15 July 2011

Tanzania: Railways to Lay Off 1,000 Employees

Dar Es Salaam — Tanzania Railways (TRL) has announced it wants to lay off all staff estimated at over 1,000 for the next six months.

The staff are already on paid leave since December 2009 when the El Nino rains washed away a rail bridge in Morogoro region west of Dar es Salaam.

The Government suspended all rail traffic due and since it has not been making any money fromrailway business, the possibility of repairing the line is not expected short of the six months.

Following this development, the Government has announced plans to send home all workers for the next six months on unpaid leave. However, the workers are against the decision saying it will wreak havoc to their lives, and are also saying it is illegal for the employer to make such a decision.

The Government has suffered greatly from boycotts and go-slow strikes by workers who have been protesting against delays in payment of their monthly salaries by RITES, the Indian company that runs the railways. The government was thus forced to subsidise TRL expenses in the millions of dollars.

In the third quarter of 2009, RITES threatened to pull out all its locomotives and couches because it had not been paid some $10 million it was demanding for leasing India railways rolling stock to TRL.

In January 2010 the government stated its intention to revoke the 25-year management contract that was entered into in 2007 citing breach of contract.

RITES, which holds 51%, and Tanzania Government holding the remaining 49% shares, are locked in difficult negotiations to either continue with the 25-year management contract that commenced in 2007 or, amend the pact to avoid the high financial consequences.

The railway line has been plagued by inefficiencies and perceived breach of the contract that led to Tanzania to subsidise the railway in millions of Tanzania shillings to pay monthly staff salaries.

The TRL, with a gauge of 1,000 mm (3 ft 338 in) and a total length of about 2,600 km, has been the main lifeline for transporting agriculture goods from the country's hinterland to Dar es Salaam and Tanga ports since the beginning of the last century.

The railway, otherwise known as the Central Line, has also been the main artery for landlocked countries of Uganda, Rwanda, Burundi, eastern parts of the Democratic Republic of Congo (DRC), Zambia and Malawi.

Much of these countries' exports and imports were ferried on this railway including copper, fertilizers, machinery, food and commercial goods.

Last month the government stopped attempts to revoke the RITES contract fearing it would suffer huge financial consequences, but the idea has not completely gone away because officials are now saying it will still be submitted to cabinet for final decision.

If Tanzania succeeds to revoke the management pact, it would have been yet another eye opener to the government to look inward for local expertise to run services of former state-owned firms. When RITES took over TRL in 2007, it was on condition that RITES would, among other things, inject $121 million in investments over a period of five years.

However, RITES has instead been demanding $10.42 million payment from TRL for leasing 25 used locomotives and 23 worn out passenger wagons.

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