September 4, 2007

25-year rail concession for Indian firm

Tanzania has given India's Rites Limited a 25-year deal to restore and run its dilapidated railway system, local newspapers have reported. Rites, a unit of state-owned Indian Railways, signed a shareholding agreement with the government in May that gave it a 51 percent stake in the Tanzania Railway Corporation (TRC) and the government retained the remaining stake. The two formed a new company known as Tanzania Railways. "This signing ceremony marks the end of complex but fruitful consultations on TRC's concessioning," said Andrew Chenge, minister for Infrastructure Development, after signing the final agreement.
Under the deal, Rites is required to rehabilitate TRC's 2.700-km network and introduce new locomotives for both passenger and cargo services. The network has fallen apart after years of low investment in trains and poor maintenance. The poor state of the system is cited as a hindrance to doing business in the country and the region it serves outside Tanzania. The rehabilitation will occur in five stages and the first will be to restore tracks, communication equipment and rolling stock, for which the TRC has applied for a $44 million loan from the International Finance Corporation. The deal does not include the separate Tanzania-Zambia Railway. (Rts)


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