Government terminates firm's water contract

The Tanzanian government has terminated its 10-year contract with an international firm for the provision of water and sewerage services to the country's commercial capital, Dar es Salaam, for what it described as "poor performance". "The water supply services in Dar es Salaam and neighbouring places have deteriorated rather than improve since this firm took over two years ago," Edward Lowassa, the minister for water and livestock development, said on Friday at a news conference, where he announced the cancellation of the contract with the firm known as City Water. "The revocation," he said, "was made following persistent complaints by city residents over incompetence of the firm." He said City Water had failed in its responsibility of improving and managing water provision and sewerage infrastructure in the Dar es Salaam region. A new firm, to be known as Dar es Salaam Water and Sewerage Corporation, was being formed to take over from City Water, Lowassa said. Under Tanzania's programme of reforming state-owned utility firms, City Water - a joint venture formed by British Water Company Biwater, German engineering consultancy Gauff Ingenieure and local Superdoll Trailer Manufacturers Limited - had won the contract in February 2003 and began operations on 1 August 2003. The lease contract was for the management of water and sewerage operations in the capital, plus the neighbouring districts of Kibaha and Bagamoyo. The areas used to be handled by a government utility firm and have a combined population of at least three million people. Associated with the lease contract was a substantial capital investment programme, which included at least US $160 million in funding from the World Bank, the African Development Bank, the European Investment Bank and City Water Services. On Friday, Lowassa accused City Water of not remitting the collected revenue due to the government and non-payment of the leasing fee. Under the contract, he said, City Water was required to invest $8.5 million during the first two years of operation but had so far only invested $4.1 million, less than half of what was stated initially. "Now with the cancellation of the contract, City Water forfeits the funds it has invested," Lowassa said. Efforts to get senior City Water officials to comment on the minister's announcement failed, and a news conference that the firm had planned for Sunday was cancelled. On Monday, some City Water employees told IRIN that they had learnt about the cancellation of the contract through the media. Upon reporting on duty on Monday, they were told that the firm's top executives had left the country. "We were told that the bosses are on leave," an employee, who declined to be named, told IRIN. However, on Tuesday, Lowassa met the City Water employees and assured them that they would all be absorbed into the new corporation. City Water had at least 1,300 staff members, most of them inherited from the state-owned Dar es Salaam Water and Sewerage Authority, following the government's decision to contract a private company to provide water and sewerage services.