Concession termination in a railways project in Tanzania
Date
August 15, 2011
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On August 1st, RITES, an engineering consultancy company, specializing in the field of transport infrastructure abandoned Tanzania Railways Ltd, a joint venture of RITES and the government of Tanzania (51:49). Tanzania Railways Ltd was established in 2007 as part of a 25-year concession deal to improve the country's main railway network.
RITES has executed projects in over 62 countries on every major continent. As of 2010, it was executing projects in 30 countries.
"This is a victory because for a long time we have been pleading to the government to part with the TRL management" said the deputy secretary general of the Tanzania Railways Workers Union.
He said since RITES took over the railway company has been underperforming with sporadic strikes. Since its privatisation, the railway's passenger traffic fell 46% last year, while the annual cargo haul also fell 43% to 256,190 t from the previous year.
The International Finance Corporation (IFC) - the World Bank's investment arm - which had disbursed part of a $44-million loan, exited the project when the privatisation process stalled. The fact is that the relationship among the parts was never the best. Read Railway Gazzete and IFC's testimony.
Future Plans
The IFC would be willing to consider supporting a re- privatisation of the railway based on a commercially sound business plan and financing plan but it seems that the governments wants to keep control and management of the railway line.
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