Annual general report of the controller and - Parliament of Tanzania

and various gas producing companies such as Songas
Tanzania Limited and PanAfrican Energy (T) Company
Limited on the other hand revealed that within the
contract there is a clause which required a producing
company to recover 75% of its cost from the sale of gas
before the profit is shared between the parties.
PanAfrican Energy (T) Company Limited has been
recovering its cost by 75% before sharing the remaining
profit. In order to be certain of the costs incurred by the
Company, TPDC has to satisfy itself with the genuineness
of the claimed costs by undertaking its own audit of the
costs incurred by the Company (Article 21.2 of the PSA
between the Government, TPDC and PAE).
The Corporation’s Internal Audit Unit has been assigned
to undertake the exercise of verifying the costs incurred
by the Company and to accomplish this task the Unit
utilizes the expertise of staff from other directorates of
the Corporation. We observed that the Unit has not yet
completed the exercise and as such the Company is
recovering its costs on unverified expenditure figure.
With the circumstance the Government seems to be out
of control of the company’s costs which is important base
for profit sharing between the parties.
9.11.2 New Investment in Songas Limited TANESCO Shs. 5
billion
According to the Audited Financial Statements of the
Songas Ltd. for the year ended 31 December, 2007 the
Company recorded after tax loss of USD 4,935,000. In
addition, total liabilities exceeded total assets by USD
3,478,000 which indicates that the company’s ability to
continue as a going concern is doubtful. However,
revenue generated by TANESCO is being retained by
Songas Limited for future investment. The total amount
retained up to 31 December 2007 was Shs 5 billion.
In light of the financial problems facing Songas Limited,
the amount so held may be in a risk of recoverability and
instead of holding such cash by Songas, TANESCO could
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Office of the Controller and Auditor General PA&oBs 2007/08 184