India's RITES consortium has signed a deal with the Tanzanian government that will allow it to run the state-owned Tanzania Railways Corporation.

The deal creates a locally-registered entity, Reli Assets Holding Company, that will manage the railway from October.

The Indian company has bought 51 percent of the shares of the Tanzania Railways Corporation, now known as the Tanzania Railways Limited, while the government of Tanzania retains the left 49 percent.

The Indian company will run the 2,600-km railway system under a25-year lease, with Tanzanian government's agency Surface and Marine Transport Regulatory Authority to remain as the regulatory body.

The Tanzania Railways Limited rail line runs from Dar es Salaamto Kigoma in the west and to Mwanza in the north.

Local English daily News said on Tuesday that the World Bank had approved a loan of 33 million U.S. dollars for the initial rehabilitation of the railway system, which includes 90 locomotives, 1,280 freight wagons and 110 passenger coaches.

Tanzania has two railway systems. The other is the Tanzania-Zambia Railway, known as TAZARA, which runs 1,860 km from Dar es Salaam to northern Zambia.