The Tanzanian public audit office has re-launched an investigation into corruption in the Tanzanian energy sector following allegations that Tanzanian government officials have been making fraudulent payments.

The Tanzanian opposition party (Chama cha Demokrasia na Maendeleo) has accused senior officials of illegally authorising payments of at least USD 122 million of public funds. The money was paid from an account held jointly by state owned TANESCO and independent power producer IPTL to IPTL’s owner, Pan Africa Power, in 2013.

Both the Tanzanian government and Pan Africa Power deny that the payment was fraudulent.

A group of 12 international donors are withholding funds to the East Africa energy sector until the investigation is complete. The group is made up of Britain, Germany, Norway, Finland, Sweden, Japan, Canada, Ireland, Denmark, the European Commission, the World Bank and the African Development Bank.

This year the group has already given Tanzania USD 69 million as general budget support and has committed to contributing a further USD 490 million.

Sinikka Antila, the chairperson of the donors’ general budget support committee said that disbursements will not be made until the auditor general report has been completed. She went on to state that if the report does find

any misappropriation or wrongdoing the group expects to see prudent action by the government.

Tanzania has had several big discoveries of natural gas, however allegations of corruption have restrained the industry.

Tanzania’s energy sector has lately been hit by several corruption scandals. Earlier this year, the former chief executive of TANESCO, William Mhando, was charged with abuse of office and forgery. A state audit report found that he had awarded a contract worth over USD 524,000 to a company owned jointly by himself and his wife.

“We have been having huge problems with electricity in Tanzania for the last 20 years,” said Kabwe, a member of parliament for the opposition party. “There is no story of power in Tanzania, of the energy sector in Tanzania, without corruption.”

Politicians are worried that the scandal could taint Tanzania’s political and business climate as it prepares for large-scale gas. Many are concerned that action must be taken now to establish a safe, legitimate regime to accommodate the significant energy revenues that Tanzania expects in the future.

The auditor general responsible for the investigation previously predicted that the process would be completed by the end of July however no results have been published so far. The government’s anti-graft agency, PCCB, is still conducting a separate corruption investigation. It is understood that the two reports will be released concurrently.