CAG report: Opposition raise critical issues to be dealt with

Dar es Salaam. Opposition party ACT Wazalendo leader Zitto Kabwe on Monday, April 10 raised critical issues that need to be addressed in the just released CAG report.

Mr Kabwe said the party is proposing the formation of a special parliamentary probe committee to investigate key issues raised by the CAG in relation to procurement in the standard gauge railway (SGR) project.

He outlined the issues as loan conditions imposed by Standard Chartered Bank UK; inflated costs for execution of SGR lots 3 and 4 and increased costs for procurement of trains.

According to him, the committee should question reasons for Standard Chartered UK to set such conditions in favour of contractor Yapi Merkezi.

“The parliamentary committee should also probe reasons for Tanzania Railway Corporation (TRC) to use single source procedure in finding the contractor who would execute Lot 3 & 4 of the SGR project,” Mr Kabwe told reporters.

“The investigation should also establish reasons for the doubled costs of train procurement,” he added when tabling the party’s analysis of the CAG report.

The former Kigoma Urban MP and Public Accounts Committee (PAC) chair said the Ministry of Finance and Planning’s decision to accept Standard Chartered UK loan conditions for lots 3 and 4 increased the cost of the project by $742 million, which is equivalent to Sh1.7 trillion.

He said accepting non-competitive tendering conditions increased costs of implementing lots 3 and 4 of the SGR project by $1.3 million and $1.6 million per kilometre respectively.

“The increase could have been avoided if competition tendering procedures were followed because lots 1, 2 and 5 fetched $4.1 million, $4.6 million and $3.9 million per kilometre respectively.

“However, Yapi Merkezi was endorsed to execute lots 3 and 4 at a tendering costs of $5.2 million and $5.5 million per kilometre respectively,” Mr Kabwe added.

Furthermore, he said the CAG has unveiled a serious violation of the Procurement Act, therefore increasing the costs of purchasing the trains.

The costs increased by $215 million after other 11 bidders who were picked to participate in the international tendering to supply, order, make trials, trainings and handover train rolling stocks for SGR lots 1 to 4 were dropped.

According to Mr Kabwe, all bidders were rejected due to failure to reach tendering demands and providing a high price compared to the allocated budget.

“The doubled price needs an extra and in-depth explanation because it doesn’t make sense because neither the government’s explanations are either unsatisfactory or trusted by the public.”

Regarding Air Tanzania Company Limited (ATCL) operations by loss, he said the CAG recommended that all aircrafts leased from the TGFA should be completely owned by the national carrier.

However, Mr Kabwe said ACT-Wazalendo proposes that TGFA should be returned to the ministry of Works and Transport and shouldn’t execute its duties from the President’s Office.

“The CAG should be directed to carry out a special audit on the process to procure aircrafts that started in 2016 and that all aircraft procurement contracts should be reviewed in order to improve identified shortfalls,” he said.

Clarifying about the ATCL leasing aircraft from TGFA, he said it led to losses the company has been recording such as Sh35 billion and Sh36 billion for the 2021/22 and 2020/21 audits respectively.

Furthermore, he said the CAG report shows that the company had a Sh158 billion capital deficit when Sh487 billion debts and Sh331 assets are compared.

According to him, the CAG has shown that TGFA unpaid debt amounts to Sh188 billion for aircraft leasing, but a total of Sh288 billion arguments were raised from both the TGFA and ATCL.

“Our analysis shows that losses made by ATCL are largely caused by the leasing of aircraft from TGFA. ATCL could be freed from these debts if aircrafts could be completely owned by the national carrier,” he said.

He said the Sh157.7 billion deficit capital could have been turned into ATCL assets, if the company would have been able to own the aircrafts.

Yesterday, chief government spokesperson Gerson Msigwa told The Citizen’s stablemate Mwananchi that President Samia Suluhu Hassan has issued directives over the CAG reports.

“Government executives have been instructed to thoroughly read the CAG reports and hold accountable those who will be implicated to have roles in the reported incidents of embezzlement,” he said over the phone.

“Members of Parliament (MPs) are going to debate and issue recommendations. Probe institutions will also investigate and take legal actions against those implicated as per the president’s instructions,” he added.

However, Mr Kabwe recommended major reforms in the National Health Insurance Fund (NHIF) including replacing both board members and the management team.

He said the Universal Health Coverage (UHC) Bill should be re-written to accommodate stakeholders’ recommendations.

Furthermore, he said the new NHIF Act should be enacted to strengthen health systems, noting that these recommendations were issued at the time the CAG report indicated that NHIF is making serious loss that threaten its existence.

According to the CAG, the fund recorded a Sh205 billion loss in the 2021/22 audit as compared to Sh104 billion in the 2020/21 audit.

Regarding the national debt, Mr Kabwe said the CAG found that the ministry of Finance and Planning secured loans at 30 percent and 33 percent from both domestic and foreign sources up from Parliament approvals.

“Our recommendation in this area is that Parliament directives should be respected,” he said.

Also he said the ministers for Energy and that of Regional Authorities and Local Governments (RALGs) should ensure contractual agreement requiring the company implementing the Julius Nyerere Hydropower Project (JNHPP) is respected and payments are effected reaching July 2023.

According to the CAG report the company hasn’t paid Sh270 billion in Corporate Social Responsibility (CSR) to citizens surrounding the project area therefore denying them the opportunity to benefit from implementation of development projects.

“The government should also act against negligent government officials behind delayed payment of Sh327.9 billion in levies for delaying completion of the JNHPP project,” he said.

Chadema’s secretary general John Mnyika said the president hasn’t taken pre-requisite measures to hold her appointees accountable through powers vested in Articles 33 to Article 36 of the country’s constitution.

He said the CAG report has found looming irregularities in the plea bargaining procedures under the office of the Director of Public Prosecutions (DPP).

“Despite the president’s tone when speaking about the issue during the official handing over of the CAG reports, the recommendation was formulation of a judicial commission of inquiry that will probe the whole process and come up with prerequisite recommendations,” he said.

However, Mr Mnyika said the Head of State ended by announcing that the issue would be dealt with by the Criminal Justice Commission.

“We are calling upon the formation of the Judicial Commission to deal on this matter. Former DPP Biswalo Mganga should be investigated and held accountable,” he said.