LACK OF INVESTMENT LEADS TO DAR PORT INEFFICIENCIES

Dodoma: The Tanzania Ports Authority (TPA) has said the lack of substantial investment at the Dar es Salaam Port is a major cause for inefficiencies, failing to compete with neighbouring ports and hence, operating below the international standards.

The TPA Director General, Mr Plasduce Mbossa, made the remarks at the historic signing event of three agreements for the investment and operation of the Dar es Salaam Port between the Tanzanian government and Dubai-based DP World at the State House in Dodoma, on Sunday.

At the signing ceremony witnessed by President Samia Suluhu Hassan, the three agreements were signed namely the Host Government Agreement (HGA) and the lease and operation agreements between the Tanzanian government and DP World.

“Despite taking various measures to improve the Dar es Salaam Port efficiencies, the port operations have remained below international standards,” he said.

He said the current performance of the Dar es Salaam Port has continued to be low when compared to most competing regional ports.

Mr Mbossa said: Many ships remain at the anchorage for a long time…for example, as we speak now, there are about 30 ships waiting at the anchorage, while 11 ships are currently being served at the port.”

He said the waiting period for a ship to dock is an average of five days while at Mombasa it is 1.25 days and Durban 1.6 days.

He attributed the port’s inefficiencies to the absence of modern Information and Communication (IT) systems that correspond to each other, citing some as insufficient area within and outside the port for cargo storage, few docks for anchorage of ships and lack of modern equipment for loading and unloading the ships, taking into consideration that technology is changing from time to time and also that they need huge investment and operation.

Mr Mbossa underscored some of the effects of Dar Port inefficiencies including ships waiting for a long time at the anchorage that pushes up the costs of using the port.

For example, he said one day that a ship spends at anchorage costs 25,000 US dollars (58m/-) and a ship might take up to five days at the dock for offloading and loading, while the international standard is only one day.

This has forced many major shippers to avoid Dar es Salaam Port, which means losses to the Tanzanian economy.

Furthermore, the situation has made the Dar Port become a feeder port thus increasing the cost of using this port and denying the country revenue that could have been used in the implementation of huge and strategic projects to boost economic growth and improve people’s living standards.

The TPA boss also noted that the inefficiencies have fuelled total route costs from abroad through the port to countries using the Dar Port.

For example, the cost of one container in transit to the Democratic Republic of Congo (DRC) is about 12,000 US dollars, which is almost twice as much as the cost in neighbouring ports of Mombasa (Kenya), Beira (Mozambique), Maputo (Mozambique) and Durban (South Africa).

The transport costs for domestic cargo is about 6,000 US dollars for a container and these are directly transferred to the final consumer. The transport cost for the same container in Mombasa Port is between 3,500 and 4,000 US dollars only.

He said to address these challenges, the government decided to start investing from its own sources but also sought out private investors to boost the efficiency of the port operations.

In the three agreements signed, namely the Host Government Agreement (HGA) and lease and operation agreements, DP World will operate berths four to seven at the Dar Port while also having user rights for berths zero to three.

Mr Mbossa stressed that the government is looking for other investors to operate berths eight to 11.

“Our ports should be operated competitively as many other global ports due to growth of the marine transport sector, changing technological environment and economic growth,” he said.

From the three contracts, the government will be getting fees and charges from DP World thus boosting its earnings and reducing operation costs.

Also from the contracts, the government will remain with 60 per cent of the total revenues as all the operation costs will be borne by DP World.

Mr Mbossa said previously, the government has been using 90 per cent of its revenue for the operations at the port and remains with only 10 per cent.

Also, the government revenue from the improvement of port services due to investment will be directly seen in the collection made by the Tanzania Revenue Authority (TRA) and other government authorities with the legal mandate to collect charges, fees and duties at the port.

For example, the projections of TRA collections due to improvement of port operations are 26.7tri/- in 2032/33 from current 7.8tri/-.

The other key issue is that the agreement will involve only berths four to seven and not the operations of the whole port, the duration of the agreement is 30 years contrary to the claims that it is for 100 years, with the investor’s performance being assessed every five years including its investment plan.

He said there will be key performance indicators that the investor must meet.

Also, there will be a partnership company to handle the port operations for which TPA will be a shareholder.

The Tanzania laws will be used in the implementation of the agreements as well and the right of the Tanzania government to withdraw is also considered.

The DG said the increased efficiency at the port will increase the number of ships served to 130 from only 90 currently.

He said also that the time spent in transporting cargo from the Middle East is set to go down to 15 days from current 30 days.

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