January 24, 2015 / 10:36 AM / 4 years ago

UPDATE 2-Tanzania announces cabinet reshuffle after energy minister resigns

* Energy minister is third to lose job over scandal

* Muhongo says he is “incorruptible”

* Energy sector long dogged by graft allegations (Adds details of reshuffle)

By Fumbuka Ng’wanakilala

DAR ES SALAAM, Jan 24 (Reuters) - Tanzania’s energy minister became on Saturday the third cabinet member to resign over a graft scandal that has rocked the gas-rich east African nation and led Western donors to delay aid, though he denied any wrongdoing.

Sospeter Muhongo’s resignation prompted President Jakaya Kikwete to reshuffle the cabinet, naming George Simbachawene as the new energy and minerals minister.

Tanzania’s attorney general and the minister for land have already quit over the scandal, which involves the transfer of at least $122 million.

“I have decided to resign to bring a conclusion to this never-ending debate so the nation can focus on other important issues for national development,” Muhongo told a news conference. “I did not do anything wrong and I did not steal any money. My record speaks for itself, I am incorruptible.”

Tanzania is estimated to have 53.2 trillion cubic feet (tcf) of gas reserves off its southern coast, but its energy sector has long been dogged by allegations of graft.

The graft scandal erupted last November when lawmakers concluded that senior government officials had fraudulently authorised the transfer of public funds to a private company.

The funds came from an escrow account held jointly by state power company TANESCO and independent power producer IPTL and went to IPTL’s owner, Pan Africa Power (PAP), in 2013.

The officials denied anything improper and PAP said the transfer was legal.

Tanzania’s attorney general, Frederick Werema, resigned and Kikwete sacked lands, housing and human settlements development minister Anna Tibaijuka for accepting a $1 million payment from a Tanzanian businessman linked to the energy scandal.

The country’s anti-graft watchdog this month filed corruption charges against five other senior government officials over allegations tied to the energy deal. They deny the charges.

The scandal has tied up payments to aid-dependent Tanzania, with a group of 12 international donors saying they will not pay outstanding budget support pledges worth nearly $500 million until the government responds to the allegations appropriately.

Muhongo, a geology professor with no previous experience in politics, was appointed in 2012.

His successor, Simbachawene, served as deputy energy and minerals minister between 2012 and 2014 before moving to the land ministry. In Saturday’s reshuffle, the finance and foreign affairs portfolios remained unchanged.

Analysts said changes within the energy ministry would further delay the development of the country’s gas industry.

“The top-level changes at the energy ministry will only worsen the decision-making and planning processes,” said Ahmed Salim, senior associate at consultancy Teneo Intelligence. (Editing by Edith Honan and Gareth Jones)

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