Govt dumps City Water
 
2005-05-14 09:18:05
By Bilal Abdul-Aziz

	Water and Livestock Development Minister Edward Lowassa.

The government yesterday terminated its contract with City Water Services Limited (CWS), a private company charged with supplying water in Dar es Salaam.

Water and Livestock Development Minister Edward Lowassa made the announcement to the Press in Dar es Salaam yesterday, shortly after attending a Cabinet meeting at State House.

The Cabinet, which sat yesterday, endorsed cessation of the contract after it was satisfied that the firm had failed to deliver on its contractual obligations, the minister said.

'The government has terminated the contract with City Water Services effective from today,' Lowassa told a packed news conference at the ministry headquarters.

He said a new institution, to be known as Dar es Salaam Water and Sewerage Corporation (Dawasco), would be formed immediately to replace City Water.

The minister also said the government had directed the Dar es Salaam Water and Sewerage Authority (Dawasa) to make the necessary arrangements to terminate the contract.

However, he said the cessation of the contract would not affect the current jobs, as Dawasco would inherit all local City Water employees.

Salaries and other benefits accrued to the workers would not be affected by the change in management, the minister assured the workers.

He encouraged them to work hard in the transition period for the benefit of the nation.

Lowassa told reporters that the government had reached the 'tough' decision following recommendations by Dawasa to the government.

Giving reasons that led to the decision, he said the firm had failed to inject capital into water services as agreed.

'It was expected that, by the end of the second year of service, a capital investment amounting to US$8.5m would have been injected into the project, but as of today, as we approach the end of that period, only US$4.1m, which is less than 50 per cent of the target, has been invested,' noted Lowassa.

He further noted that from the time of inception two years ago, the company had been experiencing problems that had affected its performance, which was in breach of the lease conditions.

Lowassa said the water firm had also failed to submit revenue collections and similarly failed to settle the lease fee that had accumulated to 3.6bn/-.

'City Water has also failed to contribute towards the fund that was intended to supply water to the low income people,' said the minister.

The problems, he said, had caused financial problems to City Water itself and Dawasa and decreased the capacity of the latter in financing development of the ongoing improvement of water services.

In response to Dawasa’s recommendations, City Water defended itself and claimed it had failed to deliver due to what it called “unexpected circumstances' and said that there was a need to revise the contract.

In order to clear the doubts, he said, the government directed Dawasa to hire an independent company that would examine the condition of the company and advise the government accordingly.

Two private companies, Price Waterhouse Coopers (PWC) and Howard Humphrey’s, did the job and gave the verdict that conditions had not varied from the time the contract was signed, explained Lowassa.

After the report was released, he said, City Water called for the review of the contract.

Lowassa said that the new corporation, Dawasco, would take charge of all City Water operations and Dawasa would remain with its duty of overseeing implementation as the holding company on behalf of the government.

Regarding the impact of the decision, he said that his ministry was sure that the water supply situation would not be affected by the change.

However, he asked for patience from the Coast Region and Dar es Salaam residents, if any problems occur, as the government worked to establish Dawasco.

The government leased the responsibility of supplying water in the city to City Water for a period of ten years on August 1, 2003.

A partnership of two companies, namely Biwater PLC of United Kingdom and HP Gauff of German, which jointly owned 51 per cent of shares, and Superdoll Trailer Manufacturer Ltd (STM) of Tanzania, which owns 41 per cent of shares, formed City Water.

• SOURCE: Guardian