Sh94 billion debt casts dark shadow over Tazara revival
The Tazara train from Dar es Salaam to Mbeya and Kapiri Mposhi
What you need to know:
Chinese investors interested in Tazara want outstanding debts cleared by Tanzania and Zambia governments before any commitment
is made to recapitalise the major project.
Dar es Salaam. Outstanding payments amounting to Sh94 billion could stand in the way of plans to revamp the Tanzania-Zambia Railways Authority (Tazara), The Citizen has learnt.
The rail line constructed as a turnkey project in the early seventies covering 1,860 kilometres from Dar es Salaam to New Kapiri Mposhi desperately needs an overhaul.
But documents seen by The Citizen show that Chinese investors interested in taking over Tazara want the debt cleared before meaningful investments can be made.
This includes delayed payments to suppliers, unpaid pensions for retirees, salary arrears and contributions that have not been remitted to pension funds.
The government would settle the accrued debts.
It was not immediately established how much debt was accumulated in Zambia although it has been confirmed that the Treasury in Lusaka has started reducing the debt burden since 2012 according to reliable sources.
The Sh94 billion does not cover construction loans and any other losses incurred by the rail authority over the last 40 years.
The breakdown shows that Tazara owes suppliers Sh2.4 billion and NSSF Sh41 billion.
Other outstanding payments are the Sh3.3 billion in salary arrears and Sh54 million for employees who had quit their jobs.
Tazara has to pay Sh45 billion in legal fees while Sh80 million is owed to sacked employees.
More than 300 retirees are demanding Sh1.9 billion while Sh143 million has not been paid out to survivors of deceased employees.
The dire financial status is a set back to the consensus that has been reached by Tazara stakeholders to handover management of the railway to the China Railway Group.
The company runs the Asian country’s vast national rail network for commuters and freight.
As the negotiations continue, a technical team made up of representatives from Tanzania, Zambia and China is expected to converge in September in a bid to fine tune the take-over.
The meeting in China is expected to see the signing of the technical agreement despite the fact the government has not committed as to when it would clear the debts.
The plan shows that China Railway is also looking forward to leveraging its role in the railway line so as to push for the establishment of the Bagamoyo Port.
The plan, which was first discussed in Dar es Salaam in mid-May this year, included proposals to reduce the bloated workforce.
Tanzania and Zambia would also be required to review their domestic laws to provide for preferential provisions in the running of Tazara so as to allow private players to on board.
The road map was drafted from findings of a technical study of Tazara by the Third Railway Survey and Design Institute based in China.
The same strategy advises that both countries clear all of the authority’s financial obligations.
The volume of cargo transported ton the railraod has fallen over the years, with a paltry 8average of 7,860 tonnes transported between 2014 and 2016.
The rail line used to move an average of one million tonnes in the 1970s and early 80s. It run 100 locomotives then compared to a dismal 14 locomotives currently.
Tazara’s latest performance report shows that average revenues over the last 10 years ranged between Sh45 billion to Sh60 billion against an expenditure of between Sh60 billion and Sh110 billion.
Recently, Tanzania Railway Workers Union secretary general Boaz Nyacheche blamed the two governments for the lack of political will in supporting the authority over the years.
He cautioned that the plan by the Chinese might not succeed if concerted efforts by Tanzania and Zambia are not made to increase trade volumes.
“To meet workers’ obligations alone, Tazara needs to move 600,000 tonnes of cargo every year. Currently, 97,000 tonnes is transported annually,” he said.
He noted that workers are waiting for a briefing on the take-over plan as employees were not involved in the May tripartite talks held in Dar es Salaam nor will they be part of the meeting in China.
Over the last two decades, Tazara has been underperforming due to lack of investment and poor management.
Tazara was founded over 40 years ago with a vision to connect east and southern Africa to promote sustainable regional and trade, and social economic growth.
