Monday, 16 December 2013

TAZARA board approves budget

The Tanzania-Zambia Railway Authority (TAZARA) Board of Directors has approved TAZARA’s new five-year strategic plan for 2013 – 2018, with an indicative budget outlay of $211.0 million from which $177.0 million will be applied on the enhancement of capacity in critical areas of operations.

As directed by the shareholding governments of Tanzania and Zambia, the Strategic Plan has for the first time underpinned private sector participation in the Authority’s operations, with at least 15% of investment funds initially expected to be sourced through strategic partnerships with willing customers and other stakeholders.
Other funds are to be sourced from internally generated revenues and shareholder support, including loans obtained by the two shareholding governments from the government of the People’s Republic of China through the Protocols of Economic and Technical Co-operation.
At meetings held in Lusaka, Zambia, on 5th and 6th December 2013, chaired by Mrs. Charity Kaande Ngoma, who is the Permanent Secretary responsible for Transport in Zambia, the Board of Directors endorsed management’s strategic intent to actively engage stakeholders in order to meet TAZARA’s critical requirements for both re-capitalisation and working capital.
“Now that the framework has been approved, we shall immediately embark on discussions with strategic partners in order to quickly secure sufficient investment funding for key needy areas of operations,” said the Acting Managing Director of TAZARA, Eng. Ronald Phiri.
From the US$211.0 million budget outlay, US$90.0 million is to be spent on rehabilitation, repairs and purchase of rolling stock, including locomotives, wagons and coaches, whilst US$64.0 million will go towards infrastructure development, US$22.0 million towards human resource development and US$1.0 million towards the upgrade of the Information Communication Technology (ICT) profile.
Given the addition of the already acquired six new locomotives to the fleet in 2013 and the other four new locomotives expected in 2014 under the 15th Protocol of Economic and Technical Co-operation, the plan envisages a wide traffic growth path from the annual tonnage of 480,000 tonnes in 2013, gradually rising up to 1.5 million tonnes by 2018.
With such an increase in traffic volumes, the annual revenue is projected to proportionately grow from US$48.0 million in 2013 to US$122.0 million in 2018.
At the Lusaka meeting, the Acting Managing Director informed the Board of Directors, who included members from both Tanzania and Zambia, that due to many years of insufficient recapitalization, TAZARA was suffering from serious capacity constraints, which made it difficult to develop business to sustainable levels despite the abundant availability of large volumes of imports, exports as well as local traffic throughout the year.
Eng. Phiri said the Strategic Plan had reviewed issues and challenges the Authority encountered in the last five years and prescribed what needed to be done to increase capacity and, therefore, improve performance over the next five years.
“Having considered the important issues that need addressing in the next five years, we firmly believe that great prospects are in sight,” said Eng. Phiri, who noted that funding for investment in the development and maintenance of the railway infrastructure had been the least prioritized area in the past.
On 13th November 2013 in Dar es Salaam, the TAZARA Council of Ministers, which is the highest policy organ of TAZARA, directed the Board of Directors and Management to work out a framework for incorporating private sector participation in the Authority’s operations and future investment plans.
The Council of Ministers had observed that both the Tanzanian and Zambian Governments were increasingly finding it difficult to justify the continued putting of tax-payers’ money into TAZARA, when infact the Authority had the potential to not only be self-sustaining but declaring dividends as well.

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