In 2012, the Parliamentary Public Accounts Committee (PAC) proposed that public owned institutions which are stakeholders should invest in the ailing Air Tanzania Corporation Limited (ATCL).
The idea was for the stakeholders to buy shares, thus injecting new capital to the ATCL, which had for long been struggling to finance its operations.
However, the implementation of the idea ran on a concrete wall after the office of the Controller and Auditor General (CAG) raised a regulation snag that may complicate the state stakeholders on investing into ATCL.
The CAG had it that the state stakeholders are running into their core business and thus complicating auditing of the same unless otherwise the laws and regulations of establishing are scrutinised deeply.
The stakeholders are Tanzania Port Authority (TPA), Tanzania National Parks (TANAPA), TIB Bank, Ngorongoro National Parks and Tanzania Tourism Board. The operations of these instituitions are in one way or the other hindered by ailing ATCL.
The PAC refused to give up, after three years down the lane. Last week, the committee called a stakeholders meeting and CAG office after looking into the matter with four eyes gave the green light for the state stakeholders to buy ATCL.
The ATCL acting Chief Executive Officer, Mr Johnson Mfinanga, said that the new initiative has come at the right time where the national flag carrier will get the required capital enabling the fresh takeoff.
“The airline is in need capital,” Mr Mfinanga told Business Standard, adding “the capital injection will enable ATCL to reposition itself.”
Currently ATCL operates a single aircraft which is against the regulator’s principal of scheduled airline that requires a carrier to have at least two crafts.
Currently the national flag carrier has plans to purchase two planes from Canada, a Dash 8-400, through a loan from the TIB.
The acting CEO said the purchasing of the new aircraft from Bombardier would continue as the airline needs both capital and new equipment but selling the stake to a foreign investor was put on hold.
“Even if you have capital you also need aircraft so the Bombardier deal sticks,” Mr Mfinanga said. On other hand, the Aviation Industry Corporation of China (AVIC) that wanted to enter into 50-50 joint venture with ACTL and Oman investor had their plans suspended.
PAC directed the Treasury Registrar to coordinate preparations for the establishment of either a new national airline or revamp ATCL, which should operate professionally and impediments free.
The PAC Chairman, Mr Zitto Kabwe, said core investors of the national carrier will be TANAPA and Ngorongoro National Parks. “The new national flag carrier or the improved ATCL will be co-owned by the Tanzania National Parks and the Ngorongoro National Parks who will be made strategic investors and exempted from paying taxes.”
The chairman said this will not affect core business of both national parks. Treasury Registrar (TR) will take command by coordinating the process between all the stakeholders and provide PAC with a way forward report in June, this year.
The TR was picked as is the overseer of all government organisations including TANAPA and Ngorongoro. TR is the focal point of the process, and he is responsible for government organisations and institutions day to day operations.
The TR is tasked to formulate the new shareholding structure of ATCL or a new airline. The new structure is supposed to be tabled by the end June.
The idea was for the stakeholders to buy shares, thus injecting new capital to the ATCL, which had for long been struggling to finance its operations.
However, the implementation of the idea ran on a concrete wall after the office of the Controller and Auditor General (CAG) raised a regulation snag that may complicate the state stakeholders on investing into ATCL.
The CAG had it that the state stakeholders are running into their core business and thus complicating auditing of the same unless otherwise the laws and regulations of establishing are scrutinised deeply.
The stakeholders are Tanzania Port Authority (TPA), Tanzania National Parks (TANAPA), TIB Bank, Ngorongoro National Parks and Tanzania Tourism Board. The operations of these instituitions are in one way or the other hindered by ailing ATCL.
The PAC refused to give up, after three years down the lane. Last week, the committee called a stakeholders meeting and CAG office after looking into the matter with four eyes gave the green light for the state stakeholders to buy ATCL.
The ATCL acting Chief Executive Officer, Mr Johnson Mfinanga, said that the new initiative has come at the right time where the national flag carrier will get the required capital enabling the fresh takeoff.
“The airline is in need capital,” Mr Mfinanga told Business Standard, adding “the capital injection will enable ATCL to reposition itself.”
Currently ATCL operates a single aircraft which is against the regulator’s principal of scheduled airline that requires a carrier to have at least two crafts.
Currently the national flag carrier has plans to purchase two planes from Canada, a Dash 8-400, through a loan from the TIB.
The acting CEO said the purchasing of the new aircraft from Bombardier would continue as the airline needs both capital and new equipment but selling the stake to a foreign investor was put on hold.
“Even if you have capital you also need aircraft so the Bombardier deal sticks,” Mr Mfinanga said. On other hand, the Aviation Industry Corporation of China (AVIC) that wanted to enter into 50-50 joint venture with ACTL and Oman investor had their plans suspended.
PAC directed the Treasury Registrar to coordinate preparations for the establishment of either a new national airline or revamp ATCL, which should operate professionally and impediments free.
The PAC Chairman, Mr Zitto Kabwe, said core investors of the national carrier will be TANAPA and Ngorongoro National Parks. “The new national flag carrier or the improved ATCL will be co-owned by the Tanzania National Parks and the Ngorongoro National Parks who will be made strategic investors and exempted from paying taxes.”
The chairman said this will not affect core business of both national parks. Treasury Registrar (TR) will take command by coordinating the process between all the stakeholders and provide PAC with a way forward report in June, this year.
The TR was picked as is the overseer of all government organisations including TANAPA and Ngorongoro. TR is the focal point of the process, and he is responsible for government organisations and institutions day to day operations.
The TR is tasked to formulate the new shareholding structure of ATCL or a new airline. The new structure is supposed to be tabled by the end June.
Mr Mfinanga said “It will be either the same or new airline altogether, TR has the responsibility of deciding which is which among the two... either way the market is there but we have no equipment.”
The TR, Mr Lawrence Mafuru, said he will ensure that Tanzania has a reliable airline that can fly without any snags and he promised to present the way forward report to the PAC by June.
The PAC deal will see TANAPA and Ngorongoro, as the core investors in the new national carrier, given a tax holiday as they will be channelling funds to the airline.
However, ATCL board chairman said following the special debt review by the government, ATCL’s burden has dropped to around 93bn/-.
The ATCL total debt was 140bn/- but went down after ongoing review. The flag carrier was established in 1977 following the break-up of East African Airways, which was co-owned by Tanzania, Kenya and Uganda.
The company was privatised in 1998 on the assumption that it would link up with Alliance Air but the plan was cancelled and the airline remained state-owned.
The acting CEO is optimistic that by June, the light at the end of tunnel for ATCL will be seen and the nation will have an effective flag carrier airline.
The TR, Mr Lawrence Mafuru, said he will ensure that Tanzania has a reliable airline that can fly without any snags and he promised to present the way forward report to the PAC by June.
The PAC deal will see TANAPA and Ngorongoro, as the core investors in the new national carrier, given a tax holiday as they will be channelling funds to the airline.
However, ATCL board chairman said following the special debt review by the government, ATCL’s burden has dropped to around 93bn/-.
The ATCL total debt was 140bn/- but went down after ongoing review. The flag carrier was established in 1977 following the break-up of East African Airways, which was co-owned by Tanzania, Kenya and Uganda.
The company was privatised in 1998 on the assumption that it would link up with Alliance Air but the plan was cancelled and the airline remained state-owned.
The acting CEO is optimistic that by June, the light at the end of tunnel for ATCL will be seen and the nation will have an effective flag carrier airline.
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