government

Tanesco, ports agency lead state firms with huge debts

April 19, 2022

Tanzania’s main power utility and the agency running ports are among 16 government entities flagged this week for relying on loans for their operations.

According to a report by the Controller and Auditor-General (CAG), Tanzania Electric Supply Company (Tanesco) and the Tanzania Ports Authority (TPA), which are key components in the government's economic recovery agenda, have borrowed heavily to cover their operational expenses in 2021.

The list, contained in the CAG's latest audit findings for 2020/2021, also includes agencies overseeing the key mining and oil and gas sectors: The State Mining Corporation, Tanzania Petroleum Development Corporation and Petroleum Upstream Regulatory Authority.

The Medical Stores Department (MSD), in charge of importing and distributing hospital drugs, the Cashewnut Board of Tanzania and the once-prominent Tanzania Investment Bank are also cited.

Auditor-General Charles Kichere did not name the sources of the loans but advised the institutions to quickly request government bailouts to repay the loans before too much interest accrues.

Tanesco led the pack of 71 government firms with big debts in 2020/2021 at Tsh2.88 trillion ($1.24 billion) while TPA's debt stood at Tsh562.8 billion ($243.63 million) and MSD at Tsh382 billion ($165.36 million).

The CAG also discovered 5,000 Tanesco power meter seals that were being sold in unauthorised shops, further confirming the existence of loopholes that denied the utility a further Tsh105.49 billion ($45.66 million) in due revenues in 2020/2021.

National carrier loss

The national carrier Air Tanzania was ranked sixth in debt with Tsh306.7 billion ($132.77 million) despite cutting its operating losses from Tsh60 billion ($25.97 million) in 2019/2020 to Tsh36 billion ($15.58 million).

The carrier is in the middle of a revival programme, with a current fleet of 11 and five more aircraft on the way. The government spent Tsh1.028 trillion ($445 million) to buy planes for Air Tanzania by end of 2020/2021 and a down payment of $258.7 million was also made late last year for the five additional aircraft.

According to the CAG, Air Tanzania’s two Boeing 787-8 Dreamliners caused a loss of Tsh23.6 billion ($10.21 million) in 2020/21 due to a low load factor as their international flights programme was beset by the coronavirus pandemic and other hurdles.

But profits from the airline’s two Airbus A220s and four Bombardier Q400s contributed to its improved figures.

The Public Service Social Security Fund (PSSF), with a Tsh692.7 billion ($299.87 million) debt, faces insolvency as pension payments exceeded income from active members' contributions by Tsh767 billion ($332.03 million) in 2020/2021.

Tanzania’s main pensions fund found itself in the red with a 22 percent liquidity problem, much lower than the legally-acceptable 40 percent, amid a pileup of unpaid long-term loans worth Tsh1.5 trillion ($649.35 million) that it disbursed along with the NSSF.

Further, at least four unnamed public corporations also did not remit Tsh129.33 billion ($55.99 million) to PSSSF, NSSF and the Workers Compensation Fund as required by law.

Dubious payments

State-run National Health Insurance Fund (NHIF) paid dubious maternity hospital bill claims by men while there was at least one case of a single individual receiving 30 'full blood picture” treatments in one day at NHIF's expense.

NHIF's debt to the government stood at Tsh177.4 billion ($76.79 million) in the period.

The report showed that Tanesco's continued loss-making was mainly due to an 'unproductive' agreement reached with Symbion LLC in May 2021 to pay the New York-based company $153.43 million as an out-of-court settlement after cancelling their power generation contract 'without following proper procedures'.

The ports authority on the other hand hurt its own 'commercial environment' by failing to expand cargo shipment markets in inland neighbouring countries, not cutting down offloading and storage times for shipments and failing to plug embezzlement loopholes.

TIB Corporate Ltd, the commercial banking arm of the TIB Investment Group had, by the end of the second quarter of 2021, a whopping 52 percent non-performing loans ratio despite a five percent limit by the central bank.

theeastafrican



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