WATER SPECIALIST Biwater was this week fighting to keep a £144M contract to upgrade infrastructure in the Tanzanian capital Dar es Salaam after the country's government terminated the deal.
Tanzanian water minister Edward Lowassa announced the decision to cancel the ontract at a news conference last week.
He claimed that the City Water consortium of Biwater, German firm Gauff and local contractor STM had not invested enough cash in the network and that water supply services had deteriorated.
City Water said that it would take legal action as the government did not serve 30 days notice as demanded by the contract.
'City Water is taking legal action to uphold the terms of the contract with the Dar es Salaam Water Supply & Sewerage Authority (DAWASA), ' said City Water chief executive, Cliff Stone.
The consortium added that it will continue to provide water and sewerage services in the city until it has received a valid termination notice from the government.
City Water signed the 10 year deal with DAWASA in February 2003. It pledged to install 900km of new mains, carry out an extensive metering programme and rehabilitate existing onnections within the first five years of the contract.
The government claims that work is behind schedule and that services have deteriorated.
City Water admitted that there were some delays due to the network being in a much poorer state than originally anticipated.
The British Consultants & Construction Bureau (BCCB) said the move could jeopardise future private investment in the country.
'Tanzania has had a good reputation. There are other areas where it is looking to gain private investment and the cancellation of this contract is bound to have a knock-on effect in terms of attractiveness to companies, ' said sub-Saharan Africa & Asia Pacific director Douglas Kerr.