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Tanzania challenges seizure of aircraft in Canada over debt

DAR ES SALAAM – Tanzania is mounting a legal challenge against a construction firm’s seizure of one of the country’s new commercial planes in Canada as compensation for a disputed contract, President John Magufuli said on Monday.

A Canadian construction firm, Stirling Civil Engineering Ltd, seized the newly manufactured Q400 turbo-prop plane in Canada earlier this year over a $38 million lawsuit before it could be delivered by Bombardier Inc to the Tanzanian government.

“We have decided to challenge these claims in court … I have already sent the attorney general to Canada to handle this matter,” Magufuli said in a televised speech late on Monday at the inauguration of a new airport in the Tanzanian lakeside town of Bukoba.

“I have also written a letter to the Canadian prime minister to help speed up this case because this airplane has been confiscated for the past six months now.”

Stirling’s claim stems from a 2010 compensation ruling by the International Court of Arbitration, a court of the International Chamber of Commerce (ICC), over a road contract that was terminated before Magufuli became president.

Magufuli said in his speech that another claim worth over 40 billion Tanzanian shillings ($18 million) has been filed against the government by a company in a United Kingdom court, but did not reveal the name of the firm nor details of the lawsuit.

Known as “The Bulldozer” for his management style, Magufuli used some colour language as he pledged Tanzania would overcome its business challenges..

“These are just development challenges and we will deal with them…. When a farmer bumps into a snake while farming his land, he does not quit – he knocks the snake in the head and continues with his work,” he said.

Magufuli’s government is investing around $500 million in the purchase of at least six new planes as part of plans to revive its loss-making national flag carrier, Air Tanzania Company Ltd.

The government’s airline revival plan includes the purchase of at least three Q400 planes, two CS-300 series jet planes from Bombardier and one Boeing 787 Dreamliner from Boeing .

Two Q400 planes have already been delivered, with the other planes expected to arrive in Tanzania before the end of next year.

Analysts said the new planes had been put under the ownership of state-run Tanzania Government Flight Agency to avoid possible confiscation of the planes from lawsuits related to Air Tanzania’s multi-million dollar debts from previous suppliers. ($1 = 2,240.0000 Tanzanian shillings)

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