How Dar lost out on second fire station in bungled privatisation By JOSEPH MWAMUNYANGE and WILFRED EDWIN Posted Sunday, April 26 2009 at 09:41 Lands Minister John Chilligati (right), inspects the construction of the Dar Village project. On the left is Koola Zadock, chairman and CEO of ZEK Group. Photo/LEONARD MAGOMBA The Tanzanian government missed out on a plot listed for privatisation by Simu 2000 Ltd on a technicality, it has emerged. The plot would have housed Dar es Salaam city's long-awaited second fire station, the new fire service headquarters, and a training centre. Six years later, the country's commercial capital, with three administrative districts and a population close to four million, still has only one fire station - at Ilala. The state, through the Ministry of Home Affairs, was denied purchase of plot no. 717/3 at Mikocheni in Dar es Salaam, formerly the Printing Unit of the Tanzania Telecommunications Company (TTCL), because it failed to pay five per cent of its initial bid upfront. Investigations show that the then acting home affairs permanent secretary, W.N Mogoile, wrote to Simu 2000 in January 2003, asking that the ministry be allowed to purchase the property at Tsh1,957,705,000 ($1.84 million). In its bid, the Ministry of Home Affairs said it wanted to bid for Commercial Building Plot No. 717/3 Mikocheni Dar es Salaam, "for the purpose of converting it to be the Fire and Rescue Services Force Headquarters and also the National Fire and Rescue Training School." At the time, the ministry was under Omar Ramadhan Mapuri, who is now the Tanzanian envoy to China. Mr Mogoile told Simu 2000 that as a government ministry that received funds according to the budget, "We are not able to pay the 5 per cent value amount due to government financial regulations." In September 2003, Simu 2000, which was set up for the purpose of disposing of the TTCL assets in a bungled privatisation exercise, initiated communication with one of the bidders for the plot, ZEK Group, asking it to confirm its bid to purchase the printing unit at Tsh800 million ($775,000). When ZEK Group confirmed the bid vide an undated letter with the reference number ZG/SIMU2000/1609/2003, the seller, Simu 2000, persuaded the Treasury to allow it to sell the asset at a lower price than that quoted by the Home Affairs Ministry. While the Home Affairs' plot buyout plan was blocked by Simu 2000, the Treasury gave a go-ahead through a letter dated December 30, 2003, for five properties in Dar es Salaam, Tanga, Arusha, Moshi and Iringa. They were to be sold at discounted prices - which permission was used to sell the printing unit plot to ZK Group at Tsh800 million ($775,000), way below the initial evaluation of Tsh1.9 billion ($1.84 million). Surprisingly, even though the ministry was denied the chance to buy the property and develop it into a top priority and essential facility for lack of a 5 per cent down payment, ZEK Group itself didn't pay the full amount but was allowed to pay in instalments. One industrial observer told The EastAfrican last week, "This is another case of how privatisation was mishandled in this country." According to correspondence from Simu 2000, the first instalment of Tsh150 million ($145,600) was to be paid during the first week of February 2004 and another of Tsh250 million ($242,000) by the last week of the same month. Simu further stated, "The remaining 50 per cent [is] to be paid by December 2004. After paying 50 per cent of the value [Tsh400 million or $387,500] by the end of February 2004, the property will be handed over to you for further development whereas documentation of the same will be processed after making full payment for the property." Even though the property was handed over to ZEK Group some years ago, for the purpose of putting up a modern shopping mall, little had been done in terms of developing the plot. Another twist to the tale is that ZEK Group has sued its neighbour, Rose Garden, a popular entertainment spot, which had been in the area long before the group acquired the printing unit plot. ZEK Group claims that it is being denied access to its property. According to the ZEK Group, the world class shopping mall will be functioning by May 9 this year. Other unanswered questions in the Ministry of Home Affairs offer to purchase the property for Tsh1.9 billion ($1.84 million) and the subsequent sale to ZEK Group, concern the unavailability of documents showing how the tender was conducted. Public property is supposed to be sold through an open process. Simu 2000 Ltd was formed under the Public Corporations Act, 1992 to transfer non-core assets of TTCL and to deal with pension assets and liabilities of the East Africa Posts & Telecommunications Pension Scheme from TTCL to Simu 2000.