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- Feb 11, 2007
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MPs to review railways and ports contracts
By WILFRED EDWIN
THE EAST AFRICAN
The Tanzania government is reviewing two huge infrastructure management contracts that formed key planks of its privatisation programme.
Anomalies on the part of the government have reportedly been found on the contracts for the concessioning of the Tanzania Railways Corporation (TRC) on a 25-year leasing agreement to a consortium led by Indian railway firm Rites (Rail India Technical and Economic Services) Ltd.
The lease of the container section of the Tanzania Ports Authority to Tanzania International Container Terminal Services (TICTS), a firm owned by former minister of energy and minerals Nazir Karamagi who was fired for his involvement in the Richmond scandal is also to be scrutinised.
The contracts of the large utility firms are to be tabled before parliament in Dodoma on June 10.
The TICTS contract widely considered to be the more sensitive is expected to create a heated debate following contradictory reports over why the initial 10-year lease was secretly extended to 25 years.
The review follows a private motion by the CCM MP from Mbozi East, Godfrey Nzambi, calling for the investigation of TICTS to establish how the firms 10-year contact was illegally and hurriedly extended to 25 years.
In January this year, Members of the Parliamentary Committee on Infrastructure challenged the government to explain why it extended the contract before the end of an initial agreement without following proper procedures.
The review of the contract follows a report by the Controller and Auditor General, Ludovick Utuoh that the whole process of extending the lease from 10 to 15 years in 2005, and later on to 25 years, constituted a gross violation of the Public Procurement Act of 2004.
Mr Utuoh said the extension was also a breach of a specific clause of the agreement, No 9. 1 Amendment of Lease, which requires extensive consultations with all parties who may be affected by such amendment.
The Tanzania Cabinet also did not discuss no approve the contract.
Dr Makongoro Mahanga, Deputy Minister for Infrastructure Development, told The EastAfrican last week that a government negotiation team is finalising a report that seeks to review, apart from the two contracts, the manner in which government houses have been sold.
Dr Mahanga, in whose docket the two contracts fall, said the review team, which comprises experts from his ministry and that of Constitution and Legal Affairs, is looking into how and why the extension of the TICTS lease agreement bent the existing legal procedures. He did not however divulge names as the procedures require that the report be presented in the House first.
According to Dr Mahanga, the team will also present its findings on the irregular sale of government houses, an issue raised last month by Aloyce Kimaro, a CCM Member of Parliament, through a private members motion seeking the repossession of the entire stock of sold houses because the exercise was allegedly not done in good faith.
Mr Karamagi has defended the controversial TICTS contract extension, saying the Mkapa government endorsed it.
While addressing the findings of the Controller and Auditor Generals report on the manner in which the lease was extended, Mr Karamagi argued that there was nothing sinister about the extension as it was endorsed by the Cabinet.
Mr Karamagi, who holds a 30 per cent stake in the company, has already handed over the relevant documents to House Speaker Samuel Sitta, who will present them in the House when it resumes sitting in its next session.
TICTS was originally contracted to offer container services at the Dar es Salaam port for 10 years but before the expiry of the agreed time, the government extended the lease to 25 years.
The TICTS contract extension, according to the Controller and Auditor General, made no reference to the Public Procurement Regulatory Authority (PPRA) as required by the law. PPRA is a body charged with ensuring application of fair, competitive, transparent, non-discriminatory and value of money procurement standards and practices.
In the other contract to face scrutiny by parliament the leasing of TRC to Rites Ltd it has emerged that Tanzanias Railway Assets Holding Company had misled Rites officials during the signing ceremony in October last year, that there were 92 working locomotives available, when in fact there were only 55.
According to Rites officials, this has resulted in the company failing to acquire a loan of $20 million from the International Finance Corporation, the private-sector lending arm of the World Bank, that was to be used for purchasing new locomotives and for office expenses.
It has thus been unable to improve the operations of the firm, leading to parliament demanding investigations into the way the matter was handled.
Mizengo Pinda, Prime Minister of Tanzania, said the government has found that some technical errors were made in providing due-diligence information to the investor.
Mr Pinda said the government of Tanzania would be releasing about Tsh3.6 billion ($3.6 million) as a loan to TRL to enable the firm to pay its employees while it awaits the IFC loan. The investor had asked for a loan from the World Bank but the request was rejected after the bank discovered that the information they were given about the locomotives was wrong, he said.
By WILFRED EDWIN
THE EAST AFRICAN
The Tanzania government is reviewing two huge infrastructure management contracts that formed key planks of its privatisation programme.
Anomalies on the part of the government have reportedly been found on the contracts for the concessioning of the Tanzania Railways Corporation (TRC) on a 25-year leasing agreement to a consortium led by Indian railway firm Rites (Rail India Technical and Economic Services) Ltd.
The lease of the container section of the Tanzania Ports Authority to Tanzania International Container Terminal Services (TICTS), a firm owned by former minister of energy and minerals Nazir Karamagi who was fired for his involvement in the Richmond scandal is also to be scrutinised.
The contracts of the large utility firms are to be tabled before parliament in Dodoma on June 10.
The TICTS contract widely considered to be the more sensitive is expected to create a heated debate following contradictory reports over why the initial 10-year lease was secretly extended to 25 years.
The review follows a private motion by the CCM MP from Mbozi East, Godfrey Nzambi, calling for the investigation of TICTS to establish how the firms 10-year contact was illegally and hurriedly extended to 25 years.
In January this year, Members of the Parliamentary Committee on Infrastructure challenged the government to explain why it extended the contract before the end of an initial agreement without following proper procedures.
The review of the contract follows a report by the Controller and Auditor General, Ludovick Utuoh that the whole process of extending the lease from 10 to 15 years in 2005, and later on to 25 years, constituted a gross violation of the Public Procurement Act of 2004.
Mr Utuoh said the extension was also a breach of a specific clause of the agreement, No 9. 1 Amendment of Lease, which requires extensive consultations with all parties who may be affected by such amendment.
The Tanzania Cabinet also did not discuss no approve the contract.
Dr Makongoro Mahanga, Deputy Minister for Infrastructure Development, told The EastAfrican last week that a government negotiation team is finalising a report that seeks to review, apart from the two contracts, the manner in which government houses have been sold.
Dr Mahanga, in whose docket the two contracts fall, said the review team, which comprises experts from his ministry and that of Constitution and Legal Affairs, is looking into how and why the extension of the TICTS lease agreement bent the existing legal procedures. He did not however divulge names as the procedures require that the report be presented in the House first.
According to Dr Mahanga, the team will also present its findings on the irregular sale of government houses, an issue raised last month by Aloyce Kimaro, a CCM Member of Parliament, through a private members motion seeking the repossession of the entire stock of sold houses because the exercise was allegedly not done in good faith.
Mr Karamagi has defended the controversial TICTS contract extension, saying the Mkapa government endorsed it.
While addressing the findings of the Controller and Auditor Generals report on the manner in which the lease was extended, Mr Karamagi argued that there was nothing sinister about the extension as it was endorsed by the Cabinet.
Mr Karamagi, who holds a 30 per cent stake in the company, has already handed over the relevant documents to House Speaker Samuel Sitta, who will present them in the House when it resumes sitting in its next session.
TICTS was originally contracted to offer container services at the Dar es Salaam port for 10 years but before the expiry of the agreed time, the government extended the lease to 25 years.
The TICTS contract extension, according to the Controller and Auditor General, made no reference to the Public Procurement Regulatory Authority (PPRA) as required by the law. PPRA is a body charged with ensuring application of fair, competitive, transparent, non-discriminatory and value of money procurement standards and practices.
In the other contract to face scrutiny by parliament the leasing of TRC to Rites Ltd it has emerged that Tanzanias Railway Assets Holding Company had misled Rites officials during the signing ceremony in October last year, that there were 92 working locomotives available, when in fact there were only 55.
According to Rites officials, this has resulted in the company failing to acquire a loan of $20 million from the International Finance Corporation, the private-sector lending arm of the World Bank, that was to be used for purchasing new locomotives and for office expenses.
It has thus been unable to improve the operations of the firm, leading to parliament demanding investigations into the way the matter was handled.
Mizengo Pinda, Prime Minister of Tanzania, said the government has found that some technical errors were made in providing due-diligence information to the investor.
Mr Pinda said the government of Tanzania would be releasing about Tsh3.6 billion ($3.6 million) as a loan to TRL to enable the firm to pay its employees while it awaits the IFC loan. The investor had asked for a loan from the World Bank but the request was rejected after the bank discovered that the information they were given about the locomotives was wrong, he said.
