Zanzibar terminates land lease offered to British developer

Unguja. The Revolutionary Government of Zanzibar (SMZ) has terminated a land lease held by British property developer Pennyroyal Limited in Matemwe, the developer has announced.

The land in question was a 411 hectares where the Blue Amber resort project was under construction with first phase delivery of units initially set for December 2022.

The termination was followed by a letter on July 25, from the Zanzibar Investment Promotion Authority (ZIPA) informing Pennyroyal Limited that it will not renew its construction permit following the termination of leasehold by the Ministry of Lands.

On September 5, while addressing a monthly press conference at State House, President Hussein Mwinyi said the land lease had been terminated following a court case which the developer lost.

“What I know is that there was a case which was filed with some people claiming that the land was their but the details are with respective authorities,” said President Mwinyi.

In a statement issued by Pennyroyal, on Sunday September 11, the developer says that as a result they were left with no option but to terminate their operations at the site, in the process sending home 60 workers and closure of offices.

According to the statement the termination and consequent refusal to renew the building permit was issued despite the fact that they had obtained a High Court interim status quo in February 2022.

“In 2014, Pennyroyal Limited and its predecessor acquired a consolidated Leasehold for 411 hectares, from SMZ, for purposes of developing the Blue Amber Resort,” reads the statement.

It added: Subsequently, the design of the Project was completed, presented, and approved by the Zanzibar Investment Promotion Authority (ZIPA). Pennyroyal was granted a Strategic Investor status. All other statutory authorisations including the Environmental Impact Assessment Certificate was issued. The statement further says that in June 2021, Pennyroyal Limited was informed by authorities that the Government intended to give part of the land under its leasehold to ‘investors from Dubai, UAE’. This, they say was followed by a letter from the Government that it was seeking to execute a High Court decree where a third-party company had won a dispute involving Plots No. 1107 and 1118.

The plots were part of the land under Pennyroyal Leasehold which was currently under development.

“It later transpired that in the case that was being referred to, was against the Government and not Pennyroyal Limited,” reads the statement.

According to the developer, there was no explanation as to why Pennyroyal Limited, being the registered leasehold owner, was neither joined to the case as an interested party nor informed of the proceedings of the case.

“It is also noteworthy that, to date no High Court execution orders have been issued against Pennyroyal Limited as required or at all,” says the developer.

According to the investor Mr. Brian Thomson, Pennyroyal Limited and its representatives have done all that is in their ability to resolve the current situation, since the alleged dispute plots are only a fraction of the entire project (only 20 hectares out of the 411 hectares) and would not warrant termination of the entire leasehold.

“However, our efforts have been futile as the Government has declined to reverse its position. We have since informed all the prospective property owners who had invested in different types of properties, of this development.” said Mr. Brian Thomson, the owner of Pennyroyal Limited.

He added: “The said cancellation of the Land Lease agreement and consequent refusal to renew the construction permit did not consider that Pennyroyal Limited had already invested heavily in the project as reported to ZIPA regularly through quarterly filings, and there is ongoing construction at the site and the Court order issued in February 2022.”

In an independent follow up, the Citizen has obtained the court order that instructed the maintenance of the status-quo in February and a copy of letter from ZIPA regarding the renewal of the permit which was signed by Shida Kombo on behalf of the Executive Director.

“Please be informed that Zipa could not process your application due to the reason that your land lease agreement has been terminated by the ministry responsible for land,” reads part of the letter.

The Citizen made an effort to reach out to the ZIPA executive director Shariff Ali Shariff for comment but phone calls and messages were not answered.