Mauritian firm, Aqua Power, sues Tanzania, seeks $500 million in compensation

Dar es Salaam. The shadow of investment disputes still looms over the Tanzanian government as Aqua Power Tanzania Limited, a company registered in Mauritius, has initiated legal proceedings seeking over $500 million (Sh1.3 trillion) in compensation.

Aqua Power Tanzania Limited, a company registered in Mauritius, has initiated legal proceedings seeking over $500 million (Sh1.3 trillion) in compensation from the Tanzanian government.

Aqua Power, headquartered in Ebene, Mauritius, has filed an investment dispute against the Tanzanian government at the International Centre for Settlement of Investment Disputes (ICSID) in Washington.

The company, which specialises in electricity production using various energy sources, claims to have faced discrimination from the government, including being denied an investment license in the energy sector.

In its arbitration claim, Aqua Power is seeking $500 million (Sh1.3 trillion) for lost business over the past four years and for the value of its current projects in Tanzania.

If awarded, this amount would be the largest compensation claimed by any company in a Tanzanian investment dispute to date.

According to documents reviewed by The Citizen, Aqua Power submitted its request for arbitration to the Secretary-General of ICSID on September 17, 2024, through its legal counsel, Natasha Paray.

ICSID, represented by attorney Govert Coppen, responded to the company on September 18, 2024, confirming receipt of the request and assigning registration number R20240074.

“According to Rule 5(b) of the ICSID Rules, we are forwarding the application to the Government of the United Republic of Tanzania via the email addresses specified in the application,” ICSID said in a letter addressed to Aqua Power’s CEO, Dr Gachao Kiuna, and its lawyer, Paray.

On the same day, ICSID forwarded Aqua Power’s request to the Tanzanian government through the Office of the Attorney General and the Office of the Solicitor General.

Efforts to reach Attorney General Hamza Johari for comment were unsuccessful, as his phone remained unanswered despite multiple attempts.

He also did not respond to text messages sent via SMS or WhatsApp.

Aqua Power’s claims

In its arbitration application and notice of dispute served to the Tanzanian government, Aqua Power alleges that various government authorities have repeatedly violated the Bilateral Investment Treaty (BIT) between Mauritius and Tanzania.

The company claims it was subjected to discriminatory directives, denied licenses and permits, and restricted from accessing natural gas resources for its operations.

Aqua Power asserts that it was invited by the Dangote Group to invest in the energy sector by constructing a gas-powered plant for electricity generation.

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

However, Aqua Power claims it was later denied the license to generate and sell electricity, with the government granting the license solely to Dangote, despite Aqua Power being the plant’s owner.

Additionally, Aqua Power alleges that the Tanzania Petroleum Development Corporation (TPDC) refused to sell natural gas for its operations without providing valid reasons.

The company further claims the government is facilitating the appropriation of its resources for CSI Energy Group (Tanzania) Limited without offering any compensation.

Aqua Power also alleges that while it was denied a license to produce electricity for sale to Tanesco and Mozambique, similar licenses were granted first to Dangote and later to CSI Energy Group for the same projects registered by Aqua Power with TIC.

Other allegations include the failure to conduct fair and equitable bidding processes, which Aqua Power claims led to clear discrimination against the company.

As a result, Aqua Power 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 for an amicable resolution.

The company allowed six months for negotiations, as required under Article 8 of the BIT, for dispute resolution.

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

Although both sides agreed to a second meeting to reach an agreement, 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 on July 9, 2024, as scheduled due to pending approvals from relevant authorities.

By the time Aqua Power filed its case on September 17, 2024, the second meeting had not taken place.

In its notice, the company indicated it had been patient for three years, reaching out to various government officials regarding its complaints but receiving no response.