Queries over Sh90bn UDA loan delay Dart

Dar es Salaam. Questions over  the repayment of nearly Sh90 billion borrowed by UDA to roll-out the Dar es Salaam Rapid Transit (Dart) is the reason the project is yet to start.

Dart has so far missed three kick-off deadlines, with back-and-forth discussions on several agreements between Dart and UDA still ongoing.

The behind-the-scene talks are led by Prime Minister Kassim Majaliwa who was said to have been alarmed at government involvement in the deal that could have far-reaching consequences on the sustainability of the project.

Key among them is the liability for the huge loan that was borrowed by UDA for the purposes of rolling out the interim operation of phase one of the massive transit project in Dar es Salaam.

According to sources familiar with the talks, the PM was not satisfied with UDA investment in the project while he was also worried that a commitment made by its officials to help UDA secure the huge loan could backfire on the government.

Mr Majaliwa is expected to chair another round of talks today in the city as the government seeks a safe mode that will allow for a smooth launch of the project. Said a source:

“UDA obtained the billions on the strength of returns from the project but the government feels there was little to show for on the ground.

“The government is also alarmed the loan recovery plan would make the Dart services expensive while exposing it to the possibility of repaying the billions should the project fail.”

The source further confided in The Citizen that Mr Majaliwa is seeking new operational terms that would not overburden commuters or leave the government culpable should UDA fail to service the loan.

However, the majority shareholder in UDA, Simon Group Limited, has come out to give a reassurance that it fully secured the Sh80 billion loan using its own properties and other interests.

Simon Group Executive Chairman Robert Kisena told The Citizen that the fear that the loan might not be repayed was misplaced. “We took the loan as a private entity and will service it as such,” he said in a telephone interview.

Mr Kisena, whose takeover of UDA was steeped in controversy, including queries over who the real owners of the company are, said the money was spent in acquiring 140 Dart buses and in compensating the daladala operators to pave the way for the project.

“What I know is that the talks are to find a middle ground on ticket prices and other issues such as taxes. As operators, we are also keen on a smooth take-off without free from undue interference,’ he said.

He explained that the Sh80 billion was secured in what he termed “for the bankruptcy remote structure,” meaning the project was insulated against any acts of default on the part of the borrowers.

In a revealing admission, Mr Kisena may, however, have confirmed the government worries, indicating it committed to ensuring that it would not act in any way that may jeopardise the project.

He said the government gave a letter of “comfort” during the process to acquire the loan, but not to serve as a guarantor, but some form of endorsement of the parties involved in the project.

“The arrangement is that the project is protected against any form of interference. So, if today the government says it is not in support of Dart, it will have to take over the loans or at least, leave the operations in the interim to the operators alone,” Mr Kisena said. He added that the facilities for the project were unique and could not be run as it is with ordinary public transport systems.

Last week, Minister for Local Government and Regional Authority George Simbachawene told The Citizen he was optimistic an agreement would be reached on the shortcomings that threatened the sustainability of the project.

He admitted there were “mischiefs” that delayed the start of the public transport system. He said a team picked by the PM was finalising the way forward before a firm public announcement was made.

“We have sat with the investor (UDA-RT) and agreed to clear the many mischiefs that surrounded a contract between Dart and the interim service provider. This will clear the way for the project to start,” Mr Simbachawene said.

“We have agreed in principle that all areas that have problems will be reviewed and new agreements will be put in a legal form. The team will then come out with a working document,” said the minister.

The project that is expected to serve over 130, 000 Dar residents daily and was initially set to start early last year.

UDA-RT proposed recently at a public hearing a fare of between Sh700 and Sh1, 400 for users of the service.

The proposals were roundly rejected by stakeholders including PM Majaliwa who said the rates were unrealistic and were defeating the original purpose of establishing the project.