Revealed: Privatisation blunders that cost Dar trillions
16th June 2013
The revelation comes at a time when CHC has only 12 months left before its ends its tenure.
The CHC activity report for the period ending December 2012 outlines several uncharacteristic practices which have seriously hampered the corporation’s efficiency.
The 52-page report, a copy of which was availed to The Guardian on Sunday, states that CHC did not have any sale agreements for the state-firms which were privatized before the establishment of the defunct Parastatal Sector Reform Commission (PSRC).
On expiration of its tenure, the PSRC duties --- which include privatization and monitoring -- were handled to CHC that was established 1997 as NBC Holdings.
The report titled, “Challenges for Execution of Duties,” states:
“Some of the sale agreements have no investment plans … leading to difficulties in carrying out post-privatization monitoring and evaluation hence failing to meet the intended goals which is to ensure the investors fulfill their commitments to the government which is to revamp the corporations”
It further reveals that some of the available investment plans do not have clearly defined time-frame for their implementation.
It reads: “There are communication difficulties between CHC and investors due to the fact that some of the corporations were privatized a long time ago and there is no government communication with investors.
Several investors have altered their postal and physical addresses and have changed the corporations’ ownership leading to CHC keeping records which are contrary to the reality”.
The report dated May 2013 states categorically that some of the investors were adamant on releasing key information on finance, tax and production which the CHC needs during the monitoring and evaluation process. Indirectly, it warns against ongoing plans to wind up CHC activities in a year’s time -- by June 30, 2014 -- when its additional tenure was granted through the Parliamentary Declaration in 2011.
“Despite plans to ensure the pending privatization activities are completed by June 30, 2014 … the reality of the matter indicates that some of the pending activities cannot be addressed within the corporation’s existence … so the government should put in place the means for implementing the activities that will remain undone in the post-CHC era,” the document affirms.
There are currently 40 state-owned firms awaiting privatization, and it takes at least two years to privatize a single organization. Now the government plans to shift the CHC activities to the Treasury Registrar – an office which has for years been accused of inefficiency – even though the government has also plans to establish it as a full-fledged agency.
The report also says that most of the debts inherited by CHC were ‘bad’ largely uncollectable because large portions of the said debts were ‘unsecured’ and that even those with secure collaterals were still very weak. There are currently 330 privatization-related cases in various courts under CHC.
The CHC says a total some 274 state firms had been privatized since its establishment in 1997 by December, 2012’; among them 95 were in the agricultural sector; 94 in industry; 23 in infrastructure’ 34 in Natural Resources and Tourism; 15 in the Energy and Minerals sector and 13 in other sectors.
Right now, there are negotiations for privatizing 29 firms, which include the downtown New Africa Hotel and National Bank of Commerce -- where the government still holds -- alongside 13 other firms which are at different stages of restructuring such as the National Insurance Corporation (NIC), Air Tanzania Company Ltd (ATCL), the Tanzania Railways Limited (TRL), the Tanzania Telecommunication Company Ltd (TTCL), Tanzania Postal Corporation (TPC) and the Kiwira Coal mine.
These were once privatized but the government repossessed them following poor performance–and are yet to be revamped to make profit. But these repossessed parastastals have become a burden to taxpayers because of the heavy subsidies pumped in by the Treasury to keep them operating.
The report says 47 firms out of 65 have since undergone divestiture after being placed under receivership. They include Mwanza Textile (Mwatex) Kilimanajro Textile (Kiltex) Dodoma Wine Company Limited, Musoma Textile (Mutex) and Tanzania Textile Corporation (Texco) whereas divesture for 18 organisations are underway.
The report further paints gloomy picture that out of the 170 privatized organizations, where monitoring and evaluation was conducted only 42 organisations are operating on profit while 70 are operating on losses and 58 are non-operational.
Tanzania begun implementing privatization policy in 1993 during President Ali Hassan Mwinyi era and gathered pace during President Benjamin Mkapa’s administration
Apart from the privatization, CHC’s mandate was also to recover the Sh60 billion NBC debts. However the task has hit a snug because large part debt was issued dubiously with no any collateral or traceability of the borrowers.
SOURCE: GUARDIAN ON SUNDAY
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