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TRC handover set for next month
2007-08-29 09:17:43
By Judica Tarimo
The giant state-owned Tanzania Railways Corporation is now widely expected to be officially handed over to strategic investors any time next month, ending one of the longest privatisation exercises in Tanzania`s history.
`It may be handed over to the investors next month. Right now, we are busy finalising some necessary procedures before giving it out.
Everything should be ready and in place soon and very soon,` Parastatal Sector Reform Commission Coordinator Joseph Mapunda said in an exclusive interview in Dar es Salaam yesterday.
The eagerly awaited handover would mark the end of protracted negotiations between the government and the prospective investors, RITES Company Ltd of India, as each interested party fought for agreeable contract terms and modalities.
Mapunda fell short of giving the specific date on which the handover ceremony would be held, only saying everything would be made public `once all the necessary procedures have been finalised`.
However, pressed for elaboration, he explained: `Everything is lined up in that both the Tanzanian government and the Indian investors have already agreed on the terms and modalities of the transfer agreement. We are now sorting out some important logistics of handing over the facility.`
Government sources close to the TRC handover negotiations meanwhile hinted that the board of directors of the project`s potential key financier, International France Corporation, had already approved the funding and that agreement to officially hand over the facility would be signed soon.
`IFC had already deployed its experts to assess the project`s marketability and profitability. The experts have come up with a comprehensive report that has, in turn, been approved by the IFC top management,` intimated one source.
`In fact, the key financier has already agreed to release the money needed to get the project going, including the purchase of facilities and the restructuring of other operations,` added the source.
The railway corporation`s privatisation exercise has been mired in controversy with little precedent in terms of magnitude in the country.
According to the government sources, it was initially supposed to have taken place last August but it was postponed to last month – and now the new date – because of what has been vaguely described as struggles for the best possible terms.
`We don`t like to repeat past mistakes in the privatisation of other public parastatals. That`s why we had to prolong TRC negotiations in order to get favourable terms that would benefit our people the most,` Infrastructure Development Minister Andrew Chenge was recently quoted as saying.
However, now the government wants the agreement signed as soon as possible apparently on the assumption that the corporation`s operationalisation would vastly increase revenue for the country as the strategic investors overhauled dilapidated and deteriorated facilities for enhanced efficiency in service delivery.
Shareholders of India`s RITES, the company to which TRC is being concessioned at 51 per cent for 25 years, have requested $44 million loan from IFC to partially fund capital investments for the first five years.
IFC stands as the key financier in the partnership, while lead investors RITES invests in management expertise.
Minister Chenge recently confirmed that TRC was in pathetic state, a situation that denied the nation huge amounts of revenue.
He was optimistic that once the corporation is in the hands of strategic investors, transportation of cargo to landlocked neighbouring countries like Burundi, Democratic Republic of Congo and Rwanda would flourish and earn Tanzania much bigger amounts of money.
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