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Saturday, 13 March 2010 10:56

By The Citizen Reporter  

The Cabinet yesterday granted permission to the government to take over the troubled Tanzania Railways Limited (TRL) from Rites of India.

President Jakaya Kikwete chaired the Cabinet meeting at the State House in Dar es Salaam that approved the buyback option to end the government’s three-year stormy relations with the concessionaire who had won a 25-year contract.

A statement dispatched by the State House directorate of communications, announced the move, saying talks with Rites would begin immediately to lay down the terms of disengagement.

The joint venture with Rites has failed to make any mark in efforts to improve rail services, with the foreign management spinning from crisis to another. Rites will now seek to sell its 51 per cent stake in TRL that it purchased in 2007. The government held the balance.

According to the statement signed by Chief Secretary Philemon Luhanjo, the government would soon embark on new strategies to revamp the cash-strapped company and prepare it for second privatisation to another strategic partner.

The Cabinet resolution was not unexpected as it had become apparent that the Rites journey had stuck in a quagmire to make any serious business from the railways collapsed 648km infrastructure and incessant workers’ strikes.

The struggling venture failed to attract billions of dollars in loans from the World Bank and IMF, to fund its operations as expected.

Rites had indicated that it will invest $283 million in the venture but it failed to qualify even for a start up capital of $40 million from International Finance Corporation.

The government’s withdrawal came in the heels of a major East Africa Community conference on railways that ended in Dar es Salaam yesterday.

The conference that was opened by President Kikwete on Thursday, explored problems bedeviling private concessioning of rail systems in the region and the best way to hasten regional networking to facilitate the movement of people and goods.

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Comments  

 
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0 #6 Michael 2010-03-16 01:11
I'm just wondering the impact of allowing the public buy shares and run the company. For some reason i think if the citizens will be allowed to buy shares there and maybe the govt remain with 50% stake or even less it could work some magic. Anyone with similar thinking?
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0 #5 sekiete 2010-03-15 17:23
Any action on the privatization of strategic or transport companies, which are necessary for the lives of peoples for the whole, the Government must protect its interests, i.e. more than 50% of the share should belong to the Government. In this case, if the joint owner does not fulfill its commitment, the Government could decide the fate of the company. For me it is not clear how the Government was able to sell 51% of the share (the only state railways) to a foreign company?
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+1 #4 Mrisho 2010-03-15 12:52
Everywhere we hear that these foreign partners are the reasons that privization has not worked in Tanzaania. I wonder how all these companies that are so successful - South Africa Airlines, RITES, SaskTel in other parts of the world can be successful but not here in Tanzania. Could we be the bad partners?
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+1 #3 Mtanzania 2010-03-15 11:19
I tend to agree with S Thomas above. The grand corrupt leadership in TZ have broughtthe country to its Knees through several corrupt deals as privetisation. The countryis now enburdened with dept without the benefits for decades to come. Poverty will be embedded for all but afew who have made a killing from this fraud. It is time Tanzanian's get new competent leadership who can get the best deal for our resources and build the capacity of our people for a modern workforce
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-1 #2 S. Thomas 2010-03-14 18:23
leat they might do something here.
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+1 #1 S. Thomas 2010-03-14 18:21
So the government has decided to take back TRL from he incompetent RITES. Who is going to buy it now - chinese company of course and they will bring Chinese convicts to run the company and then the TRL workers can sit at home while someone else does thier job. What lessons have we learnt from our privatisation exercise. We privatized Air Tanzania and then took it back; same for TANESCO and DAWASA. I don't remember what happened with TTCL. Now TRL. Can so many private investors from different parts of the world be lousy? I don't think so. Could it be these companies refuse to play ball with our corrupt workers and politicians? We think china is our saviour because they give us cheap credit. But at what price? They give us 2 million dollars and take back ten times that amount in a matter of days and weeks. Our politicians do the same. They are robbing us. The country is doomed. Let us sell our country to China. At least we will get something out of that.
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