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Turkey, China caught up in rail tender confusion

Monday January 23 2017

A section of the standard gauge railway in

A section of the standard gauge railway in Kenya. Turkish President Recep Tayyip Erdogan is visiting Tanzania on January 22-23 as a dispute simmers over a tender to build a $7.6 billion standard gauge railway linking Dar es Salaam to neighbouring countries. PHOTO | FILE 

By ERICK KABENDERA

A dispute over a tender to build a $7.6 billion standard gauge railway linking Dar es Salaam to neighbouring countries has provided a tense backdrop to Turkish President Recep Tayyip Erdogan’s visit to Tanzania on January 22-23.

Although EXIM Bank of China has signed an agreement with Tanzania to finance the 1,259km line, a Turkish firm is believed to be the front-runner to clinch the contract.

EXIM tends to tie its financing to Chinese contractors getting the job.

Chinese foreign minister Wangi Yi visited Tanzania two weeks ago to canvass for the tender, but government officials were said to have offered no guarantees.  

Last year, Chinese companies had won the tender to build the railway before the process was cancelled over irregularities and fresh bids invited.

Concessional loans

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Some government officials, however, fear a decision that goes against Beijing could force them back to the drawing board on the project’s financing should EXIM Bank withdraw.

Chinese ambassador to Tanzania Lv Youqing recently met with CCM secretary-general Abdulrahman Kinana but details of their discussions were not made public.

The development comes amid the government’s announcement that it was turning to China, South Korea, India and Turkey for concessional loans after it had raised concerns about tough conditions imposed on the government by development partners.

Though the government had allocated Tsh1 trillion ($500 million) in the current budget to cover the cost of initial construction, there have been questions about the viability of the project, particularly on the government’s ability to pay off the debt.

Irregular award

The Tanzania-Zambia Railway (Tazara), built in 1975, is yet to return a profit.

Opposition leader Zitto Kabwe told The EastAfrican that initial tender details showed that a Turkish company had won the tender, prompting the Chinese government to threaten to pull out of the project.

“The project has put the government relationship with China at a crossroads and it is clear President Magufuli is determined to proceed with the project even if China doesn’t provide funding. The question is where the money to build such a massive project will come from,” said Mr Kabwe.

Some government officials also read mischief in China's threat to withdraw funding, saying Beijing had hoped that its companies would be awarded the tender without competitive bidding.

Tanzania had in May 2015 awarded the tender to build the railway to a consortium of Chinese railway companies, led by China Railway Materials.

Good bilateral relations

On ascending to power last year, President Magufuli terminated the contract though the consortium had already built five kilometres of the line.

Subsequently, a former managing director of Reli Assets Holding Company was charged in court over the irregular award of the tender.

The original design ran from Dar es Salaam to Kigoma, branching off to Uvinza for the Musongati nickel mine in Burundi and extending to Kaliua.

The plan was to use Burundi as a logistical hub for supplying goods into the Democratic Republic of Congo and Rwanda.

Tanzania and Turkey have enjoyed good bilateral relations since 2009, when Ankara adopted a policy of improving its relations with Africa.

The trade volume between the two countries has almost tripled since 2009, from $66 million to the current $160 million.

During his Africa tour, President Erdogan is also expected to visit Mozambique and Madagascar.