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Tanzania Zambia Railways Authority

Background

Tanzania Railways Corporation (TRC) came into being after the collapse of the East African Community in 1977. Before it was a part of the East African Railways Corporation (EARC) operating in the countries of Tanzania, Kenya and Uganda.  It is state owned and governed by the TRC Act of 1977. The Tanzania network is approximately 2,600 km of single-track metre gauge. The network consists of two main lines, namely the Central line and the Tanga line. 

The Central line runs from Dar es Salaam to Tabora (850 km) and from there one line to Kigoma (453 km) and another to Mwanza (386 km).  The Tanga line starts from Tanga to Moshi and Arusha with a total length of 430 km.  To connect these two lines there is a link line that is 186 km between Ruvu Junction Station on the Central Line and Mruazi Junction on the Tanga line. 

There are other three branch lines i.e. Kilosa Kidatu – 102km; Kaliua Mpanda – 212 km and Manyoni Singida – 115 km.  The Central and Tanga lines were built at the beginning of the century whereas the others were built at various times during the century the latest being built between 1985 and 1997 i.e. the Singida Manyoni line.  TRC is connected to Uganda Railways Corporation by wagon ferries over Lake Victoria, and to Kenya Railways Corporation through a link from the Tanga line to the Kenyan rail network at Taveta.

In 1992 a donor funded project, the Railway Restructuring Project (RRP) commenced and this investment has led to improvements in TRC’s performance. This project is drawing to a close.

TRC has undergone internal restructuring.  Its railway hotels have been leased, its catering services have been contracted out, and the marine services have been hived off and corporatised as the Marine Services Company.  It entered into a performance contract with the Government (GoT) in 1997.

SECTOR

TRC was one of the country’s largest infrastructure enterprises providing transportation of goods (domestic goods, import and export cargo) and passengers within the country, and of transit traffic to the land-locked countries of Western Congo, Burundi, Rwanda and Uganda.   The Government’s policy towards the transport sector over the last decade has been for steady deregulation with the result that the private sector has entered the market.  Furthermore deregulation of imports and increased public spending on roads resulting in significantly improved roads conditions have increased the level of competition from the private sector in the transport sector. Transit traffic has been affected by alternative routings e.g. through the ports of Mombasa, Nacala, Beira and Maputo. TRC is therefore exposed to considerable competition.  The Government’s policy has allowed for competition in land transport.

Tanzania’s second railway is the Tanzania Zambia Railway Authority (TAZARA) which is jointly owned by the Governments of Tanzania and Zambia.  It opened in the mid 1970s primarily to export copper from Zambia.  However it does not interconnect with TRC due to the difference in grid width.  It is also being considered from privatisation by concession, but it is not part of PSRC’s portfolio of parastatals to privatise.  

PRIVATISATION STRATEGY

On the 18 May 2001 the Government made a cabinet decision to restructure TRC to allow for the award of a vertically integrated concession to a private rail operator.  The Government will retain ownership of the infrastructure assets and a Railway Asset Holding Company will be created to be responsible for these assets which will be concessioned out to a private rail operator for 25 years.  The rolling stock will be either sold or leased to the private rail operator.  Surplus rolling stock will be sold off.  The same operator will be contracted to carry out passenger services.  The private rail operator will therefore be responsible for the maintenance of the infrastructure, and the exclusive provision of freight and passenger services on the track. Non core activities and assets will be privatised or sold separately.

In April 2000 the Government made the decision to create two independent multi-sectoral regulatory agencies, one to regulate the utilities, the other to regulate three forms of transportation covering rail, land and maritime. The legislation enabling the creation of these regulatory agencies was tabled and passed in the April 2001 parliamentary session, and assented and printed in June 2001 as the Surface and Marine Transport Regulatory Authority Act 2001 (SUMATRA). A separate consultancy is in the progress to establish these two independent regulatory agencies.

EXPECTED TIMEFRAME

The Government of Tanzania advertised the opportunity in December 2001 and January 2002 and shortlisted four rail operators who were issued with the bidding documents.  However for various reasons no bids were received on the bid submission deadline in March 2003.  The Government has therefore decided to restart the transaction process.  Advertising for pre-qualification submissions is on-going.

Indicative timeframe revised