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Tazara on the brink of collapse as managers get changed

Discussion in 'Habari na Hoja mchanganyiko' started by BAK, Sep 1, 2008.

  1. BAK

    BAK JF-Expert Member

    Sep 1, 2008
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    Tazara on the brink of collapse as managers get changed

    Written by DANIEL SAID
    Saturday, 30 August 2008

    DAR ES SALAAM, TANZANIA- All is not well at the Tanzania-Zambia Railways Authority (Tazara) and the railway line is now at the brink of collapse, East African Business Week has learnt.

    Last week, the top management of Tazara was quietly changed and a new Chief Executive Officer was appointed - all this aimed at rescuing the ailing company. According to sources, the new boss was expected to report for work two weeks ago.

    Nine years ago (1999), China called upon Tanzania and Zambia to rehabilitate the Chinese-financed and built Tazara railway, which links the two countries, before it collapses, but the reaction from the two governments has been slow.

    The railway was inspected by a team of experts from the Chinese Construction Team (CCT) and called on Tazara’s management to “act quickly to rehabilitate the railway before disaster occurred.”

    The team discovered that screws and bolts were missing from most sleepers and switch bearers. Possible consequences included locomotives plunging from bridges into rivers.

    The dilapidated state of the 1,860 km railway, which was built in the early 1970s, threatens not only operations but could lead to serious accidents.

    "This is the situation despite the fact that Tazara was now upgrading its facilities at a cost of $10.8 million - an interest free loan disbursed by the Chinese government to improve customer service," a TAZARA senior official told EABW.

    Tazara's former Chief Executive Officer, Mr. Clement Mwiya declined to comment saying that he was on leave. "Am on leave…talk to the Acting CEO Mr. Henry Chipeyo," Mwiya said. Chipeyo was also not available for comment.

    In an effort to rescue Tazara from total collapse, the company now wants to commission 50 containerised wagons. It wants to also commission 50 tanker wagons and 50 more open wagons very soon.

    Two months ago, Tazara announced to its customers the decision to adjust upwards by 30% the current tariffs due to recent global fuel prices increase.

    Also ongoing is the rehabilitation of 18 main line locomotives under contract with General Electric of the US.

    Tazara was planning to procure freight wagons, shunting locomotives and other equipment - all in all Tazara needs recapitalization.

    The recent increase in passenger fares was necessitated by fuel price hikes and increased operational costs.

    Last month, Mwiya was quoted as saying that the volume of cargo traffic on Tazara is expected to grow from 600,000 tonnes annually to 800,000 tonnes over the next five years. That would increase revenue from $35 million to $55 million per year.

    A few years ago, a stakeholders' conference to discuss a consultant's report on private sector participation options for Tazara was held in Dar es Salaam.

    Tanzania and Zambia had agreed to concession it to a Chinese firm with the capacity to run the 1,860-kilometre Tazara railway profitably. The investor was to be identified by China.

    The two countries had also agreed to give priority to the Chinese firm after taking into account China's role in building the railway line and sustaining it over the past three decades.

    The World Bank and audit firm, PriceWaterhouseCoopers, had done due diligence of the giant surface transport service prior to privatisation.

    The railway line, which has been dubbed 'Uhuru Railway' runs from Dar es Salaam to New Kapiri Mposhi in Zambia was built between 1970 and 1975 by the Chinese.

    Tazara's role as a facilitator of political liberation of southern and central African countries is now over and once the concessionaire takes over, it will be run as an economic enterprise.

    China on the other hand injected millions of dollars to maintain Tazara under a technical co-operation protocol that was signed in 1976.

    Stakeholders have been in several consultations in Dar es Salaam with an agenda of considering the various possible ways of involving the private sector in Tazara.

    Tazara's performance has declined especially during the last ten or so financial years during, which traffic volumes have fallen from 1.2 million tonnes a year to about half.

    It has made efforts with limited success to revitalise the railway into a competitive and financially viable company in the face of major difficulties including reduced traffic volumes due to competition and limited haulage capacity.