Norway withdraws funds for key road By Costantine Sebastian THE CITIZEN The upgrading of an important road in Kilimanjaro Region hangs in the balance after Norway halted its funding on the grounds of poor management of the project by the Tanzania Roads Agency (Tanroads), The Citizen has reliably learnt. The Norwegians had already disbursed nearly Sh3.8 billion of the Sh23.29 billion it had promised for the upgrading of the 34km Marangu-Rombo Mkuu Kilacha road. Diplomats at the Royal Norwegian embassy said the remaining Sh19.5 billion would now be provided as part of Norway�s general budget support for the current financial year, and not directly to Tanroads as initially planned. "Norway will no longer earmark funds for this specific project," first secretary at the embassy Britt Hilde Kj�l�s told this newspaper. Government and sectoral sources said the donor was unhappy with Tanroads' lack of professional seriousness in overseeing the implementation of the project. The diplomats said Norway was not happy with the way Tanroads was handling the rehabilitation of the road. Its funding was hotly debated and largely opposed by legislators in Parliament with many questioning its economic usefulness. "We are not satisfied with the way Tanroads is managing this project,"another first secretary, Hanne Tilrem, said. However, Tanroads said the Norwegians were still fully supportive of the project. "We are not aware that the Kingdom of Norway, through its agency, Norad, has decided to pull out of the project. Norad is, in fact, actively engaged in ensuring that the project is executed to its successful completion," Tanroads CEO Ephraem Mrema told The Citizen. On what specifically Norway was not satisfied with, first secretary Kj�l�s cited underperformance and sluggishness in implementing the project. "According to the contract signed between Tanroads and Prismo on February 23, 2007, the work was supposed to be finalised within 24 months. The contractor has not performed and the road rehabilitation is thus severely delayed,� the diplomat explained. "Norway, in agreement with ministry of Finance, has decided to transfer the remaining funds for the Road Sector through General Budget Support (GBS), which is the preferred financing modality according to Government of Tanzania. The Government of Tanzania will provide continuous support to the project through the ordinary transfer of funds to Tanroads." Norway's decision is a big blow to the financing of the project that was initially scheduled to be completed next August. A contractor who has handled similar projects said on condition of anonymity that legal tussles and financial constraints could spell doom to the project. He said the delay to timely implement it had seen the cost shoot past Sh32 billion. Problems began when Tanroads terminated its contract with the first contractor, Prismo Universal Italiana S.P.A of Italy which was in joint venture with Badr East African Enterprises (T) Ltd. Mr Mrema said the contractor was shown the door due to persistent failure to fulfill contractual obligations, which resulted in failure to commence permanent works after a delay of 10 months. Prismo denies this and has already filed a suit at the High Court in Dar es Salaam objecting to the expulsion, saying Tanroads reached the decision base on wrong information provided by the consulting engineer, Norconsult. Prismo officials said that they had since October last year informed all the relevant authorities, including Tanroads, of the dubious operations of the company in the country, including use of six different identities. In May this year, The Citizen exclusively exposed the Norconsult's scam of doing business illegally in the country for about 10 years. The revelation led to Tanroads declaring void all its contracts with the Norwegian company, which has however obtained a court injunction restraining the agency from appointing a new consultant to supervise the works. "Prismo disagrees with Tanroads complaints. As at the date of Tanroads confiscating our equipment (i.e. March 25, 2008) works had commenced following Tanroads payment of compensations (i.e. October 2007) and payment of advance payment (i.e. Sh3.8 billion) received by us in January 2008,� its senior official Carlo Di Simone said. He said before Tanroads confiscated its equipment mobilized for the project Prismo local partner Badr East African Enterprises Ltd. had already invested over �10 million for the work. On May 13, the agency engaged a new contractor, General Nile Company of Egypt in joint venture with Uganda's Dott Services, to take over the works. Mr Mrema said the new contract price is Sh25 billion, which is Sh2 billion more than the Norwegians had provided. However, works are yet to commence because of financial hitches coupled with an injunction granted to Norconsult pending the outcome of its arbitration with Tanroads. The project hit another snag at this juncture when Norway refused to provide the required about Sh5 billion advance payment to enable the contractor commence work. The Norwegians gave their position before the new contract was signed saying the advance payment should be covered by Tanroads by cashing the bank guarantee it had from Prismo. The Italian firm said it has already blocked the availability of that money until their case with Tanroads is settled. Its officials claim that the new contract was awarded without terminating theirs and uncertainty of funding of the project, which is improper. They said such a scenario violates the Public Procurement Act 2004 that says no procurement entity is allowed to enter into contract if the procurement contract is not completely funded. The law's provides that "an award of a contract made by an Accounting Officer beyond its authority and not approved in retrospect shall nevertheless be valid and the Accounting Officer who approved it will be responsible for the payment of the price(s) involved," the Act states.