Don’t build Bagamoyo port, shippers tell govt

Dar es Salaam. As the government is planning to start constructing the Bagamoyo mega port in the coming financial year, shipping agents are worried that such a facility will have no significant impact at least for the coming 20 years.

They say the current pace of economic growth -- for Tanzania and neighbouring states -- brings little hope that larger vessels can dock in the country in the coming 20 years.

According to the Tanzania Shipping Agents Association (Tasaa), ship owners are striving to fill vessels that accommodate from 1,500 to 2,000 twenty-foot equivalent units (teus) and are forced into mergers to cut operation costs.  The new port will have the capacity to accommodate vessels of over 6,000 teus.

“We are warning the government that with the pace of economic development the country will never attract ships of over 6,000 teus in the coming 25 years,” Tasaa chairman Peter Kirigini told BusinessWeek.

The government said recently that it planned to lay a foundation stone for constructing the Bagamoyo port in July this year to mark the commencement of the project that will see two giant Omani firms and China Merchants Holding work together.

The Bagamoyo project is expected to cost a whopping $11 billion. The Tanzanian government, Oman’s General State Reserve Fund (GSRF) and the China Merchants Holding International (CMHI) – a state port and free zone operator – will jointly develop the $11 billion (over Sh22 trillion) Bagamoyo port and a Special Economic Zone in the country.

Tasaa advises the government to spend such a huge amount of money on upgrading the current port.

“What we need to do is to invest and upgrade the current port including dredging berth 1 to 7 to get deep drafts, put ship to shore gantry cranes, improve processes and automate systems and we can achieve higher productivity and volumes and survive for up to 20 years without a need for a new port,” said Mr Kirigini.

He said the investment should go hand in hand with widening the entrance channel to cut down berth exchange time.

Road and railways to and from the port should also drastically be improved.

With cargo increase at the Dar es Salaam port projected at 12 per cent each year, the Tanzania International Container Terminal Services Ltd (TICTS) believes that operations at the port need expansion so as to keep the growing pace.

“We can’t wait or we shall risk going back to the previous poor performance or delays, risking our national economy and importantly, our valued neighbours who depend on Tanzania as their gateway to international trade and economic development,” said TICTS chief executive officer Paul Wallace.

According to Mr Kirigini, if the Dar port and supporting infrastructure are upgraded the port can be in a position to generate enough revenue which can be used to construct the new Bagamoyo port.

“The government should privatise the general cargo terminal 1 to 7 to guarantee investments and efficiency. We simply don’t need a new port in coming 15 to 20 years,” he said.

As ships get larger, according to Mr Wallace, Tanzania needs to raise the bar and upgrade its handling capability and access channels to ports.

“We need to increase the lengths and depths of our berths and upgrade the number and scale of our cranes so that we can accommodate bigger ships,” said Mr Wallace.

He said the country receives too many smaller ships, which are inefficient and directly cause the delays we have seen in the past.

“The country also needs to put urgency with our road network. The central and northern corridors provide the lifeblood to our East African Community economies;  we need to keep our supply chains flowing efficiently as a catalyst to vibrant growth and trade our way from over-dependence on international donor funds.”

Though trucks have their place, especially over shorter distances, Mr Wallace believes that the country needs to improve its commitment to rail links, which are not only more environmentally friendly and much safer but much more competitive on cost.  As an example, it costs around $5,000 for a truck to round trip to Zambia. The railway is easily 25 per cent cheaper on that same route using a container.

Transport Permanent Secretary Shaban Mwinjaka, said recently that all the preparations had been made for the construction of the Bagamoyo port to start in July this year.

He also said that China Merchants Holding International, a state port and free zone operator, and Oman’s State General State Reserve Fund would start the work.

 “The project is under the Prime Minister’s Office but transport and infrastructure ministries are also there to implement the project. We believe after laying the foundation stone, everything will start,” Dr Mwinjaka said.

The construction of Bagamoyo port is aimed at easing congestion in Dar es Salaam.

Yet stakeholders are unimpressed. “Bagamoyo is a really good example of a white elephant,” one analyst who focuses on infrastructure told Reuters recently. “If you’re going to have two major ports, then isn’t the place to have it in the south, where the gas is?”

Tanzania has up to 53.28 trillion cubic feet of off-shore gas, putting it on par with some Middle East producers, but it has yet to construct a liquefied natural gas plant.

The construction of Bagamoyo port is set to involve several phases. The first phase of the project will be ready in three years and will be able to handle 20 million containers annually. The construction will also entail building of a 34km road joining Bagamoyo and Mlandizi and 65km of railway connecting the port to Tanzania’s Central Line and Tanzania-Zambia railway.

The development represents Tanzania’s strategic vision to serve East Africa and links to Asia through the Indian Ocean; while for the Chinese industry, which relies on the guarantee of infrastructure support, it provides a platform for supply into East Africa.

The port construction comes at a time when Tanzania is losing a lot of trade because of inefficiency of the Dar es Salaam port.