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WIKILEAKS: Tanzania central railway

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by MAMA POROJO, Sep 19, 2011.

  1. MAMA POROJO

    MAMA POROJO JF-Expert Member

    #1
    Sep 19, 2011
    Joined: Nov 22, 2007
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    SENSITIVE

    DEPARTMENT FOR AF/E JTREADWELL, INR JBERNTSEN, FEHRENREICH

    STATE PASS USAID, USTR FOR WILLIAM JACKSON, USTDA FOR KATHRYN

    DORMINEY

    COMMERCE FOR ROBERT TELCHIN

    TREASURY FOR REBECCA KLEIN

    E.O. 12958: N/A

    TAGS: BEXP ECON ELTN EAID PGOV PREL TZ

    SUBJECT: TANZANIA RAIL: GOT WEIGHS PROPOSALS TO FIX THE CENTRAL

    LINE

    REF: Dar es Salaam 772

    DAR ES SAL 00000844 001.2 OF 002

    ¶1. (SBU) SUMMARY. The Government of Tanzania, in looking at ways to
    improve its crumbling rail infrastructure, is considering an upgrade
    to U.S. standard gauge of its Central Line, running from Dar es
    Salaam to northwest Tanzania. A USTDA-supported study, conducted by
    U.S. rail firm BNSF, argues strongly for the merits of that option,
    both for Tanzania's benefit and that of its landlocked neighbors
    Rwanda and Burundi. Our contacts in the donor community, however,
    criticize the BNSF study's assumptions and conclusions, and argue
    that Tanzania's development interests would be better served by
    improvements to the existing rail network or other transport
    priorities. The GOT has publicly affirmed a commitment to adopting
    standard gauge but has not outlined a strategy or timeline for the
    change. In our view, there are valid concerns about the GOT's
    ability to prioritize and about the availability of funding for a
    massive investment in rail.

    END SUMMARY.

    ¶2. (U) Tanzania's rail systems have been deteriorating for decades
    because of poor management and inadequate funding for operations and
    maintenance. Rail currently accounts for only seven percent of the
    goods entering and leaving the port of Dar es Salaam; the resulting
    over-reliance on trucks causes more rapid wear and tear on
    Tanzania's already poor road network. The two most important
    railways, the Central Line, built by Germany in the early 1900s and
    connecting Dar es Salaam with northern and western Tanzania, and
    TAZARA, the 1970s Chinese project providing a link to Zambia, are
    plagued by slow and unreliable service. As part of its long-term
    transportation strategy, the GOT, together with donors, has
    undertaken studies of potential improvements to the Central Line.

    ¶3. (U) In 2009, U.S. rail firm BNSF conducted a study, co-funded
    with USTDA and on behalf of Tanzania's Ministry of Infrastructure
    Development, of upgrading to U.S. "AREMA" standard the portion of
    the Central Line that links Dar es Salaam with Isaka in Tanzania's
    northwest (near Lake Victoria). BNSF's study concluded that such an
    upgrade would be both feasible and favorable compared to the
    alternatives of improving the condition of the current (meter gauge)
    rail or upgrading to a European "UIC" standard. The study estimated
    a cost of between USD 900 million to 1 billion for the Dar es
    Salaam-Isaka upgrade. The study asserts that Tanzania's adoption of
    a standard gauge would also benefit Rwanda and Burundi, which would
    realize economies by constructing standard gauge rail links to
    Isaka.

    ¶4. (SBU) Other donors with experience in the transport sector, in
    particular the World Bank, have raised with us several concerns
    about the proposal that Tanzania adopt standard gauge. In
    particular, donors doubt that adequate financing, from public or
    private sources, would be available to support conversion to a new
    gauge and AREMA standards. The GOT's management of its
    transportation budget is already problematic; commitments to road
    contracts are greater than the amount budgeted, in part as a result
    of election year priorities. Moreover, Tanzania's poor track record
    with public-private partnerships and its difficult business
    environment would likely deter serious private sector investors. To
    the extent that other donors support investment in Tanzania's rail
    sector, it would be for improvements to the current system, which
    they argue could be done much more cheaply and with sufficient
    impact to meet a substantial proportion of Tanzania's rail needs.

    ¶5. (SBU) Donors have raised several additional criticisms of the
    assumptions and conclusions in BNSF's study. These include
    unreasonably high forecasts for growth in rail traffic and cost
    savings realized, underestimation of the potential carrying capacity
    of the current system, and underestimation of the likely price tag
    for conversion to standard gauge. Moreover, the critics argue that
    the study ignores the parts of the Central Line that connect to the
    main route to Isaka, all of which would need to be converted or have
    connections built to remain viable. The study's conclusions also
    rely on improvements in efficiency at the Port of Dar es Salaam,
    which the GOT has been unable to achieve to date despite claims for
    several years that port efficiency is a government priority.
    Critics say the study glosses over the tremendous obstacles to
    DAR ES SAL 00000844 002.2 OF 002
    cross-border arrangements (including financing) needed to enable the
    Rwanda-Tanzania link, which is a key element of the proposal.

    ¶6. (SBU) GOT officials have publicly affirmed their commitment to
    switching to a standard gauge system. Infrastructure Minister
    Kawambwa and East African Community Minister Kamala told a November
    conference that the entire East Africa region would move to standard
    gauge, although each country would do so "according to its own
    schedule." Kawambwa added that Tanzania would seek financing at an
    investors' forum in Tunis in January 2010. President Kikwete
    recently told visiting Deputy Treasury Secretary Neal Wolin that
    Tanzania had a basic agreement on rails with Rwanda and Burundi
    (reftel). BNSF representatives have told us that Rwandan President
    Kagame is the principal force for the development of rail links with
    its neighbors and has pressured his counterparts to adopt the AREMA
    standard.

    ¶7. (SBU) Comment: Although we are not in a position to evaluate
    fully the technical claims of BNSF's study or its detractors,
    concerns about the GOT's ability to prioritize (in the
    transportation sector or across government) are real. Similarly,
    lack of available financing is a potentially serious obstacle.
    Improved transport links with landlocked Rwanda and Burundi would
    support closer regional integration (and likely benefit Tanzania's
    economy), but proponents have not yet entirely made the case that a
    massive investment in rail is now the best way to achieve these
    ends.

    LENHARDT
     
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