Auditor-General warns of Air Tanzania’s debt risks

Air Tanzania (TC, Dar es Salaam) is at risk of having its aircraft impounded abroad because of debts owed by the state-owned carrier, Tanzania’s Controller and Auditor General (CAG), Charles Kichere, has warned. The country’s Citizen newspaper reported Kichere made the comment when presenting his audit report for the financial year 2019/2020 and the Prevention and Combating of Corruption Bureau (PCCB) report for 2019/2020 to the country’s new president, Samia Suluhu Hassan, at Chamwino State House in Dodoma last week. He revealed the company had incurred TZS12.4 billion (USD5.3 million) in interest in the FY2019/21 on debts of TZS45 billion (USD19.4 million) accrued over the past five years. “ATCL flights travelling abroad can be seized, that is a fact,” he said. He said ATCL had incurred losses of TZS150 billion Tanzanian shilling (USD64.6 million) over the past five years, including TZS60 billion (USD25.8 million) in the financial year under review. Between March and June 2020, ATCL had been charged TZS15.4 billion (USD6.6 million) for aircraft leases while not flying commercially due to COVID-19 restrictions. Air Tanzania’s entire fleet – two B787-8s, two A220-300s, one Dash 8-300, five Dash 8-400s, one Fokker 50, and one F28-3000 – is leased from TGF – Tanzania Government Flight (Dar es Salaam), a state-owned lessor. “During the pandemic, many aircraft were parked but ATCL was paying rental fees regardless of whether the aircraft were not operating due to the Covid-19 challenge. This was due to the lease agreement between the TGF (which also provides VIP flight services to government officials) and ATCL. There was no clause in the agreement that says when the aircraft is not functioning we should not pay.” Kichere said the company’s Annual Procurement Plan (APP) showed seven contracts that had not been in the set budget, which was contrary to the country’s Public Procurement Regulation. “ATCL explained that the procurements were implemented outside the APP because of their urgency and importance to the company’s survival. However, I attribute the noted anomaly to inadequate procurement planning,” he explained. He also highlighted TZS1.53 billion (USD646 million) paid to staff in holiday and travel allowances although such expenses weren’t provided for the company’s human resources policy. Advising cost-cutting measures and enhanced control over expenditure, Kichere noted: “I noticed the board of directors does not have a single member with experience in air transport matters”. He also pointed to airport capacity constraints which were limiting ATCL from operating at night.