VZCZCXRO3222
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0206 0890249
ZNR UUUUU ZZH
R 300249Z MAR 09
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 8374
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 1213
RUEHKM/AMEMBASSY KAMPALA 3371
RUEHLGB/AMEMBASSY KIGALI 1298
RUEHJB/AMEMBASSY BUJUMBURA 2849

UNCLAS DAR ES SALAAM 000206 
 
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: CONFLICTING MESSAGES FROM TANZANIAN GOVERNMENT 
 
REF A: Dar es Salaam 120 and prior 
 
¶1. (SBU) Summary. Department of Commerce DAS Holly Vineyard 
discussed the ongoing tax issue concerning Florida-based APR Energy, 
LLC, (ref a) with several GOT officials during her March 16-19 visit 
to Dar es Salaam.  While the Ministry of Energy and Minerals 
supported APR's position on the intent of the contract that lies at 
the center of the dispute, Ministry of Finance (MOF) and Tanzania 
Revenue Authority (TRA) insist that APR must appeal the claimed tax 
through the formal Tanzanian channels.  APR representative Jake 
Kennedy said the company remained open to a settlement, but only if 
the GOT authorizes export of the company's equipment. End Summary. 
 
¶2. (SBU) Acting Commissioner for Energy Prosper Victus told Vineyard 
that the spirit of the 2006 contract was for Tanesco, Tanzania's 
energy parastatal, to assume responsibility for the taxes that 
currently are in dispute.  He said the case was "unfortunate," and 
that the contract had been executed with too much haste.  Victus 
said he had discussed the case with MOF and expressed confidence 
that the dispute would be resolved, perhaps by MOF arranging for a 
tax exemption.  Victus suggested we advise other companies bidding 
on Tanesco projects to be sure all loopholes are well covered, but 
added that we should consider the APR dispute an isolated case. 
 
¶3. (SBU) TRA Commissioner for Tax Investigation Lusekelo Mwaseba 
reiterated TRA's position, that APR - not Tanesco - is the relevant 
taxpayer and accordingly must either pay the claimed tax or use the 
proper channels for appeal.  Mwaseba referred to the Attorney 
General's ruling that the 2006 contract did not exempt APR from 
paying corporate tax, and repeated TRA's insistence that APR pay the 
"agreed" withholding taxes on its employees.  Mwaseba added that at 
the February meeting between GOT and APR's local attorney and 
accountant, APR had been given the opportunity to file an objection 
to the claimed tax.  He said TRA had not received an objection. 
Mwaseba said pointedly that TRA had exercised great restraint by not 
auctioning the seized plant.  DAS Vineyard expressed appreciation 
that the plant had not been auctioned, noting that such an act would 
be seen as expropriatory. 
 
¶4. (SBU) MOF PS Ramadhani Khijjah covered much of the same ground as 
TRA.  He stressed that MOF, while setting policy, does not have a 
formal role in tax disputes, which should be handled through the Tax 
Appeals Board and Tax Appeals Tribunal.  Khijjah suggested APR 
exhaust all local avenues for appeal before considering 
international arbitration.  Khijjah said APR and TRA should agree on 
the exact amount of tax in dispute, then report back to the 
interagency group chaired by the Ministry of Energy and Minerals. 
Khijjah suggested we advise other U.S. companies interested in doing 
business with the GOT or parastatals like Tanesco that they should 
be sure to know local laws well. 
 
¶5. (SBU) DAS Vineyard also raised the APR dispute in her meetings 
with the Ministry of Industry, Trade and Marketing and the Tanzania 
Investment Center.  Officials from both organizations expressed 
concern and offered to contact MOF. 
 
¶6. (SBU) APR Project Coordinator Jake Kennedy told Vineyard that 
APR's accountant was in the process of completing an audit to 
determine the total tax in dispute (though he complained that APR 
was in effect paying for work TRA should already have done).  Once 
that information was presented to the GOT, he hoped there might be 
an avenue for resolution, especially if the figure turned out to be 
much smaller than the approximately USD 10 million claimed by TRA. 
Kennedy emphasized that APR would be willing to make a deposit in an 
escrow account or some other mechanism to launch a formal appeal, 
but only if the GOT would expressly permit export of APR's seized 
plant.  Otherwise, APR would take all available legal action. 
Kennedy said he hoped to avoid that step, not least because of its 
impact on future APR business in East Africa. 
 
¶7. (U) DAS Vineyard has cleared this cable. 
 
ANDRE