UNITED REPUBLIC OF TANZANIA

MINISTRY OF TRANSPORT

RELI ASSETS HOLDING COMPANY LTD (RAHCO)

Eng B.M Tito

Managing Director RAHCO

STATEMENT OF MANAGING DIRECTOR ENG. BENHADARD TITO IN A WEEK OF THE MINISTRY OF TRANSPORT TO MARK 50 YEARS OF TANZANIA

MAINLAND INDEPENDENCE

1.0 PREAMBLE

As we are marking 50 years of Tanzania Mainland Independence, the Managing Director of Reli Assets Holding Company wishes to present the historical background and development of the railway sub sector, in particular with regard to a railway network of 2,707kms previously operated by TRC and now TRL. The discussion will also chat out the roles and functions of RAHCO, ongoing and future railway projects. The statement will highlight some of the challenges facing the railway sub sector and way forward .

2.0 INTRODUCTION

Railways in Tanzania were first built in 1893, when the first rail track was laid at the port of Tanga. Thereafter, construction of railway lines continued to be carried out in other places in Tanzania. In Tanzania, railway services (apart from the TAZARA), were operated by the

1

Tanzania Railways Corporation (TRC), which was established in 1977 after the collapse of the former East African Community. Prior to that, the railways in East Africa were operated under the auspices of the East African Railways and Habours (1961-1967) and thereafter East Africa Railways Corporation (1967-1977)

3.0 THE ROLE OF RAILWAYS SERVICES IN ECONOMIC DEVELOPMENT

It is important to note that TRC was the largest single transport operator providing transport services for both freight and passengers within the country and transit freight to and from neighboring countries of D.R Congo (eastern), Burundi, Rwanda and Uganda. Up to the early 1980s, TRC network with a design capacity to carry 5 million tons of freight per annum played an important role in the Economic Development of Tanzania and her neighboring countries, particularly the land locked ones.

The number of passengers and freight traffic transported per annum continued to indicate a steady growth to a record high in 2003 of 683,861 passengers and 1442,713 tonnes respectively.However the performance of TRC since 2004 registered a decline trends in terms of freight traffic, passengers, locomotives availability and average train speed. For instance in 2007 freight traffic had declined to 545,241 tonnes whereas passengers declined to 593,889. Operational efficiency of TRC was constrained mainly by infrastructural problems, caused by inadequate re- investment and deferred maintenance of the permanent way, particularly during the period September 1997 to September 2007, when TRC was specified for privatization.

4.0 RAILWAY RESTRUCTURING AND PPP ARRANGEMENT

As part of the implementation Privatization Policy the Government embarked on a restructuring program with a view to commercialize the TRC through concessions or Joint Ventures. Although the process took long to implement, it was finally concluded in September, 2007 when M/s RITES of India was awarded the tender to take over the operations of TRC. Following the award RITES and the Tanzania Government formed a company known as Tanzania Railways Limited (TRL) on a 51% - 49% shareholding respectively. On 1st October, 2007, TRL was handed over the activities of TRC with a mandate to operate railway transport services for a period of 25 years following the signing of a Concession Agreement between RITES and RAHCO (On behalf of the Government) on 3rd September, 2007.

Even after the concession, budgetary constraints both for operations and infrastructure development and management problems continued to aggravate the situation. However the shareholders agreement between GoT and RITES has been terminated. RITES Board members resigned on 22nd July, 2011 and TRL operations were handed over to Local Interim Management Team on the 26th, July 2011. The Interim Management role being to revive the TRL operations

5.0 ESTABLISHMENT OF RAHCO

It is worth to note that, the concession of railways services to TRL did not include ownership of the railway infrastructure by TRL. Railway infrastructure remains the property of the Government. The Reli Assets Holding Company Limited (RAHCO) was therefore established

2

under the Railway Act No. 4 of 2002 and became operational in September, 2007 principally as Land lord of railway infrastructure on behalf of the Government .Its principal roles and functions as provided by the Railway Act include;

• To acquire by operations of the Act or otherwise the rail transport functions of the Tanzania Railways Corporation and such of its property , including choses-in – action, rights and liabilities transferred to it

• To assume the provision of , or to provide , rail infrastructure

• On behalf of the Government, to develop , promote and to manage the rail infrastructure assets

• To enter into agreements with other persons in order to secure the provision of rail transport services, whether by means of concession, joint venture, public- private partnership or other means, and to this end to delegate its own function of providing rail transport services to one or more railway operators.

RAHCO at the moment is implementing a number of activities and projects as a land lord of railway assets and developer of railway infrastructure in Tanzania. Some of these projects include;

• To undertake detailed engineering study for the upgrading of Dar es salaam – Isaka railways to standard gauge (1435mm) and construction of standard gauge railway from Isaka-Kigali/Keza – Musongati railway line.

• Restoration and protection works of the rail infrastructures destroyed by floods between Kilosa – Gulwe stations in December, 2009 – January, 2010. The major ongoing works are training of Mkondoa River and protection of railway formation.

• To acquire new land (Estates) for the purpose of railways development and related activities such as Constructions of Inland Container Depots, godowns etc.

• To protect railway infrastructure and assets, including areas and plots set aside for railway development e.g possession and acquisition of Title Deed

• Managing Tanzania Railways Corporation (TRC) residual assets .This includes settling of ex TRC staff claims, processing the EAR Staff claims, Commercial and supplier’s claims.

• To undertake feasibility study for upgrading and construction of railway links from Mwambani(Tanga) via Arusha to Musoma.

• Compensation of people who are supposed to vacate the areas earmarked for development of railway and marshalling yard for the proposed Ports of Mwambani(Tanga) and Mbegani(Bagamoyo)

3

• Rehabilitation of railway infrastructure (Central line) to ensure that the railway lines is passable throughout the year.

6.0 CHALENGES FACING RAIL SUB SECTOR IN TANZANIA

From mid 1980s, the Government of Tanzania embarked on an ambitious program to upgrade and construct new roads in the country. However regretably, this program did not go hand in hand with the development of the railway system. This resulted in the decline of railway infrastructure and rolling stock performance. Lack of investment on rolling stock resulted into the decline of locomotive availability and reliability as well as decline in the availability of wagon and coach fleet.

During the 1980s, railway transport was the most dependable means of surface transport for both people and goods. The rail subsector was transporting about 70% of goods traffic for both domestic and transit to and from the neighboring landlocked countries.

However due to mainly inadequate funding for re-investment, the railway was faced with obsolete equipment and aged infrastructure, resulting into traditional customers diverting their goods to the road. At present the railway sub sector transports less than 10% of the total inland traffic. The challenges at hand therefore is on how to raise sufficient funds necessary to revive the performance of the existing railway infrastructure as well as development of new railway projects.

Through the Government RAHCO is working out with all stakeholders, financiers and development partners to ensure that railway financing is enhanced. This will include making use of Public- Private Partnership (PPP) which is a legal framework currently in place in Tanzania and establishment of Railway Infrastructure Funds (RIF)

7.0 FUTURE DEVELOPMENT PLANS (50 years to come)

During the next 50 years, the Government through RAHCO is aiming at:

(i) Upgrading of 982 km of railway line from Dar es Salaam to Isaka from the existing ‘meter gauge’ to ‘standard gauge’ and Construction of about 620 km of new railway line from Isaka – Kigali (Rwanda) / Keza / Gitega – Musongati (Burundi).

(ii) Upgrading 1094 km of railway line from Isaka – Mwanza and Tabora – Kigoma and arterial lines (Kidatu and Taveta , Singida and Mpanda) from ‘meter gauge’ to ‘standard gauge’.

(iii) Construction of 12km of a railway line from Kange to the proposed port at Mwambani in Tanga and about 25 km of a railway line from Kidomole (Link line) to the proposed port at Mbegani in Bagamoyo.

(iv) Construction of about 664 km of a new standard gauge railway line from Arusha to Musoma .The line will include two branch lines to the already operational fertilizer plant at Minjingu and the other to the proposed soda ash plant at Wosiwosi near Lake Natron.

4

(v) Upgrading of 435 kms from Tanga – Arusha railway line so as to be compatible with new Arusha – Musoma railway line.

(vi) Construction of Mtwara – Songea to Mbambabay railway line with spurs to Liganga and Mchuchuma mineral areas.

(vii) In collaboration with stakeholders undertake the construction of fibre optic connecting all stations with modern communication technology (Train control system and station to station system).

Some of restoration works undertaken in the area between Kilosa – Gulwe stations to rehabilitate the railway infrastructure destroyed by floods in December, 2009 and January, 2010

Area (Site) No. 3 km 289+575 Before restoration works Jan-2010

5

Area (Site) No. 3 km 289+575. After restoration works in November -2010

“WE DARED, WE SUCCEEDED AND WE ARE FORGING AHEAD”

Eng B.M TITOMANAGING DIRECTOR

RELI ASSETS HOLDING COMPANY

6