Tanzania, Zambia to invest $80m in cash-strapped rail firm

DAR ES SALAAM (Reuters) – Tanzania and Zambia plan to inject $80 million to bail out a jointly owned railway firm suffering from decades of under-investment, the company said on Tuesday.

The 1,860 km (1,155 mile) railway is a key route for copper exports from Zambia and neighbouring Democratic Republic of Congo to Tanzania's main port of Dar es Salaam.

The capital infusion from the two state shareholders is expected to provide a lifeline to the loss-making company, Tanzania-Zambia Railway Authority (TAZARA).

"The governments of Tanzania and Zambia … have agreed to inject $80 million into the operations of TAZARA in the next 12 months, of which $9.2 million is to be disbursed immediately to cater for two months of outstanding employees' salary arrears and some working capital," company spokesman Conrad Simuchile said in a statement.

The railway firm has been hit by frequent work stoppages due to on-off strikes by workers over unpaid salaries.

Simuchile said the capital injections were also needed to buy fuels and lubricants for the trains.

The Chinese-built railway has suffered from falling cargo traffic as well as years of inadequate investment by the two shareholders.

The company said in September that revenue had averaged $1.53 million per month over the past eight months against an estimated average expenditure exceeding $2.5 million, of which salaries alone constituted an average of $1.3 million.