Tanzanian president orders probe into airport project cost

DAR ES SALAAM, Feb 9 (Reuters) - Tanzanian President John Magufuli has told officials to investigate an airport terminal construction project in the commercial capital Dar es Salaam, saying the cost was inflated.

The Terminal Three project at Julius Nyerere International Airport is being built by Dutch contractor BAM Group for 560 billion shillings ($250 million). It aims to double passenger traffic and is being constructed in two phases.

Both phases of the contract were awarded before Magufuli became president in November 2015, and construction of phase two is continuing.

“Why did government experts approve such a huge cost ... is this terminal really worth the 560 billion shillings?” Magufuli said after inspecting construction work on Wednesday. He did not indicate what he would consider a reasonable cost.

The president, nicknamed “The Bulldozer” for the way he pushes through projects, also suspended senior Finance Ministry official Florence Mwanri for approving the start of phase two of the project before completion and appraisal of phase one.

Phase two had been due for completion in December 2017 but that date has been pushed back due to delays in payments to the contractor.

“The government will pay the arrears to the contractor ... but these costs have to be lowered, we can’t pay for all this cost without value for money,” Magufuli said in a statement.

Magufuli promised when he was elected in November 2015 to reform an economy hobbled by red tape and corruption, and said he would start a programme to develop public infrastructure.

The International Monetary Fund said last month progress in infrastructure projects had been slow and threatened the economic growth forecast of 7 percent in 2016/17.

Expanding the airport in Dar es Salaam is part of plans to transform Tanzania into a regional transport hub. The new terminal is expected to boost annual traffic at the country’s main airport to 6 million passengers from about 2.5 million now. (Reporting by Fumbuka Ng’wanakilala; Editing by Clement Uwiringiyimana and Andrew Roche)