Tanzania’s Bagamoyo $11bn megaport to get flying start

BagamoyoThe government of Tanzania has announced that successful negotiation with Chinese officials will allow work to start on the $11bn Bagamoyo megaport this year, rather than January 2015, as originally scheduled.

The port is to be developed by China Merchants Holdings International, the world largest independent port operators. In the first phase of work, the quay, the container yards, the cargo terminals and all dredging work will be completed by 2017.

These facilities will then be expanded in stages over a period of 30 years, to give an eventual capacity of 20 million containers a year. This is likely to make the port the largest on the east coast of Africa, with a capability to handle roll on, roll off ships and container vessels with a 10,000 TEU capacity (these is, “new Panamax” ships that are too large to fit in the Panama Canal).

Underwriting the development is the discovery of some 200 trillion cubic feet of natural gas, which is going to make the country a leading exporter over the next decade.

Bagamoyo is seen as a Tanzania’s trump card in the sharpening struggle with other east African companies for foreign investment, export markets, industrial development and business from landlocked countries in the interior.

In particular, Tanzania is competing with the Kenyan port of Mombasa for investment and the handling of exports from Uganda, Burundi, Zambia and Rwanda. Although it looks to be in the lead in terms of port infrastructure, Kenya has taken the lead in the development of effective rail links, and Mozambique is closer to bringing its liquid natural gas deposits to market.

When completed, the port will cover about 800 hectares. Around it will be a 1,700 hectare special economic zone. The intention is to encourage set up industries that process or refine Tanzania’s raw materials, such as coffee roasting or ore processing, thereby capturing more of the value chain.

Adelhelm Meru, the director general of the Export Processing Zones Authority, which will be in charge of the zone, told journalists in Dar es Salaam recently that he wanted to attract “industries specialising in value-addition of agricultural products” which he said had been a leading area of investment under the EPZA for the past six years. He said about 55% of industries established under the EPZA dealt in agricultural and textile processing.

The zone is expected to be fully developed by 2024. Source: Global Contruction Review

Chinese President has sealed Tanzania’s Bagamoyo ‘mega-port’ project

bagamoyo-mapThe Chinese President has sealed Tanzania’s Bagamoyo project. Tanzania has laid down its claim for a future large slice of regional trade through a deal with China to build the new port of Bagamoyo in its Mbegani area, north west of Dar es Salaam, at a total cost of $10bn.

The deal was announced by the President of China, Xi Jinping, while recently visiting Dar es Salaam and forms part of a major investment by the China in the infrastructure of the Mbegani area and East African seaboard – a project to be completed by 2028 with the expectation that Bagamoyo port will supersede Dar es Salaam port as the country’s main port and container handling centre.

The new port will be built with a draft sufficient to accommodate higher capacity container vessels up to 10,000 teu and beyond, as well as possess specialised roll-on roll-off berths and other cargo berths.

The overall scale of the planned development is such that it will provide a highly competitive solution to Kenya’s port expansion plans in Mombasa and Lamu which, as well as catering for national trade, are focused on meeting the needs of surrounding landlocked countries such as Uganda, Rwanda and Burundi.

Kenya has ground out plans for a new deep water container terminal in Mombasa – now under construction – and has embarked upon major new port development at Lamu, but the Bagamoyo port plan has a stronger profile and coherence to it. The money is down and in the background are new offshore gas discoveries for Tanzania which promise to play their part in promoting a strong and enduring relationship with China.

The first-phase development of Bagamoyo port is expected to be in operation by 2017 with construction undertaken by China Merchant Holdings of Hong Kong.

There has been no discussion to-date of whether the new port will feature cargo handling terminals operated by the private or public sector. As in Kenya, this subject remains something of a ‘hot potato’ with some Tanzania Port Authority executives suggesting it was a mistake to introduce the private sector as the operator of the Dar es Salaam Container Terminal. As in Mombasa, there is a belief that the public sector could have done as well as private interests in seeking to achieve efficient container terminal operation.

This belief persists in certain circles despite the TPA taking steps to raise the calibre of executives in its organisation through the introduction of executives from the private sector and a greater overall focus on human resources.

Dar es Salaam currently handles over 9m tons of cargo per year which is equivalent to about 95% of all Tanzania’s import and export volumes. In container trade alone, growth has been over 12% per annum since 2000. Despite this, the cost of shipping to Tanzania is about 25% higher than rates to the larger competing ports in southern Africa. This is mostly attributable to port inefficiencies brought about by inadequate investment in port infrastructure.

These costs are compounded when the effects of congestion and delay are added to the total freight bill, which can account for between 20%-70% of the total delivered price, inflating the price of imports and undermining global and regional export competitiveness.

The rationale for the introduction of major new port capacity in Tanzania is self-evident – demand is outstripping available capacity. It is to be hoped, however, that new capacity will be introduced supported by a modern port management model and institutional arrangements to facilitate optimum use of this capacity at the lowest cost. Source: PortTechnology.com

Serious Regional Competition – China to build Africa’s largest port

Port of Dar es Salaam, Tanzania, West Africa. Image credit: TPA

Port of Dar es Salaam, Tanzania, West Africa. Image credit: TPA

China has announced plans for a new US$10 billion mega port in the Tanzanian town of Bagamoyo.

The new port, boasting an annual capacity of 20 million TEU, will not only become Africa’s largest box facility but will also rival the major ports of the Persian Gulf.

Dwarfing Tanzania’s current largest port in Dar es Salaam, which handles an estimated 800,000 TEU a year, the new port, northwest of the capital, will be used as a transhipment hub for raw materials coming in and out of landlocked Malawi, Zambia, Congo, Burundi, Rwanda,and Uganda.

China will also help to establish new road and rail networks in the area, whilst contributing to the upgrade of existing links. Source: Port Technology International.