Dar es Salaam — When former Transport minister Samuel Sitta tabled his budget for 2015/16 in May, he promised that Air Tanzania Company Limited (ATCL) would get two aircraft through a loan from the TIB Development Bank.
The planes were part of government efforts to revive the airline.
Seven months later, the national flag carrier still has one leased plane.
Its own aircraft was grounded for maintenance last July.
However, talks are still going on between the airline and TIB for the $20 million (about Sh40 billion) loan, according Mr Gabriel Migire, director of policy and planning in the Ministry of Works, Transport and Communications.
Instead of two aircraft, the government is looking to buy four Bombardier CRJ100s which have capacity to carry 100 passengers each.
“Initially we wanted to buy two CRJ100 but our experts conducted a market research and discovered that the same amount is enough to buy four of them and empower the national airline to compete,” Mr Migire told BusinessWeek.
He was acting as the ministry’s permanent secretary before President John Magufuli announced the new technocrats.
Delayed deal
The deal between ATCL and TIB may take longer as negotiations are still in early stages.
Sources from within the bank say it has not reached the stage of being presented to the board of directors.
“We are waiting for the two sides to end negotiations and submit their proposals so that we can present to the Treasury for approval. I am optimistic that by July this year ATCL will return to the skies because the government is committed to reviving it,” he said.
He said some employees of TIB Development Bank may be working with ATCL to monitor the revenue and ensure the loan is repaid in time.
ATCL was reported to have incurred a debt of Sh140 billion in January 2015.
However, Treasury Registrar Lawrence Mafuru said last week that it would be known soon after the auditing ATCL books.
“As we talk, the state-owned airline is being audited for about two months now. Its accounts have not been audited since 2008. So, after this audit, we will be in a position to tell the exact debt, value of the company and then decide how much we can reinvest to revive it,” said Mr Mafuru by phone.
He said the audit will not interfere with talks between the airline and TIB.
According to him, the audit was supposed to end at the end of December but they had not received any information by that time.
“The audit involves a lot of things. You need documents and sometimes the auditor is supposed to talk to people. All these may take longer and delay the process.”
Cash-strapped ATCL
ATCL decided to lease the plane to make its licence active as required by aviation regulations but business is not as profitable as such.
The airline generates about Sh300 million a month which is spent on paying salaries to 166 workers and the remaining amount to cover other operational costs, according to Mr Migire.
“Generally speaking, ATCL is in a seriously bad situation but the government is also committed to ensuring it returns to the competition with other private companies soon,” he said.
According to him, the maintenance for the grounded aircraft is about to be completed and it is expected to be on the skies by January 15.
The government spent Sh2.94 billion for maintenance only.
The government also says doors are open for investors interested in the airline.
Once the audit is done, some employees may be laid off as that has been cited as one of serious burden to the unproductive firm.
ATCL will also be required to operate as a business entity.
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