Tanzania to revive US$10b Bagamoyo Port

TANZANIA – The government of Tanzania has announced plans to revive the US$10 billion stalled Bagamoyo port project on the country’s eastern coast, in coordination with China Merchants Holdings International and Oman’s State General Reserve Fund.

Tanzania signed a deal in 2013 with China Merchants Holdings International to construct the port and a special economic zone (SEZ) that aimed to transform the country into a trade and transport hub to rival its neighbours.

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 include an industrial zone and rail and road links to a region hoping to exploit new oil and gas finds.

However, the late President John Magufuli’ ‘s government had complained that the conditions proposed by the investors were commercially unviable and the “exploitative and awkward” terms attached to the deal.

Among the conditions Magufuli disliked were requests from China that no other port be built in Tanzania, from Tanga in the north to Mtwara in the south.

The investors also wanted Tanzania to give them a guarantee of 33 years and a lease of 99 years, and they should not question whoever invested there once the Bagamoyo port became operational.

“The port 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”

In addition, Magufuli said the US$50 million given out to compensate those displaced by the new port project “did not reach the beneficiaries in Bagamoyo but was diverted to benefit few individuals in Dar es Salaam.

The Bagamoyo port project, which broke ground four years ago, would have been the largest port in East Africa and was a crucial component in China’s US$900-billion Belt and Road Initiative.

In the wake of Tanzania’s decision to opt for donor funding for mega projects, the World Bank has recently approved a US$292 million fund for infrastructure projects in Zanzibar.

The money is in addition to US$4.9 billion the World Bank had already approved to help push mega projects in the country.

The port 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’s, would most likely need regular, extensive dredging.

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