How to achieve win-win situation in Dar Port deal with DP World

The port of Dar es Salaam provides an economic lifeline for a number of individuals and companies whose interests may be at the root of the protracted debate over the recent Intergovernmental Agreement (IGA) between Tanzania and Dubai, available statistics show.

Despite repeated clarifications from the government and various other influential figures, the debate on the IGA has continued since the document was passed by Parliament last month.

Since then, the agreement on an economic and social partnership to develop and improve the efficiency of the sea and seaports in Tanzania has divided the country into proponents and opponents.

The IGA sets the stage for further Host Government Agreement (HGA) and Lease/Concession Agreement negotiations ahead of a new chapter in the collaboration between the Tanzania Ports Authority (TPA) and DP World, a multinational logistics company based in Dubai. begins. the United Arab Emirates.

In recent weeks, government officials who have issued detailed clarifications on a number of points in the document have included Prime Minister Kassim Majaliwa, Attorney General Eliezer Feleshi, Minister of Construction and Transport Makame Mbarawa and Director General of the Tanzania Ports Authority (TPA) Plasduce Mbossa .

Among those who have spoken out in support of the IGA are business tycoon Rostam Aziz, Tanzania Private Sector Foundation (TPSF) chair Angelina Ngalula and politician and academic Kitila Mkumbo.

There are also those who have openly expressed their concerns about some provisions of the agreement, including Tanzania Episcopal Conference (TEC) secretary-general Charles Kitima, former cabinet minister Anna Tibaijuka, former Chadema secretary-general Wilibrod Slaa, and law and development expert Issa Shivji.

While both sides could take home relevant points, it is apparently the number of people and businesses who get their daily bread from the port operations that is protracting the debate as everyone wants to be sure of what will happen next.

Stakeholders whose survival depends on the port and who believe their interests must be protected include shippers, shipping lines, inland container depots (ICDs), clearing and forwarding agents, and truck owners.

Official TPA statistics show that in 2022 there were 15 registered ICDs in the country. The ICDs handle about 80 percent of the 800,000 containers that pass through the port of Dar es Salaam each year, with the rest shipped directly from the port to customers.

While the government believes that an increase in freight volumes would mean more business for all stakeholders, including ICD operators, some stakeholders say it will all depend on how the government handles the local content aspect in the HGA and/ or negotiated lease/concession contract phase .

“What I can assure all players is that a focus on efficiency will open the door to more business for all players,” Mr Mbossa told The Citizen last week.

TPA expects that efficiency gains will more than double the cargo handled by the Port of Dar es Salaam from 20.43 million tonnes in FY 2021/22 to approximately 56.34 million tonnes in 2032/33.

Moving more cargo through the port could mean there are more shippers (importers and exporters), which means more business opportunities for clearing and forwarding agents.

TRA data from 2022 shows that there were 1,023 registered clearing and forwarding agents in Tanzania.

They win business from importers or exporters of cargo by facilitating the clearance of ports in Tanzania.

Meanwhile, data from Tanzania Shipping Agencies Corporation (Tasac) for 2022 put the number of registered shippers in the country at 29.

They win business from shipowners or chartered vessels by facilitating the loading and unloading of cargo at a port of call.

“Increasing the number of ships calling at the port of Dar es Salaam would mean more business opportunities,” Mr Mbossa said.

Tanzania Shipping Agents Association (Tasaa) Chairman Daniel Malongo expressed similar views, expressing confidence that the expected efficiency gains would allow the country to realize the full potential of its key sea gateway.

Geographically, he said, the port of Dar es Salaam has enormous potential, not only for the six landlocked neighboring countries of the Democratic Republic of the Congo (DRC), Uganda, Rwanda, Burundi, Zambia and Malawi, but also for handling.

“That way we can generate revenue. Dubai-based Jebel Al Port, operated by DP World, derives a significant portion of its revenue from throughput,” said Mr Malongo.

He added that thanks to modern equipment, technology and know-how, Jebel Al port handles 14 million containers annually, compared to 800,000 containers at Dar es Salaam port.

Another development is that efficiency in container handling will save money by reducing demurrage, which according to the TPA is currently US$25,000 (approximately Sh59.8 million) per day.

As part of the expected efficiency gains, container handling time is expected to be reduced from the current 12 hours to one hour thanks to the anticipated upgrade of the port’s ICT systems.

This reduces the ship’s waiting time at the outer anchorage from five to two days.

On the other hand, trucks are in most cases an unobtrusive but essential part of port logistics.

But for all the stated benefits to materialize, the government needs to exercise extra caution in HGA or lease/concession negotiations with the Duba-based port company, said Elias Lukumay, chairman of the Tanzania Truck Owners Association (Tatoa).

“It is too early to comment on this matter (whether local actors will benefit or lose from the proposed investment). Cargo volumes may increase, but there will be little or no point if local content is not taken into account,” noted Mr. Lukumay.

He said if they want to benefit from the expected increase in port efficiency, a through bill of lading (TBL) should not be encouraged.

A TBL is a type of bill of lading (BOL) that allows a shipping company to ship goods from the point of origin to the final destination. Unlike other BOLs, the TBL type allows the carrier to route the shipment via different modes of transport as needed.

“With TBL, we end up being used as subcontractors,” Mr. Lukumay warned.

Business tycoon Rostam Aziz has urged Tanzanians not to fear DP World investments in the port of Dar es Salaam.

He expressed optimism that there will be a large number of Tanzanians working with the company.

“If we don’t want to scare off the users of our port, we need an investor to strengthen it and make it more efficient,” Mr Aziz said last week.

He said that in the 1960s and 1970s, Zambia transported 100 percent of its products through the port of Dar es Salaam, but today only 25 percent of the country’s imports and exports pass through the port due to low efficiency.

Article 30 of the IGA provides that Tanzania will implement the necessary legal changes to promote a favorable investment environment.

The Tanganyika Law Society (TLS) believes that the provision, which calls for the improvement of Tanzania’s investment law infrastructure, could have a positive impact on Tanzania.

However, TLS is concerned about the wording of the article, which requires that the project be stabilized in a manner that is comparable and satisfactory to the parties and the project company.

“It is also well known that the existing legal environment in all sectors does not favor private or public-private partnerships (PPP), including the PPP law,” said part of the statement by the TLS, which was made available to the media a few days ago.

TLS recommended that the government implement comprehensive sectoral legislative and regulatory reforms, taking inspiration from the Tanzania Business Environment Strengthening Program.

Attorney General Eliezer Feleshi said the ongoing misdirection at DP World and negative perceptions of the company were unhealthy for the country’s development.

He said the matter could be seen as discrimination against investors from some countries by Tanzania.

“Discriminatory language expressed by part of the population towards investors from some countries can damage the country’s image as the best tourist destination in the content,” warned Dr. feleshi

“So do you want us to create an environment that worries investors in the sense that our country doesn’t want investors?”

For years, he said, Tanzania has identified itself as an unaffiliated country, welcoming investors from all countries of the world.

“Today you started discriminating against Arabs. This is unacceptable,” said Dr. feleshi

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