TAZARA in big trouble

[John Ashworth]

TAZARA IN BIG TROUBLE
Railways Africa
Friday, 31 October 2008

Thirty-two years after it opened, the Tanzania-Zambia Railway (Tazara) faces imminent closure, The East African (published in Nairobi) reported on 26 October:

“Tazara is on the verge of collapse following the failure of the debt-ridden firm to pay hundreds of workers for two months.

“Senior Tazara and government officials confirmed to The East African that the two governments need to inject at least $US3 million into the company in the next two weeks to avert its collapse. The survival of the 1,860 km railway, which forms an integral part of the Southern Africa Regional Rail Transport Network, is in doubt as its debts have shot to over $45 million.

“The EastAfrican learnt last week that Tazara owes various creditors a staggering $45 million plus -- out of which $2.3 million is owed to over 300 retirees who have already taken the company to court.

“A source in Tazara told The EastAfrican last week that while the firm has no more than 12 operating locomotives at the best of times, currently only half that number are running, with just two dedicated for passenger coaches. Consequently, the frequency of weekly passenger services to Zambia has been cut to two from three, and many tonnes of cargo -- which includes oil, copper, fertilisers and timber -- destined for both Zambia and Tanzania - have piled up over the past six months. As of Wednesday last week, workers had not been paid their September and October salaries, the source said.

“Dr Shukuru Kawambwa, Minister for Infrastructure Development, told The EastAfrican in Dar es Salaam last week that the three governments of Tanzania, Zambia and China are aware of the problems facing Tazara, and that they are working together to find a rescue plan for the rail operator. Dr Kawambwa said the three governments are in consultations over whether to hand the firm over to a private operator who can turn it around.

"The governments understand that the firm is facing difficult times that have multiple sources, which include lack of recapitalisation to repair poor and dilapidated infrastructure," he said, adding that China is still being given preference as a potential bidder for the ailing firm.

“Efforts to diversify Tazara in 2006 came to a halt as soon as the then Tanzanian Presidential Parastatal Sector Reform Commission (PSRC) was commissioned to study and recommend to the shareholders the best ways to breathe new life into the firm.
Joseph Mapunda, public and regulatory manager for Consolidated Holdings Corporation -- a new firm that manages public interests in privatised parastatals -- told The EastAfrican last week that PSRC was commissioned by the Tanzania and Zambian governments to do a technical consultancy and the report was handed to the concerned governments, but did not disclose the details of the report.

“It is understood that the two governments approached China for recapitalisation assistance to turn around the ailing firm, but this has not been forthcoming. Alternatively, China had been given priority for investing in the railway either on concessional terms or as part privatisation, but this has also not materialised.

“Sources said China, the financier of the project with a $500 million interest-free loan, looks upon Tazara as an unattractive, failed project.

“Currently, the rail network handles the exports and imports of Tanzania and Zambia, as well as Malawi, DR Congo, the Great Lakes region, South Africa and Zimbabwe.”

[ “Network” in this context probably means all the railways in Southern Africa, not only Tazara. Congestion at Durban is not yet bad enough to see South Africa using Dar-es-Salaam. – editor: Railways Africa.