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Tardy privatization of TRC harms economy
2006-01-04 14:32:32
By Perege Gumbo
The long awaited economic benefits expected to arise from privatization of Tanzania’s railway system are no longer in sight.
The single-gauge track was laid down ninety years ago during German colonial rule, and reached the shores of Lake Tanganyika in 1914. It was then mainly used to transport migrant labourers and cash crops from the interior to international markets.
Old age, coupled with lack of proper and consistent maintenance since independence, has drastically reduced its economic value. Of late, the northern link line joining Kibaha and Arusha has been rendered a white elephant as it fails to compete with all weather tarmac roads.
Worst, the rolling stock is now outdated, thus making operations inefficient.
Official estimates show that about Tsh.70 billion is urgently needed to revamp the railways, hitherto managed by the public parastatal, the Tanzania Railways Corporation (TRC).
The state was ill prepared to raise this amount of financing, hence the resort to privatization.The recent discovery of nickel in Kigoma region has attracted an investment worth USD 500m, but mine development is said to have been hindered by delayed privatization of the railways.
The central railway-line also traverses virgin land with untapped agricultural potential.
Before April last year, PSRC had already pre-qualified Rites Consortium of India and the Great Lakes Railways Consortium as preferred bidders seeking to run TRC on a concession basis.
The two firms were ultimately required to submit technical and financial bids for final selection. The bids were received on April 13 last year.
The Great Lakes Railways Consortium’s technical bid was then rejected due to failure to meet terms and conditions of the concession.
Subsequently, it challenged the selection in court.
However, in June last year, the lost bidder withdrew the case unconditionally at the Commercial Division of the High Court.
As of now, the Indian Consortium is awaiting government’s nod, having offered USD100m (over Tsh.100bn) as concession fees for 25 years.
Traditionally, the development expenditure of TRC had been borne by donor countries, notably Germany, England and Canada, but since 2000, they have remained on the sidelines to pave the way for privatization.
The president of the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA), Mr. Elvis Musiba, said that poor and outdated infrastructure is hurting the economy.
According to Musiba, a number of investors have already made decisions to start exploring for minerals, but they wanted a reliable infrastructure that could withstand the hauling of minerals in bulk to outlet points.
Malaysian investors have also shown interest to invest in planting 700ha of palm oil trees in Kigoma region.
The Central Railway line also serves the landlocked countries of Uganda, Rwanda, Burundi and Zaire.
The intended major rehab of the system would reduce costly and sporadic accidents while allowing timely delivery of goods.
TRC’s 2,700 kilometres long rail, infrastructure, engines and tracks need major repairs to improve safety standards, which have deteriorated over the last century
In June 2002, 288 passengers tragically died when the train they were travelling in suffered mechanical impairment, sped backwards uncontrollably ramming into a cargo train in Mpwapwa district, Kigoma Region.
Mr. Musiba was commenting on the state of infrastructure development as well as improvement and the general view on the business environment during the ended year 2005.
’Infrastructural problems are not well addressed, and this is partly because of the bureaucrats’ attitude of mind which is resistant to changes,’ he said.
According to him, the stumbling blocks facing the Tanzanian business community are well known to all stakeholders, and, unfortunately, frequent dialogue has so far failed to get to the bottom of them.
Mr. Musiba said that the business community through the Tanzania National Business Council (TNBC) had even labeled all problems facing business people as red, green and yellow, but yet the pace at which those problems were being addressed was not satisfactory.
In November last year, the TRC appealed to the government to hasten its privatization as the corporation’s operations were fast deteriorating at an estimated rate of 20 percent a year for lack of funds.
TRC has been experiencing an average of 40 broken railway sections and 100 locomotive failures every month, and breakdowns were frequent.
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