SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 1 PANEL DISCUSSIONS Contribution by Mr. Israel Sekirasa, Director General -Surface and Marine Transport Regulatory Authority Mlimani City Conference Hall – Dar es Salaam on March, 2010.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 2 1.None of the other countries in East Africa have an independent regulatory body for railways (or surface transport). How important is that and has it worked well in Tanzania? In the context of this conference, most of us would agree that concessions and regulatory frameworks are intertwined; one cannot work without the other. The need for independent regulatory bodies under concession environment is underlined by necessity to protect both the suppliers and consumers of services and goods. We should therefore commend the Government of Tanzania for taking a bold move to establish independent regulatory Authorities in Tanzania. In fact it is not only in surface transport where you have independent regulator, because they also exist in Marine, Communications and Broadcasting, Energy and Water and Civil Aviation.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 3 We call the decision a bold one because as we all know; regulatory powers are traditionally a preserve for the government. Under the independent regulation principle, the Government essentially gives away, surrenders or relinquishes those powers to a large extent. It does not however, mean that the regulator would operate in disregard of the Government, because we cannot operate in a vacuum. The Government is a policy maker and its main objectives are people focussed, i.e. bringing about social and economic development to its people. Therefore, in the course of our work, we consult our sector Ministry and other Government departments with close involvement of the people through Stakeholder forums.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 4 No wonder therefore, across SUMATRA Act, there is a constant reference to the Minister to ensure that the benefits of independence are realised or seem to be realized. The independence which is emphasized in the principle is independence in resources to run our business, independence in decision making, independence in thinking and acting. The independence of the Regulator can be gauged through SUMATRA Act in section 6(1) (1) wherein it is provided that “In addition to the preceding provisions of this section, the Minister may from time as occasion necessitates it, give to the Authority directions of a specific or general character on specific issues other than in relation to the discharge of the regulatory function…”

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 5 But sub-section (5) of section 6 in relation to incidences where the Minister may give a direction provides that: “6(5) any direction given by the Minister in accordance with subsection (4) of this section shall be in writing and shall be published in the Government Gazette” Therefore, you will find that the Minister is restricted even in cases where he has general powers, in order to secure independence of the regulator.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 6 However, in order to sustain this arrangement it is prudent that at all times, the Minister is briefed so as to be well informed of key decisions taken by the regulator because at the end of the day, he is the one answerable to the People through the cabinet and the National Assembly. Above all the best way to safeguard this independence is for the regulator to exercise his powers prudently and in accordance with the law, diligently, equitably, transparently and professionally, so as to keep the trust and confidence of the Government, the people, suppliers of goods and service and investors.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 7 In my considered opinion, SUMATRA has been able to maintain its independence within these parameters and has at no time suffered from interventions by the Minister or the Government and there has been no incidence warranting interference. It is yet important to submit that there is no freedom, autonomy or independence without limitation, essentially to safeguard public interest. For instance, the law puts a break when it comes to exclusive licences having a term of five or more years. It is provided that

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 8 “6 (3) in the performance of its functions, the Authority shall not award or cancel a major or exclusive licence having a term of five years or more without prior consultation with the Minister and the relevant sector Minister” Thus, under this provision, SUMATRA has little to do with TRL concession or container Terminal Concession whose term run for 25 years even if we felt they are bad unless the Minister is convinced. On the other hand, taking into account the powers vested in SUMATRA by Section15 of the Act, in the unlikely event that a major licence such as that of TRL concession is cancelled we would intervene and appoint an administrator. In order to measure the degree of the powers and action that would be taken against a licence holder, Section 15 of the Act is reproduced in extenso:

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 9 15 (1) Subject to the provisions of this Act, the Authority shall have power to do all things which are necessary for or in connection with the performance of its functions or to enable it to discharge its duties. 2) Without limiting the powers conferred under subsection (1) the Authority shall also have the following powers: “(b) The power to appoint an administrator to manage the business of a regulated supplier whose licence to operate has been cancelled as may be provided under sector legislation”

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 10 So far the Regulatory body has worked quite well. We have made notable progress on establishment of regulatory frame work and notably formulation of regulatory instruments, considered key in our work. We have also made substantial progress in areas which could not wait: tariff procedures and reviews and quality of service standards. SUMATRA has adopted a strategy of close engagement with Government, service providers, consumers, and stakeholders with a view to fostering safety and quality improvement in transport services.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 11 The Railway Concession in Tanzania has failed- Did SUMATRA have to intervene in anyway? The issue as to whether the Railway Concession has failed or not can best be answered by the Government and RAHCO. We cannot give our position when there is no issue of the like pending with us. We can only state that the concession has not worked very well because they have failed to attain the performance goals. Safety is seriously wanting and there is almost no service at the moment. We have taken judicial notice of the deficiencies. Our intervention has always been in carrying out inspections and advising the Government, RAHCO and TRL on areas deserving critical attention, issuing guidelines, prohibition notices and sometimes suspending or withdrawing certain equipment from service.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 12 3.Does SUMATRA play any role in formulating key railway management and operation policies at the national level? If so what are these key policies? Do you consider conversion of existing metre gauge railway to standard gauge railway viable? The overall responsibility in transport policy formulation and implementation rests with the Ministry responsible for transport and infrastructure matters. Our Ministry is therefore the custodian of the current National Policy which was issued in 2003.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide It is said that railways and roads do not compete with each other on a level playing field because road transporters are not required to recover infrastructure investment costs from consumer, whereas railways have to. How can this situation are corrected. Is it a matter of Government policy? If so how? I think you have said it all. Indeed, it is a policy matter. The Government has priorities and prioritization is government business. A shift in policy and priority to railways development is inevitable. Perhaps the end of this conference would mark a new beginning to re-look into our priorities.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 14 The Mission statement of the NTP is stated as to: “develop safe, reliable, effective, efficient and fully integrated transport infrastructure and operations which will best meet the needs of travel and transport at improving levels of service at lower costs in a manner which supports government strategies for socio economic development whilst being economically and environmentally sustainable.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 15 Its vision is stated as: “to have efficient and cost effective domestic and international transport services to all segments of the population and sectors of the national economy with maximum safety and minimum environmental degradation” Going by these statements which do not differ so much from Sumatra’s in terms of regulatory oversight goals, it can be said that SUMATRA can influence and in fact influences policy making in form of regulations and rules. Under SUMATRA Act, we have general power to make rules and regulations while under the Railways Act in section 28(1); the Minister may in consultation with SUMATRA make regulations for or in relation to any matter necessary to give effect to functions relating to safety.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 16 Under TAZARA Act, 1995, the two Governments of Tanzania and Zambia are required to appoint Chief Inspectors of Railways. SUMATRA Act provides that the Division Director for Railways shall also serve as Chief Inspector of Railways in Tanzania. Therefore SUMATRA is a designated Chief Inspector of Tanzania Railways but also for TAZARA by appointment and in compliance with SUMATRA law. The two pieces of legislation therefore give SUMATRA opportunity to initiate or influence Government policy on railway safety, operations and environment. However the overall responsibility rests with the Minister for Infrastructure Development. Our role would essentially be at advisory level.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 17 Do you Consider Conversion of Existing Metre gauge railways to standard gauge railways viable? The idea of conversion to standard gauge railway in the Region and for Tanzania in particular in itself is a great idea and SUMATRA fully supports it. It is important that our planning should look at 50 years to come if we are to realize long term economic benefits through the railways.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 18 Having learnt of the decision by the East African leaders to convert to standard gauge up from the current meter gauge, we were overwhelmed. And to demonstrate our convertion to standard gauge proposal, we have already advertised for consultancy services on Safety standards for Infrastructure and Rolling Stock focussing on standard gauge, in readiness for the new levels of service.

SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY 11 June 2016 SUMATRASlide 19 As for viability, the conversion is not only viable but visible. According to BSNF Final Report: Forecasts are for 35 million gross tones on the railway by the year 2031 and 1.4 million container lifts at Dar es Salaam port by that same year. It is only the standard gauge railway that can handle the projected volumes. The capacity of existing meter gauge is unlikely to exceed 3-6 million by same period even with extensive investment and upgrading.