Private sector has been urged to venture into expanding railway networks in order to improve the country’s railway capacity and efficiency.
According to a statement by the Transport Minister Harrison Mwakyembe during the opening of the ongoing East and Central Africa Roads and Rail Infrastructure Summit, the minister said it was time for the government to connect and exploit private sector potential in railway investments.
He explained that the private sector can own locomotives and rolling stock for own account usage under special arrangements, they can also be involved in a variety of ‘railway network expansion projects’ by utilizing financing schemes like the Build Operate and Transfer (BOT).
BOT is a form of project financing, whereby a private entity receives a HYPERLINK "http://en.wikipedia.org/wiki/Concession_%28contract%29" \o "Concession (contract)" concession from the private or HYPERLINK "http://en.wikipedia.org/wiki/Public_sector" \o "Public sector" public sector to finance, design, construct, and operate a facility or project stated in the concession contract.
He noted that since large infrastructure investments are expected to be in the form of Public Private Partnerships (PPP), therefore, investors in the private sector should understand requirements of partnership agreements if they are to participate effectively.
“…if successfully implemented, the Tanzania intermodal and rail concept will lead to rational allocation of freight between road and rail models and increase in port off-take capacity as well as reducing the congestion in the port-city interface.” Mwakyembe explained.
He is of the impression that, the private sector in East and Central Africa ought to consider inter-regional transport connection as a way forward towards a single market that would foster economic development.
“…capital requirement for the modernization of the East Africa railway system is a colossal financial endevour…” the transport minister contended and reiterated the need for private-public sector cooperation.
It is said that economic growth has been very strong in the Eastern and Central Africa especially with the increased activity in mining, agriculture and tourism sectors. Demand for raw materials particularly from India and China is also providing the regions with new export markets.
Therefore the Summit would provide the platform to network with industry stakeholders, probe and evaluate investment opportunities, and to do business with fresh insights.
Tanzania’s railway network dates back to German and British colonial rule period. The two through out the 18th century, constructed and extended railway system as they periodically, especially by war, alternated colonial administration of the region.
The very first railway tracks in Tanzania were built by the Germans in the late1880s. They also built a second set of tracks from Tanga to Moshi which was, in 1929, extended by the British to reach Arusha.
Most of the rest of the Tanzania railway network with the exemption of Tanzania-Zambia Railways (Tazara) were built in the short span of five years between 1970 and1975 with assistance from the People’s Republic of China. Both railway systems, according to the national site tanzania.go.tz are up for privatization.
Regional GDP has been reportedly growing and expected to continue the slow but steady uphill trend. This economic expansion has been attributed to increased oil output in Sudan, mineral exports in Ethiopia and Tanzania, robust trade output from Kenya and economic reforms in Rwanda.
The growth is expected to remain strong with foreign investments in oil and mineral exploration in Sudan, Uganda and Ethiopia and a host of large infrastructure projects in the Central, North and South Corridors.
The Minister for Transport believes, “… efficient transportation corridors are key to economic development…” and advises the region to increase “…rehabilitation projects and resurge infrastructure investment to keep the region prospering.