By Fumbuka Ng'wanakilala DAR ES SALAAM (Reuters) - Tanzania said on Saturday it planned to acquire the majority stake held by Indian state-run Rites Limited in the east African country's railway company. Rites owns 51 percent of Tanzania Railways Limited, a joint venture established in 2007 as part of a 25-year concession deal to turn around the country's main railway. Tanzania's government owns the rest of the company. According to officials, Rites made an offer to sell its shares to the Tanzanian government several months ago after TRL was dogged by financial difficulty and on-off workers' strikes over salary delays. "The government has given a go-ahead to the sectoral ministry to start serious negotiations with Rites for the acquisition of its shares," Siraju Kaboyonga, a member of TRL's board of directors told Reuters by phone on Saturday. A statement from the president's office late on Friday said a cabinet meeting chaired by President Jakaya Kikwete ordered the government to begin talks with Rites to pave the way for its exit. "After the conclusion of the negotiations, the government will make basic preparations ... for a joint venture with another investor," the statement said. In a business plan released in September 2008, TRL projected it would run an operational deficit of around $83 million between 2009 and 2011 and its management advised the government to seek a loan from India to cover it. The company was forced to revise its previous targets for 2008 to annual cargo haul of 650,000 tonnes from an estimated 1 million tonnes. Actual figures later showed that TRL hauled just 450,000 tonnes of freight in 2008, compared to 600,000 tonnes transported by the former state-run Tanzania Railways Corporation in 2006. Government officials say TRL needs to haul approximately 1.5-1.7 million tonnes per annum in order to break even in its operations. Official figures show that by 2007, TRL was posting an annual turnover of $75 million, but was making a loss of around $6 million each year. TRL has needed government bail outs to meet salary obligations even after retrenching 4,000 of the original 7,000 railway workers. "When the going continued to get tough on the part of the company, Rites opted to sell its shares to the Tanzanian government so the government could own 100 percent," said Kaboyonga. Several Tanzanian legislators have long pressed the government to end the concession with Rites, accusing the company of failing to improve services.