nngu007
JF-Expert Member
- Aug 2, 2010
- 15,860
- 5,803
By In2EastAfrica - Thu Jun 02, 2:21 pm
Tanzania said on Wednesday it would invite fresh bids for a stake in its railway company after the termination of a concession deal with Indias Rites Limited before the end of next year.
Rites, which owns 51 percent of Tanzania Railways Limited (TRL), has already signed a deal with the government to sell its stake in the joint venture, Transport Minister Omari Nundu told a parliamentary committee.
TRL was established in 2007 as part of a 25-year concession deal to improve the countrys main railway network. The government retained a 49 percent stake.
But the privatisation deal failed to revive the network, with the company frequently hit by financial difficulty and workers strikes over salary delays.
Following the unsatisfactory performance of TRL, the Ministry of Transport and Rites of India agreed to terminate the contract and a deed of settlement has already been duly signed between the two parties, Nundi said.
He said the government was now seeking the approval of the World Banks private sector arm, the International Finance Corporation (IFC), to buy back 100 percent ownership of the company as an interim measure.
The IFC had extended a $44 million loan to TRL after the joint venture deal was sealed, but the privatisation of the railway firm has been largely unsuccessful.
The full state ownership of the railway company would only be for a transitional period while the government seeks another investor, the minister said.
The government had provided a 4.12 billion shillings ($2.66 million) bail-out to TRL by February for working capital and to settle some of the companys debts in addition to 13.868 billion shillings disbursed by the state for staff salaries.
Nundu said the railways passenger traffic declined 46 percent last year, while the annual cargo haul also fell 43 percent to 256,190 tonnes from the previous year.
Reuters