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14. March 2006

TANZANIA: Tanzania to Invite New Bids for Rubber Plantations

Source: Daily "The East African", Nairobi; 14 Mar 2006

Tanzania has terminated a management contract for the
two largest rubber plantations in East Africa awarded
to a Kenyan firm, saying the company breached the
terms of the agreement.

The contract for the concessioning of Kihuhwi and
Kalungwa rubber plantations was signed in May 2000 but
the government says the lessee – Jumaan Muhsin-El-Ardhi Company Ltd
of Mombasa - has failed to pay salaries to more than 1,000 workers,
among other omissions.

Joseph Mapunda, communications consultant at the
Parastatal Sector Reform Commission (PSRC) said in Dar
es Salaam that the 10-year lease agreement had been

Mr Mapunda said that the government had taken over the
plantations and will invite fresh tenders for running
of the plantations in Kihuhwi, Muheza District in
Tanga region and Kalungwa, Kilombero District in
Morogoro region.

The plantations are the main source of raw materials
for bubble gum manufacturing for Kenyan firms.

Mr Mapunda said the commission was looking for
financially solid firms with experience in managing
similar farms to lease the ailing plantations for a
renewable five-year term.

The workers of the plantation are also understood to
be in the final stages of forming a company that would
take over the two plantations when new bids are

"The workers will be tendering for the concession of
the plantations," the Member of Parliament for Muheza
Constituency, Herbert Mntangi, said.

Jumaan Muhsin-El-Ardhi was awarded the lease to
operate and manage the two plantations for $60,000 per
annum but soon after taking over, operational
difficulties ensued. The company owes the workers
wages in excess of $100,000.

Six investors had been pre-qualified to manage the
farms, the others being Banken Commodities, Bora
Industries Ltd, Mackina Enterprises (T) Ltd, Mimara
Ltd and Mohamed Enterprises (T) Ltd.

Although Mackina Enterprises was willing to pay
$65,000 for the annual lease, its bid lost on
technicalities, allowing Jumaan Muhsin-El-Ardhi to
take over the farms.

Mr Mntangi estimates that 68,750 tonnes of rubber can
be harvested annually from a potential 23,000
hectares, enough to meet three quarters of the needs
of General Tyre in sub Saharan Africa, earning $55
million in foreign exchange.

"The region will also benefit because the plantations
are the main supplier of raw materials to Kenyan firms
which manufacture bubble gum," the legislator said.

The two plantations were established by the government
in 1970 to alleviate the high cost of importing
natural rubber required by the General Tyre (EA) Ltd.

The Arusha-based factory later decided to return the
plantations to the government because of the high cost
of running them, especially as rubber production was
not General Tyre's core business.

Both plantations cover an area of 750 hectares each.
The total acreage under rubber trees in both farms
totals 510 hectares, of which the Kihuhwi plantation
has 318 hectares, leaving 471 hectares of undeveloped
land; and Kalungwa, 192 hectares, leaving 558 hectares
of undeveloped land.

Joyce Mgana, District Com-missioner for Muheza
District said that the workers have been running the
firm since the contract with the Kenyan firm was
cancelled last year. She said the PSRC has been paying
staff salaries for the past one year.

The two plantations have the potential to earn the
country $70 million annually if privatised and run
optimally, given the ready market in tyre
manufacturing countries like Kenya, South Africa and

This is the second time that the Tanzania government
has terminated the lease agreement of the two
plantations. In August 1996, the government entered
into a 10-year lease agreement with M/S Mercantile
Freighters Company Ltd but the agreement was
terminated in December 1999.

(Syed Rashid Ali, Karachi, Pakistan)

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