Why Ticts contract should not be renewed

What you need to know:

  • The lease agreement between the government, through the Tanzania Ports Authority (TPA), and Ticts was last renewed in 2017, and is due to expire in September, this year.

Dar es Salaam. ACT-Wazalendo yesterday waded into the controversy surrounding the contract between the government and Tanzania International Container Terminal Services (Ticts), saying it should not be renewed.

The party’s spokesperson for communication, technology, information and transport, Mr Ally Saleh, said the company – which manages and operates a specialised container terminal at Dar es Salaam Port – has not performed satisfactorily during the past 20 years to necessitate contract renewal.

The lease agreement between the government, through the Tanzania Ports Authority (TPA), and Ticts was last renewed in 2017, and is due to expire in September, this year.

But according to Mr Saleh, because of unsatisfactory performance and inefficiency in the clearance of containers for the better part of the past 20 years, a significant amount of cargo that should have passed through Dar es Salaam Port was diverted to competing ports in the region.

Quoting the Controller and Auditor General’s 2020/21 report, Mr Saleh said it took between three to eight days for containers bearing petroleum products to be offloaded from a vessel at the port.

This, he added, flew in the face of the Tanzania Ports Authority’s plan to cut discharge time to not more than two days.

“It’s no secret that taking that long to discharge containers from vessels adversely affects the port’s performance,” Mr Saleh said.

He added that official data he had obtained shows that Dar es Salaam Port last year recorded growth of only 0.8 percent in its handling of 20-foot containers. A total of 606,169 containers passed through at the port last year.

This, he said, was by far lower than the number that passed through Mombasa Port, which is Dar es Salaam’s main competitor in the region.

Mombasa handled 1.4 million containers in 2019, and at least 2 million are expected to pass through the port this year.

“Looking at these figures alone, there is no reason why we should prolong the debate on whether or not the government’s contract with Ticts should be renewed...it should not be renewed,” he said.

The government, Mr Saleh added, should put the national interest first when deciding on the matter.

He said Ticts’ underperformance should serve as a wake-up call to the government to be more careful in the awarding of sensitive tenders to avoid similar mistakes in the future.

“It’s time the government conducted thorough analysis before awarding tenders, and Ticts’ contract should serve as an important lesson,” said Mr Saleh.

But the government said yesterday its discussions with Ticts on whether or not the contract should be renewed were still in progress, and Tanzanians would be informed accordingly when the negotiations come to an end.

“Our team of experts is still in discussions with Ticts, and at the end of the day we will be in a position to decide whether to renew the contract or not,” Works and Transport permanent secretary Gabriel Migire told The Citizen.

He said any decision to be reached in the process would ensure that Tanzanians get a better deal.

The contract has been discussed by Parliament, the CAG and a number of independent pundits over the past two decades, but that did not prevent the government from renewing it on several occasions.

Those against the deal say the company has been inefficient, and that it has not invested adequately in infrastructure in addition to failing meet its contractual obligation to increase cargo traffic.

Ticts was incorporated on April 19, 2000. Five months after its incorporation in Tanzania, it was awarded a ten-year contract to lease the container terminal.

It should be noted that at the time the container terminal was first leased to Ticts it was the best performing unit under the then Tanzania Harbours Authority, which is now known as TPA.

That was the period when transporters were increasingly shifting from the general system of transporting cargo to the containerised one.

There was heated debate in Parliament in 2005 when it came to the attention of some lawmakers and pundits that with Ticts only half way through its contract, government officials had already extended the deal by 15 years.

The extension did not consider complaints against the company’s performance and how that was denying the government revenue.

In 2008, Parliament passed a resolution instructing the government to terminate the contract extension. However, that was followed by a five-year contract extension in 2017.

In September 2017, President John Magufuli directed TPA to review its contract with Ticts. That came only five months after the CAG, Prof Musa Assad, revealed that the contract had numerous defects.

After reviewing the contract in 2017, the government doubled the annual fee Ticts pays for leasing the lucrative container terminal from $7 million to $14 million.

Ticts was also required to ensure 37 percent annual growth of container traffic.