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- Feb 26, 2006
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Dar to nullify SaskTels contract with TTCL
Disappointment: During the signing ceremony last year, the then infrastructure development minister Andrew Chenge said one of the priorities of SaskTel would be investment in human resource development, But sources say that, to date, no human resource development has taken place. Photo/LEONARD MAGOMBA
Source: The East AfricanThe Tanzania Cabinet is early next year expected to decide whether to suspend or continue with the three-year contract awarded to Canadian firm SaskTel International Inc to operate the Tanzania Telecommunication Corporation Ltd (TTCL).
This follows recommendations by a team appointed by the government to audit operational and financial performance before and after the SaskTel management took over at the largest state-owned telecommunication utility in the country.
A high placed source in the government told The East African last week that the ministry responsible for the utility was now drafting the paper that is to be submitted to the Cabinet for final discussion and decision as early as January next year.
The source said that among the issues to be discussed by the Cabinet will be the failure by the Canadian firm to raise funds to bail out the telecommunication utility, contrary to the commitment it signed in the operational contract.
SaskTel, which will next year remain with one and half years on its contract to run the profit-making firm, has for some time been trying to secure loans from local and international banks for the operations of the telecommunication firm.
The source said the Canadian firm has already approached NBC Ltd and Stanbic Bank Tanzania. Abroad, it sought funds from China Development Bank, which however gave such stringent conditions that SaskTel withdrew the request.
The Chinese bank wanted the Canadian firm to purchase telecommunication infrastructure and facilities from a Chinese state-owned manufacturing firm, to include engineers and technicians for installation of the equipment.
The source said the two local banks for their part refused to grant SaskTel the money until the management firm had reviewed and audited TTCLs financial and operational performance.
The EastAfrican has learnt that what has irked the Tanzania government the most is the Canadian firms bid to raise loans from local banks by purporting the government would be the guarantor of the multimillion-dollar credits.
This, the source said, led the government to direct SaskTel to seek funding from outside Tanzania without a state guarantee.
The failure by Sasktel to raise the money prompted the government to form a team to conduct an operational performance audit of the management firm.
TTCL is yet to emerge from the managerial problems that have been affecting its operations, thwarting expansion plans drawn up by the local management that were on the drawing board before the SaskTel team moved in.
Among them is the development of the National Optical Fibre Backbone, where the Canadian management is supposed to supervise the implementation of the backbone, a project already approved by the government.
But when contacted for comment, Amin Mbaga, acting public relations manager of TTCL, told The EastAfrican that the preliminary stages of the National Optical Fibre Backbone are being prepared by the parent Ministry of Science, Technology and Communication, which has set aside $13.2 million for the purpose.
TTCL is only responsible for managing its implementation, which has not started yet, he said.
The Canadian team was hired on a $5 million contract to help improve the firms financial, commercial and technical performance. This was after a lengthy battle between the government and the TTCL workers union, who wanted the local management retained.
During the signing ceremony last year, the then infrastructure development minister Andrew Chenge said one of the priorities of SaskTel would be investment in human resource development, adding, Only 32 per cent of the 2,200 TTCL workers have an education level of Form Six and upwards. He said the new management would run the company for three years as a way of preparing Tanzanians to effect a smooth takeover after that.
But sources say that, to date, no human resource development has taken place; on the contrary, it appears that several technicians and engineers have become so frustrated that they have decided to quit.
Three weeks ago, the Telecommunications Workers Union of Tanzania (Tewuta) demanded, among other things, a 40 per cent salary increase for TTCL employees, warning that otherwise workers in the whole country would go on strike within 14 days.
However, the director of the board, Prof Matthew Luhanga, intervened to save the situation by ordering the two sides to meet and discuss the issue with a view to averting the strike.
During the discussions, it emerged that the strike would have undermined the assessment report by Prof Nicolas Kuhanga, whose final recommendations are now being worked out at the ministry.
Sources also say the SaskTel management pleaded with workers to be given more time until February 2009 to assess their demands. But W.N Beckman, the chief executive officer of the giant firm, denied reports of the impending workers strike. He said, If there were any such action, definitely I would have been advised.
However, he said the Morogoro meeting which brought together workers and management representatives was intended to discuss industrial relations.
According to TeleGeographys GlobalComms database, TTCL is Tanzanias primary provider of fixed line services, but its record on providing access has been poor and it faces stiff competition from the countrys mobile operators.
By the end of 2006, around 250,000 landlines had been installed, with connections concentrated in the urban areas and a few semi-rural communities, but only around 160,000 were in service, representing a teledensity of just 0.4 per cent.
By contrast, the nations four mobile operators Vodacom Tanzania, Celtel Tanzania, MIC Tanzania (which operates under the brand name Tigo) and Zantel collectively reported 5.59 million customers at the end of 2006, a cellular penetration rate of 14.6 per cent, up from 3.4 million users the previous year.