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Revealed - Ticks Contract Was to Cost Govt Sh1 Trillion

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by MaxShimba, Oct 11, 2009.

  1. MaxShimba

    MaxShimba JF-Expert Member

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    Oct 11, 2009
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    The Citizen (Dar es Salaam)
    Tanzania: Revealed - Ticks Contract Was to Cost Govt Sh1 Trillion

    Mkinga Mkinga
    9 October 2009


    Terminating the Tanzania International Container Terminal Services (Ticts) contract would have cost the Government over Sh1 trillion in damages and other penalties, The Citizen can reveal today.

    A source close to the negotiations, who preferred anonymity because of the sensitive nature of the negotiations, said the Government opted to reach an agreement to end the company's container cargo handling monopoly at Dar es Salaam Port.


    Both sides agreed it was the only "win-win" situation and sealed a deal last Monday that now opens the door for other operators into the lucrative business, which has proved tricky with Ticts being roundly blamed locally and abroad for causing cargo congestion at the port.

    Speaking during the signing of the addendum to the contract in Dar es Salaam, the minister for Infrastructure Development, Dr Shukuru Kawambwa, said: "It was a very tough task, but we have done it. And we hope we have done it in the manner recommended by Parliament recently.'

    Dr Kawambwa said terminating the contract, as recommended by Parliament, was out of the question, as it would have had "serious repercussions for the Government." He did not say what those "repercussions" would have been, but it has now transpired that the Government would have paid heavily for the decision.


    Ticts was first awarded a 10-year in 2000, but this was reviewed midterm in 2004 for another 15 years, giving the company 25 years of exclusive cargo handling rights at the port, the gateway to the sea for about eight landlocked East and Central African countries, including Uganda and Zambia.

    Critics saw the midterm review as suspect, but Ticts said it was a reward for its good performance. According to Ticts, Dar es Salaam Port handled only 100,000 containers before 2000 and was projected to handle 233,000 containers by 2010, but dealt with 256,000 containers in 2004.

    "They (government team) believed terminating the contract would be very easy. We started the talks in May last year and after they learnt of the implications, they simply backed out," said the source.

    The Government's demand to have the contract ended ahead of time was apparently based on a resolution passed by the National Assembly in April last year, after debating and endorsing a private Motion tabled by Mbozi East MP Godfrey Zambi.

    But the Bunge resolution had called on the Government to negotiate with Ticts and review the contract, which the lawmakers said unduly favoured the company.


    Initially in the discussions, the Ticts team refused to budge but later eased its stance. The teams managed to reach agreement only on the removal of the exclusivity clause.

    That clause had given Ticts exclusive rights to operate container-handling services at Dar es Salaam Port for the entire period of the contract. But according to the addendum, other players can now compete with Ticts.

    Dr Kawambwa has said that many companies had shown interest in handling container cargo at the port. Former Cabinet minister Nazir Karamagi has emerged as the man behind Ticts.

    His clout was enhanced when President Jakaya Kikwete appointed him the minister for Energy and Minerals. However, he was forced to resign early last year after being implicated in the Richmond emergency power generation contract scandal alongside former Prime Minister Edward Lowassa.


    Although Dr Kawambwa believes the changes will help decongest the port, the European Union (EU) head of delegation, Mr Tim Clarke, says improving infrastructure is crucial for efficiency at the harbour.

    Speaking at an infrastructure stakeholders' workshop in on Wednesday, Mr Clarke said revamping the railways, was a prerequisite for decongesting Dar es Salaam Port.

    Mr Clarke said the rehabilitation of the railways would not only help Tanzania, but also the landlocked neighbours who depend on port as their gateway to the outside world.

    He said since most containerised cargo could easily and more efficiently be transported by railways, it was only logical to come up with strategies to ensure that the railway system works efficiently.

    A Tanzania Ports Authority (TPA) employee echoed his remarks, saying the review of the contract between the Government and Ticts was not the solution to the congestion mess at the port.

    Speaking to The Citizen, on condition of anonymity, on Monday, after the signing of addendum to the contact, he said: "The Government must improve infrastructure, particularly the Tanzania-Zambia Railway Authority (Tazara) and Tanzania Railway Limited (TRL), if cargo is to move faster out of the port."

    However, Tazara, jointly owned with Zambia, and built with Chinese aid to give the country an alternative route to the sea following the Unilateral Declaration of Independence (UDI) by minority settlers in Southern Rhodesia, now Zimbabwe, the company is cash strapped.

    TRL, which was built by the Germans and the British, is equally broke and an Indian company brought in on a 25-year management contract, apparently also has no money to pump into the operations and improve the rolling stock
     
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