CAG opposes sale of ATCL, TANESCO By Fumbuka Ngw'anakilala THIS DAY 28th April 2011 CAG - Ludovick Utouh THE Controller and Auditor General (CAG), Ludovick Utuoh, has urged the government to rethink plans to privatise key state-run companies, warning that the loss of state ownership and control over such firms could undermine the country's independence and put the national economy under serious risk. Utuoh cited the national flag carrier, Air Tanzania, and power utility Tanzania Electric Supply Company (TANESCO) among the nation's prized assets, saying the government should not sell these public companies come what may. In his latest annual general report on the audit of public authorities and other state-run bodies for the 2009/10 financial year, the CAG warned that the sale of strategic parastatals to profit-hungry private investors was an ill-advised move. He said sensitive public companies should remain in 100% government ownership and ought to be struck off the list of state-run firms specified for privatisation. "Some of the public enterprises need to be state owned due to the type and nature of the services offered by them in the country," said the CAG in his report released at the recently-concluded Parliament session in Dodoma. Utuoh insisted that despite the government's privatisation exercise, the "ownership and control" of some key public companies should remain fully in government hands. "For example, ATCL is a national carrier and a symbol of national identity outside the country which can greatly publicize Tanzania and boost tourism," said Utuoh in his report. "Likewise, any draw back of TANESCO operations result in low production, less tax income, loss of employment, increased prices and so on." The government has said it is in talks with investors interested in buying a stake in ATCL after its previous privatisation to South African Airways (SAA) failed. ATCL has currently been forced to suspend operations after its sole aircraft, a Bombardier-built Dash 8 Q300, was flown abroad for maintenance. This is the second time that the government has sought a partner for the loss-making carrier. In 2006, South African Airways gave up a 49 percent stake in the airline for $20 million after only five years of being a shareholder. The government announced in 2009 that a Chinese firm, China Sonangol International, was interested in a 49 percent stake in the national flag carrier. However, the CAG also cited the public bus transport company, Shirika la Usafiri Dar es Salaam (UDA), as another parastatal that should not be privatised. "On the other hand, transport is another headache, especially to school children. Had the government enabled UDA to effectively operate to at least half the capacity of private bus operators, this problem to ordinary citizens would have been eased," he said. ATCL, TANESCO and UDA are among state-run companies currently specified for restructuring and/or privatisation. The government plans to offload more than 30 public enterprises, which were taken over by Consolidated Holdings Corporation (CHC) after the tenure of the defunct Presidential Parastatal Sector Reform Commission (PSRC) expired. The CAG advised the government to speed up the privatisation of non-core state assets but halt the sale of ATCL, TANESCO, UDA and other strategic public companies. "Leaving these public enterprises in the hands of private owners is of high risk to our independence and the contribution to the country's economy," he warned. "Private-owned businesses mainly focus on profit and not service delivery." Tanzania has been much criticised both at home and abroad for the way it has handled the privatisation of state-run assets since it embarked on the exercise two decades ago. Many of the privatised parastals have failed, with only a couple of formerly public owned companies such as Tanzania Breweries Limited (TBL) touted as rare success stories in the exercise. The latest high-profile flops in the privatisation exercise are ATCL, TANESCO, Tanzania Railways Limited (TRL) and Tanzania Telecommunications Company Limited (TTCL). The Father of the Nation, Mwalimu Julius Kambarage Nyerere, famously opposed the privatisation of Tanzania's largest and oldest commercial bank, National Bank of Commerce (NBC), which was ultimately sold to South Africa's ABSA Group in 2000 under dubious circumstances. The government has been under pressure from the World Bank and the International Monetary Fund (IMF) to privatise as part of their push for structural adjustment since the start of economic reforms in mid 1980s. Privatization was put as one of the conditions for a country to receive supposedly low-cost loans, grants and debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. However, despite years of debt relief, Tanzania's national debt rose to a staggering $11.241 billion as of February this year, while the privatisation exercise has resulted in massive job losses and collapse of formerly state-owned companies.