Tanzania invites fresh bids for stalled $10 billion Bagamoyo port project

The Government is inviting bids from a strategic foreign investor for the planned $10 billion Bagamoyo port project earlier backed by a China Merchants Holdings International Co. Ltd, which has failed to comply by newly introduced contractual terms.

The announcement follows failure for both sides to reach to a consensus on new contractual terms for the infrastructure investment project, The BusinessWiz has learnt

When contacted for further clarification on the matter, the Minister for Works and Transport Professor Makame Mbarawa told The Business Wiz in an exclusive interview that, “both parties have not yet reached a consensus on the way forward for the project.

“The closed-door negotiations have elapsed for over a year now. Since the matter is very sensitive and do not need to rush as we need a win-win situation bearing in mind the fact that Bagamoyo port is an important facility that would help ease congestion in other ports in future”, said the Minister.

President Samia Suluhu formed a taskforce committee team last year composed of economic experts to resume the long-stalled talks about expanding the port project whose earlier contractual terms were revoked by the fifth phase government.

The head of State had commissioned fresh negotiations on 26 June 2021 during the 12th Summit of

Tanzania National Business Council (TNBC), which was held in Dodoma.

The aim was to ensure that the government comes to good terms that will benefit the nation and not otherwise.

Tanzania’s technical team of negotiators was led by the Investment Minister, and included also the

Permanent Secretaries responsible for Works and Transport, Finance and planning as well as Industry and Trade Ministries.

Others were representatives from the Tanzania Ports Authority (TPA), Export Processing Zones Authority (EPZA), Tanzania Revenue Authority (TRA) and TIB Development Bank.

With almost a year gone now, the closed-door negotiations ended last month in apparent deadlock after the Chinese firm failed to comply by new contractual conditions the sixth phase government had introduced.

Initially, the government had signed the framework agreement deal for the Bagamoyo port project on

March 24^th 2013 with prospective largest port investor which had 80 percent share and Oman’s State

General Reserve Fund

Under a three-way partnership signed, Tanzania was to get an undisclosed shareholding in the project

Apart from raising $ 28 million that compensated 2,180 registered landowners to be displaced away from an area earmarked for the project.

However, when the late President John Magufuli came into power in November 2015, he ordered an immediate suspension of the project in January 2016, saying the conditions set by the investor were tantamount to selling Tanzania to China.

Three years later in 2019, he foiled the agreement saying it was a looters’ den shrouded in grand corruption that was too exploitative and inappropriate and that its terms were not for the benefit of the country.

The late President came out and shed light to the public that, the mega project was inconceivable for the country to allow its implementation under awkward and exploitative stringent conditions and terms imposed by the investors, which could not have benefited Tanzanians.

Among the stringent conditions, which Magufuli revealed was that, the project terms required that the government should not develop any of its other ports bordering East Coast on fringes of Indian Ocean and should not have a say in its operations for 99 years instead of 33 years according to the law.

The investors would operate free of charge throughout the years and that any loses that would be incurred would be compensated by the government, and that they would not be subjected for any payment of taxes whatsoever.

There would be no special status and that should not pay the market rate for water and electricity like any other investor and that they could start any other business deemed necessary within the port without government’s approval and were open to scrutiny and regulation by relevant agencies in line with law like any other investor.

The Bagamoyo port deal with its prospective investors has become an uphill battle now for nine years

down the lane, investors have withdrawn from the formal negotiations living top government officials with hard task pinning good or bad labels on the latest developments in relation to the project.

According to the Ministry of Works, the government is currently looking for a foreign strategic investor to run the project at this time when it has officially announced a new tender to bring hope for the nation.

The multi-billion project, which broke ground, had its foundation stone laid down by former President

Jakaya Kikwete in August 2015 during the visit of the Chinese President Xi Jinping in the country.

The port, to be built in Bagamoyo, 75 km (47 miles) north of Dar es Salaam, would dwarf neighboring

Kenya’s port at Mombasa, East Africa’s trade gateway some 300 km (180 miles) to the north, and includean industrial zone and rail and road links to a region hoping to exploit new oil and gas finds.

It is meant to ease congestion at the port in the commercial capital Dar es Salaam and transform a depressed area into a trade and manufacturing hub. Yet there are practical difficulties, not least that

Bagamoyo’s port, unlike Dar es Salaam that would most likely need regular, extensive dredging.

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