MWE Correspondent
The High Court of Tanzania has dismissed a lawsuit filed by Independent Power Tanzania Limited (IPTL) against the government, upholding the validity of a 2021 settlement agreement involving the contentious Tegeta Escrow funds.
The verdict, delivered by Justice Awamu Mbagwa, concluded that the plaintiff failed to provide adequate proof that the agreement was signed under coercion or without legal merit.
“The plaintiff has failed to prove its claims on the balance of probabilities. I hereby dismiss this suit for lack of legal standing. The defendants are entitled to recover legal costs,” said Justice Mbagwa.
Background: One of Tanzania’s Most Notorious Financial Scandals
At the heart of the legal battle is the Tegeta Escrow Account, a special holding account created to manage payments during a dispute between IPTL and the Tanzania Electric Supply Company Limited (TANESCO).
The money was meant to stay in escrow pending arbitration at the International Centre for Settlement of Investment Disputes (ICSID), under the auspices of the World Bank Group.
In 2014, it was revealed that over USD 250 million was transferred from the Bank of Tanzania to various private accounts. This sparked a national scandal, triggering resignations from senior government officials, ministerial reshuffles, and extensive public outrage. The saga remains one of Tanzania’s most defining corruption scandals of the last decade.
Despite the settlement signed on March 1, 2021, which formally concluded the original Civil Case No. 90 of 2018, IPTL returned to court in 2024, filing Civil Case No. 14259 of 2024.
The company argued that its chairperson, businessman Harbinder Singh Sethi, signed the deal while in remand at Ukonga Prison in Dar es Salaam, allegedly under duress.
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They also demanded TSh100 billion (approximately USD 40 million) in compensation for damages purportedly suffered due to the agreement.
The High Court found no evidence supporting IPTL’s claim of coercion or invalidity. The ruling is expected to set a precedent in enforcing binding agreements between private investors and state institutions.
Legal experts suggest the outcome affirms the Tanzanian judiciary’s increasing emphasis on finality and enforceability of out-of-court settlements, particularly in cases involving public-private partnerships and high-stakes commercial disputes.
The case has reawakened public discourse around governance, regulatory oversight, and transparency in Tanzania’s energy sector. Critics argue that incidents like the Tegeta Escrow scandal underscore the need for continued reforms in how strategic utilities and concessions are managed.
With Tanzania’s ambitious energy goals under Vision 2025, the government has repeatedly emphasized the importance of restoring investor confidence and strengthening institutions like EWURA (Energy and Water Utilities Regulatory Authority).
While IPTL may explore the option of appealing the decision, the court’s ruling has been praised by legal analysts and governance advocates as a step toward accountability and adherence to legal processes in investment disputes.
