Govt has its way in new port deal

Dar es Salaam. Tanzania Ports Authority (TPA) yesterday signed a new lease contract with Tanzania Internal Container Terminal Services Limited (Ticts).

The agreement was signed less than a year after President John Magufuli directed TPA to review its contract with Ticts, saying it did not benefit the country.

Speaking during a tour of Dar es Salaam Port last September, Dr Magufuli tasked the Minister of Works, Transport and Communication, Prof Makame Mbarawa, with overseeing talks between the two parties.

Earlier last year, Controller and Auditor General Mussa Assad listed in his 2014/15 financial year report shortcomings in the contract, and advised the government to review the lease agreement “with a view to ensuring that public interests are protected therein”.

Prof Mbarawa appointed a 12-member team of experts chaired by Mr Hamza Johari, who is also the Tanzania Civil Aviation Authority director general, to review the contract and advise the government on the way forward.

Other members of the committee were drawn from TPA, Tanzania Intelligence and Security Services (TISS), Attorney General’s Chambers and the University of Dar es Salaam, among other institutions. Members included Prof Palamagamba Kabudi, who was later appointed Minister of Constitutional and Legal Affairs.

TPA and Ticts originally signed a ten-year lease agreement in 2005. However, the lease period was irregularly and dubiously extended to 25 years in 2005, according to the CAG.

The two sides yesterday signed a five-year contract pending a performance review.

The CAG also raised a red flag on TPA’s decision to award Ticts additional operational areas, including the Ubungo inland container depot, which was previously not in the lease agreement.

The CAG report noted that while a key objective of privatisation was to let go of underperforming areas or entities, the Ubungo ICD was handed over to Ticts despite being a profitable operation for TPA.

Under the new lease agreement signed yesterday, the ICD has been handed back to TPA.

Other major changes, according to Prof Mbarawa, include an increase in the annual lease fee, which has been doubled from $7 million to $14 million. The fee will increase every year by 3.8 per cent.

“They (Ticts) will pay $14 million in 2017/18, and in 2018/19 it will increase to $14.8 million. The fee will increase by 3.8 per cent annually until the end of the contract,” he said.

Fees charged for each container handled by Ticts have also increased from $13 to $20, and will rise by four per cent annually.

Prof Mbarawa said Ticts had also been tasked to ensure the growth of container traffic by 37 per cent annually.

“We will make sure terms of the agreement are properly enforced to make this contract mutually beneficial,” he said. Prof Kabudi, who was also present at the signing ceremony, said, “This new agreement has come at the right time. The process of negotiating this contract has taught us vital lessons on the need to review many other contracts.”

Prof Kabudi said all laws that put Tanzania at a disadvantage as far as investment was concerned would be reviewed, adding that the first steps had already been taken with the passing by Parliament earlier this week of key bills on the management and exploitation of natural resources.

“Times have changed. Tanzanians shouldn’t enter into contracts from a weak position. Before approaching the negotiation table in the future we need to prepare ourselves and prioritise issues of national interest. To a large extent, this new agreement has met the country’s expectations, but we need to be careful during its implementation.”

Ticts chief executive Jared Zerbe said the firm had a good track record in Tanzania dating back to 2000, adding that he was confident the new agreement would further cement the bond between the company and its Tanzanian partners.

“Good relationship and partnership by both parties is very important...we will align ourselves in many ways to ensure that efficiency at Dar es Salaam Port is improved,” he said.

Mr Zerbe signed the new lease contract with the TPA board chairman, Prof Ignatus Rutaratuka.