Tanzania awards Chinese firms $270 million contract to build oil tanks at Dar Port

Dar es Salaam. Two Chinese firms have been awarded the contract to construct tanks and associated infrastructure for the receiving, storage, and distribution of petroleum and energy products at the Dar es Salaam Port.

This marks the latest endeavour by the government to enhance cargo handling efficiency at this vital sea gateway.

The Sh678.6 billion project, to be executed by M/S China Railway Major Bridge Engineering Group Co Ltd and M/S Wuhan Engineering Co Ltd - will involve the construction of 15 tanks that will store 420,000 cubic metres of petroleum products, according to the minister for Transport Makame Mbarawa.

"This is a historic event that started 10 years ago," said Prof Mbarawa, noting that the project will be executed within a period of two years.

Each of the 15 tanks will have the capacity to handle 30,000 cubic metres of petroleum products.

Specifically, six tanks will be designated for diesel storage, five for petrol, three for jet fuel, and one for the interface process.

Upon completion, the tanks will markedly diminish the duration ships spend offloading petroleum products at the port.

Consequently, this will curtail demurrage charges, which are fees payable to the owner of a chartered ship in the event that the consignor fails to load or discharge the ship within the agreed-upon timeframe.

According to the director general of the Tanzania Ports Authority (TPA), Mr Plasduce Mbossa, ships carrying petroleum products take an average of 11 to 12 days to unload the consignment, which may cost up to $25,000 per day as demurrage charges.

The additional costs are transferred to the final consumer through pump prices.

"The construction of tanks is expected to simplify the unloading of oil and reduce it to between three and four days. This efficiency mirrors the current operational model at Tazama, where unloading oil from the ship via single-point mooring typically takes 48 hours," he said.

“Ultimately, these improvements are expected to yield several benefits, including a potential reduction in fuel prices, the mitigation of oil loss issues at the Port of Dar es Salaam, and a decrease in complaints among oil traders,” he said.

He said it will also improve revenue collection because all oil will be received and properly measured in one place and be under the authority of the port before distribution.

Additionally, these facilities will bolster government revenue control by sealing tax evasion loopholes and simplifying the collection of income from oil products entering the country.

The oil tanks to be constructed by TPA will ensure the government maintains sufficient oil reserves.

Currently, the country's storage capacity for oil stands at a mere 15 days. And this capacity is owned by private oil companies.

This situation will also increase confidence among traders who want to export oil since they can store their oil in the port's tanks.

The construction of oil tanks will also ensure the security of oil supply and support the establishment of the Strategic Petroleum Reserve (SPR).

With enough storage facilities, Tanzania can also import petroleum products at a time when prices are low and keep them for use during times when prices have risen, thereby curbing imported inflation, Mr Mbossa said.