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Badilisha Lugha KISWAHILI

ATC`s failure to repay Sh 1.25bn TCRA loan riles CAG

15th April 2012
CAG Ludovick Utouh

The office of the Controller and Auditor General (CAG) has expressed concern over the financial inability of Air Tanzania Corporation (ATC) to repay a Sh 1.25 billion loan granted to it by the Tanzania Communication Regulatory Authority (TCRA).

This concern has been noted in the audited accounts of Public Authorities and Other Bodies for 2010/2011, whose report was availed to the public in Dodoma on Thursday by CAG Ludovick Utouh.

According to the report, “the audit of TCRA observed that the Authority granted a special loan amounting to Sh 1.25 billion to Air Tanzania Corporation (ATC) in an effort to assist its revival. However, there was no indication or possibility of a revival.

“The amount loaned by TCRA is at the risk of recoverability and, worse still, is the fact that the loaned amount does not earn any interest as it would have been if the amount was invested in commercial banks,” the report reads in part.

Speaking about the Ngorongoro Conservation Area Authority (NCAA), Utouh, in his report, states that in April 2008 NCAA advanced Sh 634.76 million to Toyota Tanzania for the purchase of motor vehicles.

However, out of the amount paid Toyota supplied motor vehicles valued at Sh 471.355 million on August 15, 2008 and Sh 137.9 million on June 30, 2010. The report says when the audit was carried out in the 2010/2011 financial year it was noted that a balance of Sh 34.5 million was yet to be recovered from Toyota.

“To make matters worse, no proper arrangement and agreement on how to recover the funds by the Authority had been made. This is contrary to the best practice of cash management, which requires that any money advanced to suppliers must be recovered within twelve months, failure to which interest penalties or interest must be imposed thereon,” Utouh states in his report.

In the course of auditing investments of the National Social Security Fund (NSSF) it was noted that the Fund has not signed any project financing agreement with the government for the construction of Phase II of the University of Dodoma (UDOM).

According to the report, NSSF spent Sh 234.054 billion on the project but only signed a contract for Sh35.218 billion. The buildings for Phase I were completed and put into use in September 2008, but the Fund has not collected rentals or repayment of the loan from the government, which has accrued interest amounting to Sh14.157 billion.

The report further states that the amount used to finance Phase I of the project has been recognised as a loan, with the interest portion being capitalized contrary to the contract terms which state that the project was in the form of Design, Build, Own and Transfer whereby the Fund should have been receiving rent calculated on the basis of cost and interest on investment over the period of ten years.

With regard to the Machinga Complex, the CAG noted that NSSF advanced a loan of Sh 12.9 billion in 2007 to the Dar es Salaam City Council (DCC) with an interest of 14.9 per cent, but the loan has not been serviced and no repayment has been made. The loan, as of June 31, 2011, stood at Sh15.4 billion.


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