With Zero investment, Rites gains TZS.177bn 'profits'

[BAK]

Train services from Dar-es-Salaam to Kigoma resumed in June, although limited to only one serice per week. Photo Jackson Odoyo
The problems facing Tanzania Railways Ltd (TRL) have not been resolved (they have been described in several issues of TA) but a number of new developments have been reported during recent months.
In May it was revealed that the India-based firm RITES was demanding $86 million (about Shs 125billion) as the cost of ending the 25-year deal it had signed with Tanzania three years earlier. However, the Guardian on Sunday claimed that the company hadn’t invested any money in the railways during all this time. The paper alleged that RITES had expected to use the TRL’s shares and assets it acquired in order to borrow $400 million from the International Finance Corporation/World Bank. As the quality of service on the main lines declined, the paper said, the government eventually agreed to buy back the 51% of shares RITES owns. Then, alarmed by the financial report presented by RITES, the government’s negotiation team was said to have asked for an independent auditor to verify the books of accounts, before any compensation deal could be reached. RITES apparently did not agree to this.
On June 8 the Daily News reported that the government had formed an interim management team to run Tanzania Railways Limited (TRL) while the government looked for a reliable and serious investor. RITES management had agreed to hand over the assets and operations of TRL as a decision to this end had been made by shareholders on both sides of the partnership.

Tanzanian Affairs » TANZANIA RAILWAYS

 

[Zak Malang]

Wajumbe JF:

Jamani mbona nchi hii ni ya kuliwa tu? Hawa wadosi walikuja na midude chakavu na huduma mbovu – sasa wanaondoka na kitita cha Sh 30 billion!!! Halafu hakuna mtu yoyote atakayewajibishwa na serikali ya JK – hii ni ukweli mtupu!

Dr Slaa akilizungumzia hili majukwaani serikali na wapambe wake waliopotea njia wataanza kusema Chadema inataka kuvuruga amani. Inaudhi kweli kweli.




Revealed: Rites` $20m bounty

By Staff writer


They came with nothing valuable except 50-year-old locomotives and wagons, but will leave this country with $20 million (Sh30billion) bounty, thanks to the flawed contract signed between Rail India Technical and Economic Services Ltd (Rites) and the government of Tanzania.

Apart from paying them a hefty $20 million as the cost of the five decades old wagons and locomotives, the government will also foot the bill of the travel cost of all Rites’ senior officials who have been working in the country for four years, The Guardian on Sunday has learnt.

Following months of intense negotiations on how to end the doomed partnership, Rites finally emerged the winner as the government agreed to pay a whopping amount to the Indian firm as a cost of termination of contract as well as the total number of wagons and locomotives imported by the company between 2008 and 2009.

Earlier in 2009 Rites issued a 60-day ultimatum to the government stipulating that if the latter does not pay the $30.2million for hiring the locomotives and wagons, the Indian firm will break the partnership.

The move comes a few months after the public reacted furiously to $65 million award given by the International Chamber of Commerce to the controversial Dowans Holdings Tanzania Ltd.

But, some local officials within the Tanzania Railways Authority see the move as deeply flawed and misuse of taxpayers billions.

The Indian firm managed to lease 23 used passenger coaches for a price that could have bought 20 brand new wagons. In the leasing agreement for the 23 coaches, seen by The Guardian on Sunday, TRL was to pay $5,765,300 over five years, including lease charges of $3,255 per coach per month for five years and maintenance and spare charges of $450,000 per year.

According to details gathered by The Guardian on Sunday, what the government is paying for, has a zero book value. A new passenger coach bought outright could cost about $250,000 depending on the type and country of origin. Most of the passenger coaches currently used by the Tanzanian railway were made in England and Sweden.

Though the Minister for infrastructure development, Omar Nundu, wasn’t available to comment the story, his deputy Athumani Mfutakamba confirmed to The Guardian on Sunday about the hefty payments to be paid to Rites.

But, the Deputy Minister couldn’t confirm the $20 million figure, saying he was out of the office.

‘It is true there is a certain amount of money to be paid to Rites, but those are funds which are statutory and were stipulated in the agreement’ noted Mfutakamba over the telephone when interviewed by The Guardian on Sunday, this week.

The Deputy Minister also confirmed that the government would foot the cost for transporting of all high level Rites’ executives who have been serving at TRL management as part of the agreement.

He also expressed government’s frustration over the way the Rites’ partnership turned into a total mess as the Indian firm failed to manage the Tanzania Railways Ltd as agreed on the original contract, which however favoured the company at the expense of the government.

‘When Rites came in as an investor in 2007 we had four passengers’ locomotive trains functioning properly, but currently we have only two…we have gone down further instead of growing higher.” The Deputy Minister added.

But a senior official from TRL who declined to be named because he is not the authorised spokesperson told The Guardian on Sunday, “As a Tanzanian engineer, educated by this country, I am deeply shocked by the government’s move to pay such a hefty package to a failed investor.”

“The truth is that it’s Rites that failed to manage TRL according to the contract, but today our government is paying them (Indian investors) billions for their failure.” The TRL official added

Old wagons, heavy burden to TRL

According to the contract, TRL was to pay an extra $4,491,900 in leasing charges for the coaches over the five-year period, as well as $823,400 in freight and insurance charges for the coaches from India to Tanzania.

This amount could have purchased another 17 brand new coaches enabling the TRL to own at least 37 wagons, rather than lease just 23 with carriage capacity of 5,550 passengers.

The Guardian on Sunday has also reliably learnt that the $10.42 million that Rites was demanding for leasing 25 YDM4 locomotives for a two -year period is enough to buy the same number of new locomotives at a price of $1.8 million per locomotive depending on the power.

To put it simple, the amount of money that Rites charged to lease used locomotives and wagons over five years could buy ten brand new locomotives and 48 new passenger coaches, which if they were bought outright rather than leased would have given the railway the added collateral benefit.

But curiously, TRL was instead dragged into the controversial contract to lease the used locomotives, some as old as 48 years, which according to experts are very expensive to operate due to their massive fuel consumption.

The 73R XX locomotives leased have 1200 horsepower and were manufactured in 1951, whereby their fuel consumption stands at five litres of diesel per kilometer. Tanzania's railways were designed for 89xx class locomotives with 2000 horsepower.

Speaking on condition of anonymity, a senior TRL engineer told The Guardian on Sunday that there are 34 88xx class locomotives manufactured in 1992 that belonged to the defunct TRC, in addition to nine 89xx class locomotives of the same year.

Those 43 locomotives would be enough to revamp rail transport in the country, the engineer said.

Comparatively, he said the Rites-leased locomotives had far greater fuel consumption. Just one of the ‘fuel guzzlers’ uses 3,500 litres of diesel to travel from Tabora to Kigoma and since they always operate in pairs, both consumed at least 14,000 litres of diesel on a round trip journey, he said.

TRC's original locomotives used just 4,000 litres of diesel for the same trip. “The government blindly entered into a contract that if not seriously taken care of, will kill the railways services in the country. One of the leased locomotives can only pull a few passenger coaches as two of them combined, pull 12 passenger coaches,” he said, adding that a single locomotive among those already owned by the government can pull up to 17 passenger coaches.

The Guardian on Sunday also learnt that Rites, because it has a majority share in the railway, was able to choose TRL's management, allowing it to stack the top ranks with Rites officials.

According to the contract, TRL was forced to pay a freight charge of $35,000 per passenger coach from India to Dar es Salaam. But a quotation obtained by The Guardian on Sunday from one of the marine transporters in Dar es Salaam shows that the firm would have charged $18,000 per wagon.

Inside the shoddy contract

In September 2007 a leasing contract agreement between Tanzania Railway Ltd (TRL) as lessee and Rail India Technical and Economic Services Ltd (Rites) as lessor for leasing 25 YDM4 locomotives was signed by TRL Managing Director A. Jayaran and Sumit Sinha, Rites Executive Director (Expotech) in the presence of Sawjay Misra, TRL executive director, and Amitabh Sinha, Rites general manager.

The five-year $31,777,850 (Sh42,582,319,000 at the current exchange rate of Sh1,340 to a dollar) contract prize agreement included lease charges of $107,800 (Sh144,452,000) per locomotive per year and maintenance charges of $128,700 (Sh172,458,000) per locomotive per year.

The agreed wet leasing charges must be paid by TRL to Rites towards the hiring charges and maintenance charges per locomotive taken on a two-year lease, while freight and insurance charges must be paid in advance for each shipment agreed to be subject to adjustments.

The wet leasing charge of a locomotive for one year is $236,500 (Sh316,910,000) meaning that wet leasing charges of 25 locomotives for five years stand at $29,562,500 (Sh39,613,750,000), according to the contract, with the total wet leasing charges of contract agreement for 25 locomotives for five years at $30,213,700 (Sh40,486,358,000).

Apart from these charges there is also the cost of modifying 16 of the locomotives for $651,200, with $35,000 as estimated one-way freight per one locomotive from India and Dar es Salaam, subsequently placing freight for 16 locomotives at $1,120,000 and nine locomotives already in Tanzania then at $315,000, totaling freight charges of $1,435,000.

Included in the contract are marine insurance for the 16 locomotives at $100,800 and marine insurance for nine locomotives from Dar es Salaam to India at $28,350. The total freight and marine insurance stands at a staggering $1,564,150.

On safety, the agreement says: “The lessee shall be wholly responsible for any loss or damage to life, property and to the leased locomotives, on account of failure to comply with the instructions of operations and load restrictions.”

It adds: “The lessee will be responsible to meet and pay for all claims arising out of any loss of life and property as per existing rules of the lessee for payment of compensation to person(s)/parties involved. The lessee shall suitably compensate the lessor in case of the leased locomotive is involved in any mishap during the period the loco is under the lessee’s custody.”

In the event that a locomotive is damaged in a collision or derailment to such an extent that it cannot be repaired in Tanzania, the contract stipulates: “The hire charges for the damaged locomotive will terminate at midnight on the date of the derailment/collision and the locomotive must be returned to India at the cost of the lessee.”

Other terms and conditions of the agreement indicate that in case of termination of the contract before expiry of the lease period of five years, a notice of three months is required to be given by either party.

“In the event that the parties are unable to resolve any differences relating to the interpretation or the effect of Force Majeure, then the parties agree to seek resolution of their differences by resorting to arbitration” in an amicable manner in a spirit of cooperation. “Any unresolved dispute or difference shall be arbitrated, in accordance with international practice.”

Although in the initial contract it was agreed that Rites would start delivering 16 locomotives within four months after signing the contract and a mobilisation advance being made available, an addendum changed the clause to read: “The delivery of (16) locomotives shall conclude within twelve months of receipt of upfront payment.”

The upfront payment towards the cost of mobilisation was $2,087,725 (Sh2,797,551,500) but yet another addendum stipulated that the upfront payment be paid in three installments one month before each lot of locomotives was shipped from India.

The suggested tentative dates of shipment of the lots were October 25, 2007, for the first lot, with a payment of $727,725, and December 25, 2007, for the second lot that required an upfront payment of $680,000.

The third lot was to be shipped on February 15, 2008, with an upfront payment of $680,000.

The contract categorically stipulates that the upfront payments are not refundable in case of any premature termination or cancellation of the leasing agreement for any reason whatsoever.

The payment for the dry lease would commence with $1,247,995 as an upfront payment towards the cost of mobilisation to RITES within two weeks of signing the contract. This payment is also not refundable in case of any premature termination or cancellation of the leasing agreement for any reason whatsoever.

The contract states that the balance of $4,267,305 shall be paid in two monthly installments. Just like the agreement in leasing locomotives, this contract states that the lessee will be responsible to meet and pay for all claims arising out of any loss of life and property as per existing rules of the lessee for payment of compensation to person(s)/parties involved.

The lessee shall suitably compensate the lessor in the event that the leased locomotive is involved in any mishap during the period that it is under the lessee`s custody.

The agreement shows that the lease charges must be paid by the lessee regularly, even if the coaches are not in service.

SOURCE: GUARDIAN ON SUNDAY

 

[Zak Malang]

Nimeisoma hiyo habari kwenye gazeti na nimeshituka sana. Nilifikiri Dowans ndiyo ingekuwa the last dirt by JK administration -- kumbe bado madudu yako mengi tu -- na ninadhani ufisadi katika Kilimo Kwanza wakati utakapoanikwa itakuwa funga kazi!

Well done JK -- it's a good job you did kuwafungulia mlango mafisadi wa ndani na nje kuchota na baadaye unawaachia tu ukichekelea! CCM inakufia mikononi mwako -- matumaini makubwa waliyokuwa nayo vijana wakati uliupoteuliwa kugombea urais mwaka 2005 sasa yametoweka kabisa baada ya misururu hii ya maudhi!!!

 

[Zak Malang]

Nimeisoma hiyo habari kwenye gazeti na nimeshituka sana. Nilifikiri Dowans ndiyo ingekuwa the last dirt by JK administration -- kumbe bado madudu yako mengi tu -- na ninadhani ufisadi katika Kilimo Kwanza wakati utakapoanikwa itakuwa funga kazi!

Well done JK -- it's a good job you did kuwafungulia mlango mafisadi wa ndani na nje kuchota na baadaye unawaachia tu ukichekelea! CCM inakufia mikononi mwako -- matumaini makubwa waliyokuwa nayo vijana wakati uliupoteuliwa kugombea urais mwaka 2005 sasa yametoweka kabisa baada ya misururu hii ya maudhi!!!

Na hasa ukifikiria jinsi wananchi masikini kandokando ya reli hiyo walivyokuwa wakiteseka kwa huduma mbovu!!

 

[Madcheda]

dah hv kuna haja kweli ya kusubiri mpk uchaguzi,even though nachukia vita ila nazan yatupasa tupigane kdg kama kenya ili tuheshimiane,mana saiv naona wakenya baada ya kupigana they r running n not going backwards like us, this is stupid,we have to know kila mtu aliyehusika katika mchakato wa kuingia kwenye hii mikataba na tuwawajibishe hata kama wamestaafu,hata kama hawana hela ya kulipa basi tuwafunge maisha wafie jela tu

 

[BONGOLALA]

shamba la bibi tanzania!huu ufisadi sasa umekithiri nchi yetu inamalizwa na watu weupe!kila tukikusanya wahindi waarabu wairan wanazichota!muda wa kuzuia jambo hili kwa mikono yetu ni muhimu sasa!mahakamani hatuna chetu

 

[Zak Malang]

dah hv kuna haja kweli ya kusubiri mpk uchaguzi,even though nachukia vita ila nazan yatupasa tupigane kdg kama kenya ili tuheshimiane,mana saiv naona wakenya baada ya kupigana they r running n not going backwards like us, this is stupid,we have to know kila mtu aliyehusika katika mchakato wa kuingia kwenye hii mikataba na tuwawajibishe hata kama wamestaafu,hata kama hawana hela ya kulipa basi tuwafunge maisha wafie jela tu

Hapana, tusiende huko. Ni lazima CCM iondoke kwa kura. Nadhani mwaka 2015 wataiba ushindi kama vile Kenya au Ivory Coast, tuwaachie tu -- lakini mwaka 2020 itabidi waondoke!!!!!

 

[tzjamani]

Jamani TZ

 

[KELVIN GASPER]

Hii ya kusubiri 2020 siikubali, hawa magamba watakuwa wamechukua kila kitu, hata hayo mafuta huko baharini hatutayakuta.2015 ndio mwisho wao.

 

[sinafungu]

2020 kooote huko...! hawa ni kuhamasishana tu, leo hii unga wa ugali kg ni tsh 850/= kwa ajili ya kulipia mizigo kama hiii, huko 2020 kg moja ya unga wa ugali itakuwa tsh ngapi........?

 

[Mimibaba]

Hapana, tusiende huko. Ni lazima CCM iondoke kwa kura. Nadhani mwaka 2015 wataiba ushindi kama vile Kenya au Ivory Coast, tuwaachie tu -- lakini mwaka 2020 itabidi waondoke!!!!!

Watakapoondoka wakati huo watakuwa wamekomba kiasi gani?

 

[ThinkPad]

Siamini. . . .

 

[Black Devil]

Siamini. . . .

Mipango ya sasa ni kuwapa ziwa Natron wadosi Wa TATA, 75% ya flamingo wote waliobaki duniani huzaliwa huko, nao hawaamini.

 

[Bob]

What do we expect with Werema kind of AG? This country is totally f..ked up. I'm very sorry to say so.

 

[Zegreaty]

sasa naona muda wa kuwavumilia hawa Magamba umekwisha,nakumbuka JMK alipokuwa akizindua hii kampuni aliahidi sasa tabu ya usafiri wa reli ya kati utakuwa ni historia lkn mwisho wa siku hao RITES wakafanya kazi chini ya kiwango kuliko hata shirika letu la reli lilipokuwa chini ya serikali 100%,huu ni uhuni mwingine kuwalipa watu walioshindwa kutimiza makubaliano,haya ndio madhara ya kuchagua wanasheria wabovu kama Chenge,Mwanyika na Werema wanatupelekea kwenye mikataba mibovu mwishowe tunaishia kudaiwa mabilioni kama hivi,TUKIANDAMA serikali inatulaumu nini sasa?

 

[BONGOLALA]

eti na nauli ya kurudi kwao tuwape!hii kali ya mwaka!kwa nini wasitumie mishahara yao?unampaje mtu share 51% wakati hana chochote alichonacho!maana hata mabehewa yenyewe walikodi huko india

 

[lifeofmshaba]

NAONA KAMA HAWA WATATUMALIZA SIO MUDA MREFU
ATCL nako hakujalibuka mambo na kesi yao, kuna pesa anatudai ZOMBE,
HII NCHI ITAKUWA MUFIRISI KAMA UGIRIKI SIO MUDA MREFU,
WE NEED TO DO SOMETHING

 

[lifeofmshaba]

Tutafikaje huko na pesa wanagawa zote leo

hapana, tusiende huko. Ni lazima ccm iondoke kwa kura. Nadhani mwaka 2015 wataiba ushindi kama vile kenya au ivory coast, tuwaachie tu -- lakini mwaka 2020 itabidi waondoke!!!!!

 

[BAK]

Huu ni wizi wa mchana kweupe. Hawa matapeli wa RITES waliingia nchini bila kutoa hata senti tano na bado Serikali ikawapa 51% ya hisa za TRC ili watuibie Watanzania.

Kulikuwa na bank account ambayo shilingi bilioni 10 katika account hiyo zilipotea na Serikali ikataka kuwaita Independent Auditors ili wakague vitabu na kuhusu upotevu huo na si ajabu ulikuwa mkubwa zaidi ya shilingi bilioni 10, lakini wahindi hao wakagoma kuruhusu vitabu vya TRC vikaguliwe.

Mwanzoni ilidaiwa watalipwa $87 million, mimi bado naamini kabisa kama Watanzania tukigoma malipo ya aina yoyote kwa hawa wahindi basi wataondoka mikono mitupu. Hawastahili kupata hata senti moja ya pesa za walipa kodi Watanzania. Waliingia mikono mitupu na wanastahili kuondoka mikono mitupu.

 

[Falconer]

Wadosi hawana makosa tafuteni mchawi ni nani?. Hawa wamekuja kufanya biashara. wajinga wakuliwa ni nan?. WAKE UP GUYS, SMELL THE COFFEE".