TAZARA Board Approves Budget For 2022/2023

TAZARA Board approves Budget for 2022/2023, adjusts passenger fares and resolves to form Technical Committee to chart the way for revamping operations as directed by the Heads of State.

The Tanzania-Zambia Railway Authority (TAZARA) Board of Directors, comprising the Permanent Secretaries responsible for Transport in the United Republic of Tanzania and the Republic of Zambia, Mr. Gabriel Migire and Mr. Fredrick Mwalusaka, Chairperson and Co-Chairperson, respectively, together with Prof. Razack Lokina and Mrs. Rukia Shamte, Board Members from Tanzania and Mr. Stephen Mbewe and Mr. Nkumbu Siame, representing Board Members from Zambia, held the 118th Board of Directors Meeting from 29 July to 3 August 2022, in Dar es Salaam.

The Board of Directors deliberated on various matters pertaining to the operations of the Authority and agreed on the following key resolutions, amongst others:

Performance Results for the Financial Year 2021/2022

The Board reviewed the performance of the Authority for the Financial Year (FY) ending 30 June 2022- and observed that the accident at Chambeshi Bridge in Zambia and line Wash-Aways in Tanzania had affected the annual freight performance, which dropped by 3.5% compared to the previous Financial Year.

Passenger traffic also continued to be affected by the effects of the Corona Pandemic as well as the low availability of equipment for servicing passengers. As a result of the constraints on the line, during the period under review, revenue performance from all sources declined from US$31.044 million earned in the previous financial year to US$24.280 million in the year under review.

Budget for the Financial Year 2022/2023

The Board approved the Budget for the Financial Year 2022/2023 amounting to 450,000 tons of freight and 3.4 million passengers. The total projected revenues for the budget year were expected to be USD 51,312,500 out of which USD 34,332,010 would come from both freight and passenger services, USD 10,480,490 from other non-traffic revenues, including current open access operations. The total operating expenditure projected in this budget period was USD 51,312,500.

Business Opportunities

Having toured the Port of Dar es Salaam where they were also availed a detailed brief on the operations of the Port, the Board observed the abundance of freight on the TAZARA Corridor market and urged Management to expedite the repair of rolling stock and hire of locomotives to move the readily available volumes of cargo. The Board also encouraged TAZARA to devise a short-term plan for purchasing of at least two locomotives each year by engaging banks and customers.

Open Access

The Board noted the positive contribution of the private operators plying on the TAZARA line through open access agreements but urged Management to ensure that a portion of the revenue from open access fees was channelled towards the repair of the railway infrastructure.

Digitization

The Board observed the low usage of ICT in TAZARA and urged Management to prioritize the digitization of the financial and commercial systems as soon as possible.

Adjustment of Passenger Train Fares

In reviewing the Passenger Train Fares, the Board observed that not only had costs of operating passenger trains gone up, but both the Zambian and Tanzanian currencies had depreciated significantly since 2018 when the rates were last reviewed in Zambia, thereby creating fare distortions.

The Board, therefore, approved a proposal by Management to adjust the dollar-denominated base fares upwards by 12%. The fares would be adjusted gradually by 6% in the first quarter and 6% in the second quarter of the Financial Year 2022/2023.

Mununga Quarry

The Board approved a Public-Private-Partnership (PPP) model for Mununga Quarry and directed Management to prepare a concept paper on how the PPP would operate at the Mununga Quarry.

Revamping of TAZARA Operations

The Board noted the Directives from the Heads of State of Tanzania and Zambia, who met in Dar es Salaam on 2 August 2022. Accordingly, the Board resolved to form a Joint Technical Committee that would harmonize the interests of the two Shareholders and develop a position paper for the two Governments to find a suitable approach to revamping TAZARA operations through the participation of other investors, including the Chinese.

Immediate Funding for Operations

The Board considered and approved a proposal from Management to utilize USD 200,000 on immediate operational requirements, out of the USD 2.4 million that was granted earlier in the Financial Year for short-term recapitalization by the Zambian Government.

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