Why talks on port stalled - VIDEO

Mwanza. Talks on the proposed $10 billion Bagamoyo port have stalled because investors’ conditions were likely to deny Tanzania maximum benefit from the project, according to Tanzania Ports Authority (TPA) director general Deusdedit Kakoko.

“The conditions include investors’ demand that they be allowed to set charges for cargo passing through the port. They also want tax exemption on various goods in addition to being compensated for any losses incurred during implementation of the project,” he told The Citizen in an interview.

An initial agreement on the project was signed in 2013 during a ceremony witnessed by President Jakaya Kikwete and Chinese President Xi Jinping.

The project was to have been executed by China and Oman’s State General Reserve Fund (SGRF).

The Citizen could not get an immediate response from the Oman and Chinese embassies in Dar es Salaam after officials asked that any inquiries on the matter be sent by email. However, emails sent to the embassies had not been replied to by press time.

In November 2017, SGRF announced that the project would go ahead, adding that it entailed the construction in phases of a maritime port built to international standards.

The first phase was planned to include the construction of four berths, two of which were to have been set aside for containers, one for multiple uses and another for support services.

Since then, there has been a change of focus, with most of the efforts being directed towards rehabilitation of Dar es Salaam, Tanga and Mtwara ports.

According to Mr Kakoko, it was odd that the developers sought tax exemptions on the grounds there was insufficient cargo in the country.

“If the country has insufficient cargo, why do they seriously consider Tanzania for investment in railways and ports?

“The condition requiring the government to compensate the companies in case of losses is the worst. Who knows that they will incur losses? This demand can render the country bankrupt,” Mr Kakoko said.

He added that investigations by the government have established that the investors planned to control the port and railway transportation with an eye on copper from Zambia and cargo destined to the Democratic Republic of Congo (DRC).

“While controlling all this, taxes, calculations and audits were set to be undertaken in China. This would have been possible because they would be controlling cargo, ports and logistics,” he said.

The government was also ready to start the one-stop centre for businesses undertaken at the Bagamoyo Port.

“Surprisingly, they came with 14 new conditions, including demanding exemptions in the areas of income tax, taxes paid by individuals, local government duties and property taxes,” Mr Kakoko said.

They also asked for waiver of lands tax, workers compensation tax, skills development levy, customs duty and value added tax (VAT).

Mr Kakoko added that the investors also wanted charges related to work and residence permits be waived.

“Even it was agreed that some taxes be waived, we would have to examine the percentage of exemptions. However, it seems they wanted to invest for free, which would be akin to selling our freedom,” he said.

According to him, the doors for discussions were still wide open, noting that the interests of the nation will be prioritised during the process, execution and implementation of the project.

“We are waiting for them. We will be ready for equal participation provided they relax their conditions. They should just bring in the money and be ready to share it with the country, but they should forget about getting 100 per cent preferential treatment,” Mr Kakoko.

He said the project was significant for the country, noting, however, that the government’s wanted to see both parties benefit equally from the project.

“The country has land and human capital while investors bring in capital. It is therefore important that both sides benefit,” he said.