OPENING REMARKS BY H.E Tim Carke, EU Ambassador, Chair REPRESENTATIVE OF DEVELOPMENT PARTNERS AT THE 5th JOINT INFRASTRUCTURE SECTOR REVIEW (31/10/2011)

Introduction

-  Honorable Minister for Transport Omari Nundu
-   Honorable PS representing MoT, MoW
-  Representatives of the Government of Tanzania, Private sector and Civil society
-  Distinguished Participants
-  Colleagues and Partners

On behalf of the Development Partners Group in the Transport Sector, it is my pleasure as current Chair of this Group, to make these opening remarks.

Let me first recall of where we are coming from. Last year, when I opened this forum with your predecessor, I expressed on behalf of my development partners colleagues some serious concerns about the quality and level of our dialogue. I indicated that in our view it needed to be significantly improved. This was confirmed in writing as well as in my initial courtesy call on yourself and your colleagues when you took over the Ministerial responsibilities.

Minister, I have to say in all frankness that my colleagues are not happy with where we have got to since then. We are aware of course that the decision to split the former MOID has caused significant re-organizational challenges, with the creation of two new Ministries with new roles and competences. Whilst this may have brought some benefits, we feel that the quality of our dialogue seems to have suffered.

Yet despite this, signs of progress in the transport sector are clearly visible all over Tanzania: trunk road construction is advancing; the Port of Dar es Salaam that I had and many of my EU colleagues visited last week is becoming more efficient. The budget for Transport has dramatically increased. Transport developments are taking pace and you Minister are in the forefront of this process. I take this opportunity to congratulate you personally on your efforts.

Minister, you may be aware that I wear several hats. One of them is as Chair of the General Budget Support donors. This is a very important position, since I am a central dialogue point between the GBS Donors and the Government on all matters relating to budget support. It HAS to work. And I am happy to say it IS working. We have regular meetings at technical level. These are backed up by meetings at Ministerial and Ambassadorial level. We take decisions, and move on. Hopefully the proof will be in the pudding when we meet at the end of November for the Annual Review.

Yet in this sector, we haven't had such meetings. And as a natural consequence we haven't moved forward as well as I would liked. Perhaps I am speaking too plainly and bluntly. But this is the message I have been mandated to pass onto you. We are dedicated to and highly motivated for improving infrastructure. No one should attempt to question our willingness and spirit of co-operation.

And as we repeated on many occasions, we believe that only open and frank debate can take us in the desired direction and lead to qualitative improvement of our dialogue. So that there is confidence and trust on both sides, and common understanding on how to jointly address the key challenges.

I have heard the message in your speech. I and my colleagues have a "positive mind". We want to move forward together. 

Having said this, we would like to thank yourself and the Ministry of Transport for organizing this year's Joint Infrastructure Sector Review together with the Ministry of Works and PMO-RALG. This is the fifth event of this kind. We are looking forward to an open debate on various policy matters. Some of them may prove to be difficult topics as we clearly see that there are areas in which, despite commonly agreed targets and priority actions, the progress made within the last two years has been very limited.

We think that this is particularly true, and worrisome, in two areas: the financing of road maintenance and the financing of rural roads, where we have not advanced towards the identifying sustainable solutions so desperately needed.

On the other hand, some positive developments have occurred in other sub-sectors, like ports, decongestion of Dar es Salaam and railways, even if the way towards reaching solid achievements is still long way to go.

Let me now elaborate upon a few key areas in the transport sector which are of particular importance and interest to the Development Partners group:

General:

* With regard to issues of cross-cutting nature, which must lay the foundation for further sector advancement, we believe that this year’s JISR and the following months should allow all concerned to refocus the overall planning of transport sector infrastructure development, since the implementation period of TSIP I will end in June next year and TSIP II is currently at an inception stage.

Let me first reaffirm that the DPG Transport remains committed to supporting the TSIP as the overarching reference for our assistance. We also continue to support the planning and preparation of TSIP II through technical expertise available under our programmes.  In this spirit, we think that it is of crucial importance that – through a meaningful dialogue - all parties reach a common understanding on basic issues and challenges facing TSIP II, and agree on how best to prepare an investment plan that is aligned with MKUKUTA II and the Five Year Development Plan, based on realistic assumptions and taking into account future transport demand projections as well as available budgetary resources.

* In our view, there are two major issues emerging from the review of TSIP I implementation. 
First, there will be a large carry-over of projects that have been contracted but will not be completed by the end of the current fiscal year. 
Second, the subsector performances are quite uneven, with trunk roads developing rapidly while other road categories and subsectors are getting much lower attention and are underfunded. This gives rise to unbalanced and unsustainable development of the transport network as a whole and prohibits real intermodal solutions needed especially for smooth functioning of transport development corridors crossing Tanzania.

We hope that those issues will be properly addressed in the preparation of TSIP II and we are ready to assist you in that process which will ultimately guide sector development over the next five years.  

* However, there is also one more issue that might affect sector performance in the years to come. While we welcome the preferential allocations to the infrastructure sector in the 2011/12 budget, which nearly doubles the combined development parts of the MoW and MoT budgets as compared to last year’s allocation, we would like to be assured that those increases address the most serious bottlenecks in infrastructure with transparency and accountability.

Of particular concern in this regard is the accumulation of overdue financial obligations on road projects managed by TANROADS. 

Overdue payments have emerged over the last two years mainly as a result of signing contracts beyond budgetary estimates, even though we flagged this issue as a serious irregularity already during the 2009 review.  The signed contracts cover a multi annual period and budgetary pressures are expected to continue well into future years.  We note that the MoW oversight over TANROADS has been tightened.  Nevertheless, we would be grateful if the Government could explain how the current and future budgets will address this issue of all sector implications.  

In this respect, we also commend the Controller and Auditor General and Minister of Finance for their cooperation in agreeing to undertake the special audit to TANROADS. 
 
* In addition, I note with great satisfaction that this review gives due respect to the role of Tanzania as the regional transport hub. I emphasized this in my opening remarks last year, and I am happy to see this has been internalised in the review process of the National Transport Policy. 

We also note that the Government has successfully supported, together with other EAC member states, the process of harmonizing vehicle overload control regulations and is similarly supportive of introducing further measures that would ultimately lead to fewer road controls and shorter transit times, eg. the concept of One Stop Inspection Posts along the central corridor and at borders, which DPs are ready to support financially.

Nevertheless, we would encourage further efforts and a more vigorous approach to regional agenda on transport and trade as, in our view, it is in Tanzania’s own economic interest to pursue a deeper integration of the EAC Common Market, with consequent improvements in the efficiency of the regional transport networks and smoother border crossing procedures.

* As for institutional developments, last year's split of the MOID into two separate Ministries is too close in time to see its actual influence on sector performance. This change brings the sector back to the 2006 situation when two distinct Ministries existed. Consolidation of their merger into MOID, promoted also by DPs at the time, has taken a lot of time. We have yet to be convinced that this institutional arrangement will promote overall sector policy co-ordination and a multi-modal approach. Our fear is that it might have the opposite effect.

Please allow me also to make brief remarks on the situation of each sub-sector as perceived by Development Partners, with emphasis on challenges observed.

Roads

* Within the road sector, which is of particular interest to all Development Partners, apart from the already mentioned issue of the non-budgetised contracting of works, which now seems to have received proper attention from the Government, there are also other areas that call for prompt action and forward-looking decision making.  One such area is an inadequate budget for maintenance, leading to a continuously increasing backlog.

While Development Partners acknowledge the efforts of road network managers to achieve their maintenance targets, as well as appreciate attempts made to identify additional sources of revenue of the Road Fund, progress in this area has been limited.  Although the harmonization of excise duties for diesel and kerosene is a step in the right direction and will probably increase this year's revenues of the Road Fund by 10%, what is needed is a much more significant widening of its revenue base and perhaps also reshuffling of priorities in terms of budget allocations, in favor of periodic maintenance.  To this end, Development Partners are ready to deepen the dialogue with the sector and the Ministry of Finance on identifying ways forward and can also offer further technical support in search for a long term systemic solution for financing of maintenance needs.
 
* We also reiterate the importance of ensuring that adequate funds are channelled to development of Local Roads. This is another area where progress is negligible. The LGTP programme has seen a significant financing gap over the last years and needs to be given its proper share in the new TSIP, in line with the MKUKUTA II priorities.  Development Partners would like to hear during this review what options for a sustainable funding of rural roads are currently under consideration and are ready to assist with advice and financing of agreed priorities.

* Moreover, we are concerned about the significant slowdown in the implementation of the road safety policy, especially in adopting the Strategy and establishing implementing bodies. We believe that despite noticeable institutional capacity constraints that need to be addressed, the available resources are not utilized in an effective way. Nevertheless, we welcome the tradition of organizing the National Road Safety Week celebrations across the country, which sensitizes ordinary citizens to road safety issues in general.

* Finally, to conclude on this sub-sector, let me express our appreciation on the developments regarding the planned Serengeti road project. We believe that the statement made to UNESCO in June this year sent the right signal and confirms that Tanzania cares for its reputation as world leader in conservation.  Even though the construction of the road across SENAPA will not be pursued, Development Partners still see the need to have continual discussion with the Government on alternative solutions and maintain their commitment to support those considerations with technical expertise, if required.

Railways

* Railways are yet another subsector which remains an area of concern although we recognize that the Government has tripled allocation to this sector in the current budget which gives some hope for reverting worrying trends in the coming years. Nevertheless, investments in railway and rolling stock maintenance and rehabilitation over recent years have been dramatically low, and have brought down railway operations on both TRL and TAZARA to very disappointing levels and put an unnecessary strain on the road network as well as contributed to the congestion in the port and city of Dar es Salaam.

* Therefore, we urge the Government to intensify efforts aimed at creating a viable business and investment plan with a view to restoring reliable operations on the TRL line. Once those are in place, Development Partners would be ready to provide further financial assistance and mobilize wider donor community to join us in endeavours of rehabilitating the network and other assets. As for TAZARA, we are not aware what restructuring options are currently under analysis and would appreciate more information on government's plans for this line.

Ports

* For ports, we acknowledge that some progress has been made as far as decongestion and operational improvements in Dar es Salaam port are concerned. However, the situation is not yet stable and seasonal fluctuations occur. While 2011 target for the container dwell time has been achieved, the ship turn-around time indicator seems to have worsened. At a recent meeting at the port I heard that there are those that believe that the port's operational capacity could be doubled.

I encourage all those concerned to do everything they can improve the port's performance and to encourage the private sector to invest. In particular we would recommend that TPA be encouraged to speed up its transition to a fully functional Landlord Authority and the process of introducing the Port Community System. We also encourage the establishment of an updated and predictable tariff system which will allow for pre-payment of port charges. 

* And as I said during EU Heads of Missions visit to the port last week, Development Partners would be prepared to engage in a deeper dialogue with TPA to better address existing challenges and to see how we could be of help in this regard.

Aviation

* The Aviation sector remains to be a crucial transport sub-sector and DPs will continue to support it. We look forward to actions to be proposed by the planned master plan study in terms of capacity demand, including a list of priorities for new airports. These should be done taking into consideration the main players in the sector, namely airport operators, regulatory authorities, airline operators, air navigation service providers and users. We fully support the Government intentions to involve private investors in airports development and operation and we would also like to receive updates on the ongoing reform processes in this sub-sector.

Congestion in DSM

* Regarding decongestion of Dar es Salaam, we note that the ongoing infrastructure measures and the preparatory work for the long awaited Rapid Bus Transit Project Phase I mark the beginning of a more fundamental long term transport system improvement in Dar es Salaam, guided by the Transport Development Master Plan.  One of the keys to the decongestion of Dar es Salaam is the management of Port traffic, its distribution in the city and its connections with hinterland.  To that end, further planning should be conducted and financing sought for the improvement of road and rail links between the port and major logistic centres serving the port, existing and planned. 

* For further planning and implementation of key projects towards long term goals institutional development is essential.  We understand that the path to establishment of DUTA will probably be long as it requires restructuring of responsibilities, changes in the financial flows amongst involved agencies and a thorough consultation among the stakeholders. Thus, we believe that a phased approach toward the formal establishment of DUTA makes sense and we would like to hear more about the planned way forward.

Intermodality

* Lastly, we should not forget that efficient and coherent operation of transport as a sector is the main focus of this review. The main objective is to increase the capability to move goods and people at lower price and in shorter time, regardless of the mode of transport chosen. It is also about improving the competitiveness of Tanzania's transport system in the face of increasing international competition. 

* We hope that the recently completed intermodal study will contribute to improved integration of the port, railway and road networks as integrated operations of different transport modes are critical to regional integration and economic growth. We would be grateful to learn what further steps are foreseen to follow up on the results of this study, including possible further organizational adjustments.
Minister, Distinguished participants, we are convinced that in the coming days we will together be able to identify priority actions in Transport sector that can promote the economic growth of Tanzania and the region. Enhancing our present dialogue would already be a big step forward.

No one denies the great challenges ahead. But as we approach the 50th Anniversary of Independence, a special year for all of us, I would like to take this opportunity to reiterate the solid support of all Development Partners in helping all stakeholders in Tanzania to bring lasting improvements in the Transport sector. There can be no durable development without a sound infrastructure base. Development partners, the Government, the private sector, all must work closely together to achieve this noble goal.

I hope that our deliberations over the next two days will demonstrate that we are all on the same wavelength.

Minister, we share your need for a new vision, for a long-term vision over the next 50 years. Let's see how we can work closely together to work on commonly shared priorities and shared solutions.

We wish all concerned every success.