BECCO seeks regulatory assistance from BoT over bank guarantees
THE Bharya Engineering & Contracting Company Limited (BECCO) is seeking regulatory intervention from the Bank of Tanzania (BoT) to prevent Stanbic Bank Tanzania from encashing bank guarantees as requested by Arab Contractors Tanzania Ltd and Elsewedy Electric Tanzania Ltd, operating under joint venture Company as JVACEE.
BECCO’s claim seeks the advance payment guarantee of 1.2bn/- and a performance guarantee of 409.9m/- as dated on 9th April, 2020 both issued by Stanbic Bank, Tanzania.
The two guarantees were created under subcontract agreement where JVACEE had subcontracted BECCO to construct a 77-kilometer road from Kibiti to the construction site of the Julius Nyerere Hydropower Project (JNHP).
Advocate Benedict Ishabakaki of the Victory Attorneys & Consultants, who represents the BECCO, told the Daily News that they have written to the Director of Financial Sector Supervision at the BoT to seek the regulatory intervention for their client.
“Our client seeks the regulatory assistance against the intended liquidation of the expired bank guarantees at the request of the JVACEE,” Mr Ishabakaki said, yesterday.
He said they also demand consumer redress in compelling Stanbic Bank from taking any action to the detriment of their client pending other necessary action by the judiciary and law enforcement authorities.
They also seek consumer redress in compelling Stanbic Bank to release the expired bank guarantees.
“We hope that our complaint shall be handled at the earliest possible time so that our clients may not face further operational impairment,” he said.
He explained that since the bank guarantees had about a day to their expiry on the date of receipt of the order for status quo in 2021, on removal of the order on 2nd May 2023, the life of the bank guarantees resumed and ended officially on 3rd May 2023.
“To date our client has not received any notice for the release of the bank guarantees by neither Stanbic Bank (Tanzania) nor Arab Contractors and Elsewedy Electric Company,” he stated.
In December last year, the High Court Commercial Division put on hold an advance payment guarantee worth 1.2bn/- and bank performance guarantee worth 409.9m/- pending arbitration proceedings.
The arbitration at the Tanzania Institute of Arbitrators (TIArb) involves Bharya Engineering & Contracting Company Limited (BECCO) against Arab Contractors Tanzania Ltd and Elsewedy Electric Tanzania Ltd which operate under joint venture Company as JVACEE.
In his ruling, Judge Deo Nangela of the High Court Commercial Division ruled in favor of BECCO which sought interim orders pending determination of the dispute by arbitration proceedings at the TIArb. The BECCO has filed a case before the arbitrators seeking for settlement of subcontract agreement dispute with JVACEE.
