8 January 2016

Tanzania Suspends Construction of U.S.$10 Billion Bagamoyo Port

The construction of the $10 billion Bagamoyo port, which would be the largest port in East Africa, has been suspended.

Tanzania wants to focus, instead, on improving the capacity, performance and efficiency of the Dar es Salaam and Mtwara ports.

The Minister for Works, Transport and Communications, Prof Makame Mbarawa, said the government will upgrade berths 1 to 7 and construct two additional ones, 13 and 14, at the Dar port as well as develop the Mtwara one.

"I do not want to reveal too much details or plans by the government on the fate of this project [Bagamoyo]. What I can say is only that we are currently concentrating on the Dar es Salaam and Mtwara ports," he told The Citizen.

However funding constraints for the two ports are standing in the way of the revamp efforts.

"We are looking for funds for the port of Dar es Salaam and then for the Mtwara Port," he said.

The World Bank has agreed to fund the facelift of berths 1 to 7 and talks are ongoing to also finance the construction of berths 13 and 14, Prof Mbarawa said without revealing the cost of the projects.

The government hopes to start the refurbishment this year and complete by 2018.

"It all depends with the financial resources. If we get the funding soon the projects will run," he said.

The initial works for the Bagamoyo port had already started after former President Jakaya Kikwete broke ground last October with some residents relocated to other areas to pave way for the construction.

Prof Mbarawa said the decision to suspend the building of the port was because the multibillion-shilling project was too big; it needed more attention, a lot of planning and a major source of funding.

Bagamoyo port was also put in the queue by the need to take advantage of huge inflows of foreign direct investments in the natural gas-rich regions of Lindi and Mtwara, the government said.

Politically sensitive

The port has so far become a politically sensitive issue. Opposition politicians and the private sector have poured scorn on the project arguing it was a waste of resources and urged for improving the existing Tanga, Dar and Mtwara ports instead and the connecting infrastructure.

President John Magufuli was forced to defend the project during last year's election campaigns against attacks from the opposition presidential candidate Edward Lowassa who had criticised it. Mr Lowassa while campaigning in Tanga had said if elected president he would shelve the project and put resources on improving the Tanga port.

"As far as I am aware, the Bagamoyo port would benefit all Tanzanians and not Bagamoyo residents alone. We should stop sowing the seeds of divisions for the sake of votes," Dr Magufuli said at a campaign stop.

Opposition politicians have also been complaining that the construction of such a huge project was done without consulting Parliament.

The Bagamoyo project will occupy 800 hectares and another 1,700 hectares of Portside Industrial Zone, which will be developed under tripartite agreement of Government of Tanzania (GoT), China Merchants Holdings International (CMHI) from China and State Government Reserve Fund (SGRF) from Oman.

The new port will have the capacity to handle 20 million containers a year when completed, compared with Mombasa's 600,000 and Dar es Salaam's 500,000 containers.

The first phase was to be completed in 2017. The initial funding of the project was expected to come from China though negotiations for funding the entire project were said to be going on.

An agreement for the initial development of the Bagamoyo Port Project was signed in March 2013 during the visit of the Chinese President Xi Jinping as part of the Tsh1.28 trillion infrastructure package deals. The agreement specified that $500 million would be designated for port financing for the year of 2013 to allow the project to start.


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