Tanzania paid a nominal $1 to South African Airways (SAA) to reclaim the company's 49 percent stake in the east African country's national airline, a government official has said.

Africa's largest carrier bought the shareholding in Air Tanzania for USD$20 million in 2002 as part of a strategy to strengthen its dominance of the continent.

The Tanzanian government, which announced its intention to sever ties with SAA earlier in the year, owns the remaining 51 percent.

"The Government of Tanzania paid one US dollar for the purchase of the 49 percent stake held by SAA in ATCL," ATCL Chairman Ali Mufuruki said in a statement on Friday.

Mufuruki gave no reason for the discrepancy in price or details of the transaction.

"With the resolution of this long-standing and costly shareholder impasse, ATCL reverts to 100 percent government ownership for the time being but firmly remains on the privatisation track," the statement added.

"However, this time round, privatisation will be considered after ATCL has been turned around into a viable and financially stable business."

SAA confirmed the sale but declined to give details of the terms of the agreement.

"The sale of SAA's shares in ATCL follows on mutual agreement between the parties to discontinue the business relationship in respect of ATCL," SAA lawyer Louisa Zondo said.

"As part of the disengagement process the parties have reached agreement on transitional arrangements necessary to facilitate continuation of operations," Zondo said in a statement.

Tanzania has never given details of the nature of problems between ATCL and SAA.

In Tanzania's 2006/07 budget, the Ministry of Infrastructure set aside 13 billion Tanzania shillings (USD$9.7 million) to revamp the airline.

Mufuruki said the documents finalising the break-up were signed in Johannesburg at the end of August.