Renovating wagons by TRC partnership a taste of things to come

28Dec 2019
The Guardian
Renovating wagons by TRC partnership a taste of things to come

PRIVATE transporters are readying to partner with the Tanzania Railways Corporation which needs synergies to procure locomotives and renovate 690 wagons. This follows a directive by the Minister for Works, Transport and Communications Isack Kamwelwe to TRC board members and top management.

The minister said the idea of welcoming partnerships is to fast-track cargo movement to inland regions and transit trade, as official procurement procedures delay.

As the government needs 41.4bn/- to renovate 690 wagons and up to $25 million to procure ten new locomotives, it is possible such cash can be mustered by some major transporters who need rail space more or less urgently. With a workable commercial arrangement they can purchase those locomotives and wagons, and make use of them as part of offsetting costs, plus a concessional charge. In future the wagons and locomotives are dissolved into ordinary TRC stock.

The minister sees this partnership as an opportunity, as apparently a huge flow of cargo needs to be transported from the port of Dar es Salaam, amidst a shortage of cargo wagons. Partnerships are vital to fast track obtaining engines and wagons, even if formal procurement would take one year. If the locomotives are purchased by a different method, TRC or the government would now have legroom to spend the money differently, into other areas needing urgent financing.

TRC had renovated 86 old wagons for 4bn/- and would now look for partnership to help renovate other currently redundant wagons. It is part of modernization as it isn’t just the government that has large amounts of money that can be sought. Private firms dispose cash too and not just in railways but other areas such synergies can be tapped.

So far TRC has had partnership with the food and beverages group headed by Said Salim Bakhressa and also the World Food Programme (WFP) who had renovated 40 cargo wagons. If we look closely around there are other beneficiaries of an expanded rail network who could chip in to fast track availability of services, for instance in mining areas, plantation agriculture, etc. Those building industries in some inland areas also need a workable railroad, apart from people living in remote areas facing high charges from bus, lorry transport.

The method that the minister outlined is workable, as transporters   use the wagons for a concession fee for some years to return costs, and then they revert to TRC. Such occasional partnership is helpful while it doesn’t change holding arrangements as to ownership of the service provider firm, only conducting business with it. At some point when there is more partnership needed, the vision could be reset to include continuous capital-based partnership, as in raising bonds.

Everything depends on how agro-processing needs increase in the country’s economy, as cargo volume had reached 17m tonnes while TRC capacity  stands at 425,000 tonnes per annum, a mere 3 percent of transportation needs. Lorries haul most of the cargo and this method of transportation is not the most efficient, since it is costly. At the same time trains are environment friendly as there is just one engine instead of countless bus and lorry engines as we usually have.

Home-based tourism is possible with low-fare visits to national parks for sightseeing. It is all part of changing conditions so that there is a more hospitable investment climate, where the public sector gains from unused capacities in the private sector as in this instance.