Hearing of $500 million compensation claim against Tanzania set for March 6

Details of the hearing’s commencement on March 6, 2025, were posted on the World Bank (WB) website, which oversees ICSID.

However, the Tanzanian government has yet to comment on the latest development.

When asked about the case, Attorney General (AG) Hamza Johari declined to comment, instead referring questions to the Solicitor General (SG).

"Have you contacted the Solicitor General? Please reach out to him, as he is the one familiar with all government cases, even, I receive information from him," AG Johari said.

However, despite attempts to reach the Solicitor General, Dr Ally Possi, via phone and WhatsApp messages both before and after AG Johari's instructions, there was no response.

According to the ICSID, both sides have already appointed their arbitrators, with a jointly selected chairperson, Jan Paulsson.

 The tribunal which was officially established on January 6, 2025,will be joined by Brooks Daly, former Deputy Secretary General and Principal Legal Counsel of the Permanent Court of Arbitration (PCA), who was appointed by the claimants, and Makhdoom Ali Khan, appointed by the respondent, Tanzania.

Before the hearing, each side was required to post a bond of $200,000 (over Sh500 million).

Aqua Power, which is power generating company from various energy sources and infrastructure, is seeking compensation of $500 million (over Sh1.3 trillion) from Tanzania.

The company claims the compensation is for lost business over the past four years and the value of its current projects in Tanzania.

Aqua Power's claims

In its arbitration application and notice of dispute served to the government, Aqua Power alleges that Tanzania, through various coordinating authorities and other entities, has repeatedly violated the Bilateral Investment Treaty (BIT) it entered into with Mauritius.

The company claims the government has issued discriminatory directives, denied it licenses and permits, and restricted access to natural gas resources for its operations. 

Aqua Power explains that it was invited by the Dangote Group to invest in energy by constructing a gas power plant for electricity generation.

Based on that agreement, Aqua Power asserts it built a 45-megawatt power plant in Mtwara, registered with the Tanzania Investment Centre (TIC), and invested $50 million (Sh135 billion). 

However, it claims the government denied it the license to generate and sell electricity, instead granting the license solely to Dangote, despite Aqua Power being the plant's owner and without just cause.

Additionally, Aqua Power asserts that the Tanzania Petroleum Development Corporation (TPDC) refused to sell it raw materials, specifically natural gas, for its operations without valid reasons. The company claims Tanzania is facilitating the appropriation of its resources for CSI Energy Group (Tanzania) Limited without any compensation to the rightful owners.

Aqua Power also alleges that while it was denied the license to produce electricity for sale to Tanesco and Mozambique, the license was granted first to Dangote and then to CSI for the same projects registered by Aqua Power with TIC.

Other allegations leveled against the government include failure to conduct fair and equitable bidding processes, leading to clear discrimination against Aqua Power, which claims Tanzania is seeking new owners for its resources.

Consequently, the company argues that these actions by Tanzania violate Articles 3, 4, and 5 of the Bilateral Investment Treaty between Mauritius and Tanzania (BIT).

Before filing the lawsuit, Aqua Power issued a six-month notice to the Tanzanian government on September 17, 2023, expressing its intention to initiate legal proceedings while inviting the government to engage in discussions to reach an amicable agreement. The company allowed six months for negotiations, in accordance with Article 8 of the BIT regarding dispute resolution.

According to the arbitration application documents, the six-month period ended on March 31, 2024. The first meeting of both parties took place on March 12, 2024, at the Office of the Solicitor General.

Both sides agreed to meet again for a second session to reach an agreement, but that meeting never occurred, despite Tanzania's repeated requests for postponements and rescheduling. The last planned meeting was set for July 9, 2024.

However, on June 28, 2024, the government informed Aqua Power in writing that its negotiation team could not meet for the second session as scheduled on July 9, 2024, due to pending approvals from relevant authorities.

By the time Aqua Power filed its case on September 17, 2024, the second meeting had not yet occurred. In its notice, the company indicated it had been patient for three years, reaching out to various government officials regarding their complaints but receiving no responses.