JE, NI BUSARA SERIKALI KUIPATIA PESA PRECISION AIR ILI KUIOKOA ISIFE?

I happened to be going through a front page news item on the citizen today. This was on nothing other than the Government of Tanzania’s seemingly intent to bail-out Precision Air Services Limited, a DSE listed company, currently in a god-knows-how-we-got-here sort of financial turmoil. According to Citizen, the bailout is expected to be of approximately TZS 51 billion, yes, tax payer’s money.

I should say I completely believe that this, if it happens, will have been another case of absolute misuse of public funds. There are several reasons to this.

First, in its current operations, Precision is almost completely falling short of its current immediate competitors fast jet, whose coming has meant sleepless nights to Precision. I am yet to see precision come up with its own business survival strategy. Since the coming of fast jet, it has all been a down-hill-fall for PW.

What does one call a stock-listed company that could not resist even one year of competition in a market that it had solely controlled since forever? I remember 2011 when I would cautiously encourage prospective investors to buy precision air stocks only because it had been a monopoly in local flight destinations. I realized that such would not necessarily be the case if a strong competition arose.

Secondly, and even more importantly, in a very strange way, Precision seems to be lacking a knowledgeable board of directors. It is shames to have had the company’s Chairman of the board, Mr. Michael Shirima admittedly say that the board has been irresponsible for the company’s failure. 

I fail to know which board will now be managing the bail-out funds from the Government. In his interview with the Citizen, Mr. Shirima, blamed the former CEO of the Company, Mr. Kioko of leading the company to its current state of affairs.

“He (Kioko) deserves credit for steering the airline during a long transition period, but he had some weaknesses which are to blame for the problems we are now encountering” Mr. Shirima said. He cited as an example the ambitious plan that saw the airline lease three Boeing 737 jets to fly to new destinations in Africa, adding that the decision did not take into account the risks involved.

Well, here I am, thinking, could the CEO have taken the business expansion decisions on his own? Did the members of the board review the proposed plans before approval? Is it the same board that is going to sit and approve how the TZS 51 billion, Tanzania tax payers’ money will be utilized too? I see a bubble growing.

This case reminds me of what happened in 2005 when a shadowy company going by the name of Tan Power Resources limited managed to undertake a number of Government-guaranteed deals which ultimately ended up being a loss to the nation. 

Tan Power Resources Limited, having managed to have the whole of Kiwira Coal & Power Limited (KCPL) sold to it by the Government of Tanzania for a tiny TZS 700 million, went on to acquire from CRDB, PSPF and NSSF, Government-guaranteed loans amounting to $ 15m (including accrued interests only up to year 2008). 

As those who had visited the mine site since its privatization will tell you, there has never been a capital investment done on the mine, even though such huge sums were summoned by Tan Power Resources Management. Strange? That is how smart people rob a nation. A friend of mine once said, the best way to rob a bank is to actually own it.

Source:Jamii forums