The Tanzanian Government is reportedly in final talks with Continental AG on the subject of buying back its 26 per cent shareholding in the now-defunct General Tyre East Africa (GTEA) tyre manufacturing company. According to local news reports, the government intends to revamp the tyre company.
The Tanzanian government has reiterated its commitment to restarting production at the General Tyre East African Limited (GTEA) factory before the end of this year.
The state-owned venture was once a significant player in the East African tyre market, along with Kenya’s former Firestone operation. According to local news sources, it started manufacturing tyres in 1971 and at its peak produced up to 1,200 tyres a day and employed over 4,000 workers.
Production at Tanzanian tyre maker General Tyre East Africa will reportedly resume within a year. Last year management of the company – which hasn’t produced a tyre since 2007 – was placed in the hands of Tanzania’s National Development Corporation, and the corporation’s corporate affairs manager now says that investors from China, Malaysia and South Africa have shown interest in the getting the company up and running again.
Tanzanian newspaper The Guardian reports its country’s government plans to hand over General Tyre East Africa to Tanzania’s National Development Corporation (NDC) in response to what it calls the “hard conditions” imposed by shareholder Continental AG. The country’s Industry and Trade Minister, Dr. Cyril Chami, is reported as saying talks with Continental, who holds a 24 per cent share in General Tyre East Africa, failed to reach a suitable conclusion. He attributes this lack of success to conditions Continental wishes to impose, such as restricting General Tyre’s activities to its domestic market and just two export destinations – Uganda and Burundi – and that the Tanzanian tyre maker should pay back its outstanding US$3.321 debt to Conti. Continental’s alleged lack of investment plans for General Tyre is another given factor.
According to Nairobi based news portal The East African, the nation of Tanzania is “struggling” to end the multi-billion dollar General Tyres East Africa (GTEA) partnership brokered with Continental AG in the mid-1990s. The East African states that Continental, 38 per cent shareholder in the venture, has been “feuding with the state” since 2006. The GTEA facility in northern Tanzania has been closed since 2007, with 400 workers locked out.
The fate of General Tyre Tazania is still hanging in the balance, having closed in April last year. Local newspapers are reports that the government is not likely to bail it out unless the last investor, Continental Tyres, accounts “for the $10 million it was advanced in 2002 to revive production.”