International contracts improving Tanzanian procurement

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Senior engineer with the Ministry of Transport of Tanzania, tells international legal experts that government is seeing big benefits from adopting international standard contracts. 

Speaking at an international conference about construction contracts across the Middle East and Africa, Thomas Ngulika has set out his experience of their adoption in Tanzania as it improves capacity for delivering major projects.

Ngulika explained: “Our Government has been putting effort into capacity building because we have issues with delays leading to rising costs. Due to the improper preparation of documentations and setting of proper timings, a three-year project lasted from 2009 to 2021. So government is working to raise and improve capacity and we are putting that in place now.”

“So in Tanzania we are developing local capacity but we still need external knowledge for some projects. The large projects need even more expertise and we have adopted the FIDIC contracts to help engage more international contractors.”

This is happening not only in transport, but also in energy, and he said there was growing pressure to ensure that major projects in particular were delivered more effectively through international contracts, which has become more important amid a growth in large projects such as the $2bn Nyerere hydropower project and the 3.4km Kigongo-Buisis bridge.  

Ngulika made clear that the experience so far had been positive, saying: “We have now seen the adoption of standard FIDIC contracts on major infrastructure sectors. These are driving improvements and the government is now experiencing the benefits of standard documents.”

“We are expecting that most of our projects will be fully implemented with FIDIC documents now because our procurement system is adapting to that approach. In the past the agency used a lot of internal capacity but now we use more international consultants for studies, designs, supervising and managing projects and this is facilitated by using international contracts.”

He contrasted that to the past, saying “For some time we were developing contracts that were not comprehensive and we were doing these projects based on the annual budget. Then costs went up, which created pressure for the government. This is being better managed now.”

However, Ngulika was clear that this did not eliminate all challenges, saying “Pressure comes from politicians sometimes, and from financial institutions and you may find the project is being implemented across an election period. So we might see contractors squeezed to finish faster and the time limit can be short and if not implemented within that time, government may have to find other funds to finish the project.”  

Thomas Ngulika was speaking at the FIDIC contract users conference for the Middle East and Africa.

Also speaking was Aisha Nadar from Advokatfirman Runeland in Sweden, and she stressed that adopting international contracts required support for domestic companies to adapt to them.

She said: “Sweden is trying to increase competition by introducing FIDIC contracts. But what happens is, local companies who are used to their standard forms of contracts feel they might be displaced.”

“So, increasing their capacity to participate in these kinds of contracts does place an onus on the government to grow heightened awareness among domestic firms about how to use and benefit from those contracts because international firms have that experience already.”

Sheena Bryson from Pinsent Mason also addressed the challenge of difficult timeframes, stressing that early conversations were important to good decision-making.  

She explained: “If you have those conversations about why a project will take longer before you enter into a contract, it makes for a much smoother project in which everyone knows where the risks are.”

“You can get a contractor say ‘we could do it in just 30 months, but that will cost x amount more’ and then the employer can make its decision properly. It can push for that timeframe and face the premium, or choose not to. So having that conversation early is important.”  

The FIDIC contract users conference for African and the Middle East is part of a series, with two further conferences set to examine issues in the Americas and Asia