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Cablegate: Finance Minister Pleas for Post-Flood Rail/Road Repair

VZCZCXRO2221
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0140/01 0431014
ZNR UUUUU ZZH
R 121014Z FEB 10
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 9414
INFO RUEHNR/AMEMBASSY NAIROBI 1640
RUEHKM/AMEMBASSY KAMPALA 0168
RUEHJB/AMEMBASSY BUJUMBURA 3191
RUEHLGB/AMEMBASSY KIGALI 1668
RUEHTU/AMEMBASSY TUNIS 0051
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHLMC/MCC WASHINGTON DC
RHMFISS/CDR USAFRICOM STUTTGART GE
RHMFIUU/CJTF HOA//J3

UNCLAS SECTION 01 OF 02 DAR ES SALAAM 000140

SIPDIS

SENSITIVE

DEPT FOR CA/OCS, AF/E JTREADWELL
TUNIS FOR ADB REP
STATE PASS AID AFR/SD, USTR FOR WILLIAM JACKSON, USTDA FOR KATHRYN
DORMINEY

E.O. 12958: N/A
TAGS: EAID ELTN ECON TZ
SUBJECT: FINANCE MINISTER PLEAS FOR POST-FLOOD RAIL/ROAD REPAIR
ASSISTANCE

REF: A: DAR ES SALAAM 17 B: DAR ES SALAAM 38 C: 2009 DAR ES SALAAM
844 D: DAR ES SALAAM 80

DAR ES SAL 00000140 001.2 OF 002


(U) 1. SUMMARY: Minister of Finance Mkulo convened Chiefs of Mission
from donor countries February 10 to request emergency funding of
approximately USD 22 million to restore railway and road
infrastructure destroyed by recent flooding. The flooding occurred
primarily in Morogoro region, following heavy rains in December and
January. The Minister's main concern is the destruction of major
sections of the Central Line railway, disrupting the transport of
goods between Dar es Salaam port and western Tanzania, Burundi,
Rwanda and eastern Democratic Republic of Congo. The assembled COMs
expressed concern about the budget for rail repairs (at USD 12m
likely an underestimate) and addressing short-term versus long-term
transportation needs. END SUMMARY.

(U) 2. Following the Morogoro floods, the GoT initially assessed
that its domestic contingency budget would suffice for
infrastructure repairs and humanitarian needs. However, a more
recent assessment by experts from Tanzania Railways Limited and the
Ministry of Infrastructure Development found the damage to be far
greater than expected, resulting in this emergency funding request.
(Note: We worked with USAID/OFDA/Nairobi to make a formal disaster
declaration on January 13, providing USD 50,000 to the Tanzanian Red
Cross to provide humanitarian assistance to some of the 40,000
persons affected by the floods (ref a). End Note.)

(U) 3. Mkulo noted that this has been a particularly difficult
budget year for Tanzania, coping with revenue shortfalls due to the
global economic downturn (estimated at USD 200 million) and dealing
with several disasters, including severe drought - requiring food
aid to more than 40 districts - and the Zanzibar power crisis (ref
b). The Minister acknowledged that due to budget constraints the
2009/10 infrastructure budget was cut back considerably and covered
only a small number of projects. Although the GoT has long-term
plans to completely refurbish the century-old Central Line, there is
debate as to the most cost-effective way to accomplish this (see ref
c). Funding requirements would be substantial. The World Bank is
undertaking a Transport Sector assessment that will provide more
information on how to refurbish the rail system. One of the
diplomats present recommended that the Minister approach the East
African Community for potential funding to restore the rail service,
given its importance as a connection to member states Rwanda and
Burundi (see ref d).

(U) 4. COMs raised concerns about the possibility of restoring the
railway in the short term, given the extent of damage shown in the
report and the pending "long rains" (generally March to May).
Additionally, several COMs stated that the budget estimate seemed
far lower than that required to fix the railway, due to the severe
erosion and complete destruction of parts of the railway track.

(U) 5. Mkulo proposed the following next steps:

-- a team of engineers and other experts will evaluate the plans and
the budget to restore the roads and railway line;

-- a site visit will be arranged on February 27 for COMs to see
firsthand the extent of the damage and to get a report on the
revised budget and plans for restoration;

-- the GOT will make a formal request for assistance to the donor
community.

(U) 6. The COMs attending the meeting made no specific funding
commitments. The World Bank and the EU indicated that they would
consider ways to restore the railway line with a long-term view of
developing the rail system. The African Development Bank indicated
that it could provide up to USD 1 million for humanitarian
assistance.

(U) 7. The Resident Country Director of the Millennium Challenge
Corporation (MCC) subsequently reported on a meeting of Tanzanian
transport sector donors. The EU has up to USD 10 million (7.7

DAR ES SAL 00000140 002.2 OF 002


million euros) in funds that are available for support for
assistance with natural disasters and other emergencies. The EU is
"positively considering" using a portion of these funds to provide
relieve to Kilosa. A World Bank transportation sector
representative indicated that the World Bank office in Dar es Salaam
was advocating use of a similar World Bank fund of up to TZS 30
billion (USD 23 million) to provide similar assistance. The World
Bank was still discussing modalities internally, i.e. grant,
concessional loan, or other arrangement, but it appeared likely that
the Bank would provide a significant amount of the funding
requested.

(SBU) 8. COMMENT: Although the impact of disrupted rail transit is
real, the GoT's initial response reflects a common tendency to seek
donor support reflexively before considering the problem fully. The
GoT did not provide an analysis of the cost of fixing the rails as
compared to the economic losses or impact to the Dar-Dodoma road of
altering the mode of freight transport. The long-neglected Tanzania
rail system accounts for only seven percent of goods moved through
Dar es Salaam port. Similarly, the GOT was not prepared to discuss
the relationship between an "emergency" repair and proposals for
substantial repairs and upgrading to the entire rail system.

(SBU) 9. COMMENT, cont: Minister Mkulo opened the meeting by saying
that President Kikwete had asked him to convene the donors. It was
noted that the area most affected by flooding is Mkulo's
parliamentary constituency of Kilosa.

LENHARDT

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