The Parliamentary Parastatal Organisations Accounts Committee (POAC) has found massive deficiencies in the leasing of the national ATCL’s Air bus that is going to detriment the government heavily.
Tabling the Committee’s Report ending June 30, 2010, the chairman, Kabwe Zitto said they had found out that the hiring of the Air Bus by the Air Tanzania Company Ltd did not follow procedure.
“The committee has discovered that the Treasury registrar on behalf of the state provided a guarantee to the ATCL under the Government Loans, Guarantees and Grants Act of 1974 (amended in 2003).
He said following the government move, ATCL managed to hire Air Bus 420 – 214 in 2007 from Wallis Trading Company of Lebanon for six years.
“My committee wanted to study the whole processes in order to establish deficiencies,” he said, adding that the committee established that the hiring of the plane was done on October 2007 while the state guarantee to ATCL was concluded on April, 02 2008.
“It is obvious that the plane was leased before the state guarantee was obtained and this is contrary to the Government Loans, Guarantees and Grants Act of 1974 as amended in the year 2003.
Zitto said the contract was signed contrary to the consultant’s advice which was that it was not right to hire a plane which after six months would go for a major check, carried out after twelve years of service.
“Those who entered into the contract were aware that the plane would have to be sent for a major maintenance six months after its arrival in the country,” said the committee. He said the government guarantee was worth USD 60,000,000 and by June 2011 the guarantee together with interest rate has reached 108bn/-.
Zitto told the House that after the plane was leased, it remained in the hands of the owner (Lessor) for seven months, explaining that the contract was signed in October 2007, but the plane was released to ATCL in May 2008 because of the delays of the state guarantee.
The committee said after being brought into service in May 2008, the plane operated for only six months, before being taken to France for the maintenance check, done after 12 years of service.
Zitto said in July 2009 the plane was sent to France and all the checks done, but it was never brought back into the country because ATCL had no funds, amounting to USD 3,009,495 to pay for the maintenance.
“In this case and according to the arguments tabled, the government would be compelled to pay the ATCL debt because it was taken under the government guarantee and which in principle was caused by the executive who misused their powers and authorities to cause the nation to suffer a great loss.
“The committee advised the government to initiate punitive measures against all people involved in the contract according to the laws of the land,” said Zitto.
In another development, the committee has taken to task the Tanzania Electric Supply Company Ltd (Tanesco) and other public institutions for poor implementation of the public procurement act and its regulations.
Zitto told the House yesterday that many of the problematic areas in public institutions involve poor application of the act and its regulations.
Citing an example, Zitto said Tanesco was one of the companies have misused the act and its regulations in making procurements amounting to between 300bn/- and 600bn/- without following procedure.
“In the 2009/2010 financial year, Tanesco made procurements valued at 258bn/-. This is huge sum of money. Legal measures should be taken when such cases arise,” he said.
The audit report of Tanesco as per December 2010 shows that the utility spent 1.8bn/- and 65m/- which were earmarked by the budget for rehabilitation of a dock at Mtera Dam.
“This increased cost of rehabilitation of the dock is too high. The committee was not satisfied by the rehabilitation work done at Mtera Dam and we have instructed internal investigation on cost increase,” he said.