In an echo of the Cochabamba water conflict in Bolivia eight years ago, Tanzania was required to take on a private operator to run water and sewage in its capital Dar es Saalam, as a condition for receiving $140 million in World Bank, African Development bank and European Investment Bank loans to repair crumbling infrastructure in the city. A joint venture of UK based Biwater and German-based Gauff was awarded the contract and immediately ran into difficulties - notably in collection of bills, resistance to rate increases and competition from unauthorized water providers.
A dipsute between the consoritum and the Government of Tanzania arose when the operator asked for an increase in tariffs after realizing the difficulty of its tasks and failing to allot sufficient managerial and financial resources. The Tanzanians eventually repudiated the lease contract, and ejected Biwater. Biwater sued for $20 million in lost earnings before the ICSID (International Centre for Settlement of Investment Disputes). Last summer an ICSID panel found that Tanzania had violated its obligations, it refused to award Biwater any compensation. The reasoning was that becasue Biwater had failed to prove any actual damages, just lost opportunities to make money in the future, it was not entitled to recovery.
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