY TO SETTLE?
REF A: Dar es Salaam 71, B: 2008 Dar es Salaam 130
1. (SBU) Minister of Energy and Minerals William Ngeleja called in
Charge Feb. 25 to discuss the latest GOT discussions on the ongoing
tax dispute with Florida-based APR Energy, LLC (background in ref
a). Ngeleja told CDA and Poloff that he is paying attention to the
issue. He said that at the last Parliament session (early Feb.),he
had convened a meeting with Finance Minister Mkulo to discuss the
matter. He said the relevant government bodies were now working on
the issue with the aim of finding an amicable resolution. Ngeleja
commented that, as a lawyer by profession, the original contract
left a lot to be desired, but that APR's argument had some
justification. He said he was thankful APR had been patient and not
taken the matter to court. (Comment: This may be somewhat
disingenuous, since the initiation of court proceedings would most
likely result in APR's equipment being kept in Tanzania
indefinitely. End comment.) Ngeleja agreed that APR should not be
penalized because of public perceptions about other power deals
(i.e., the Richmond scandal, ref b).
2. (SBU) Charge told the Minister that the U.S. sought a fair and
just resolution of the dispute that would permit the export of APR's
plant. Charge expressed his appreciation for recent GOT efforts,
noting that a quick solution would be in the interest of all sides.
3. (SBU) Prior to the meeting, APR gave us a similarly positive but
more detailed readout of a Feb. 24 meeting with representatives from
the Ministries of Energy and Finance, plus Tanesco and the Tanzania
Revenue Authority (TRA). The parties will work from the framework
agreed in late 2008 (from which the GOT withdrew its consent),with
the additional step of calculating the VAT and corporate tax (which
APR has consistently rejected paying). In the meantime, the threat
to auction APR's plant will remain on hold. APR informed us that
permission to export the plant is fundamental to any agreement. At
the same time, TRA continues to insist on receiving payment.
4. (SBU) Comment: President Kikwete's convening of a new review (at
our urging) seems to have motivated the relevant ministries to seek
a deal. At the very least, the sides have pulled back from the
threat of auction and legal action. However, it is still too early
to say that the GOT will organize itself sufficiently to find its
way to a deal acceptable to APR.
ANDRE