How to strike a win-win balance in Dar port deal with DP World

Since then, the agreement on economic and social partnership for the development and improvement of the performance of sea and lake ports in Tanzania has seen the country divided between those who support and oppose it.

The IGA sets the stage for further negotiations on the Host Government Agreement (HGA) and lease/concession agreement before the commencement of a new chapter for cooperation between the Tanzania Ports Authority (TPA) and DP World, a multinational logistics company based in Dubai, the United Arab Emirates.

Over the past few weeks, Prime Minister Kassim Majaliwa, Attorney General Eliezer Feleshi, Works and Transport minister Makame Mbarawa and Tanzania Ports Authority (TPA) director general Plasduce Mbossa are among government officials who have issued detailed clarifications on a number of issues in the document.

The list of those who have come out in support of the IGA include business magnate Rostam Aziz, Tanzania Private Sector Foundation (TPSF) chairperson Angelina Ngalula and politician-cum-academician Kitila Mkumbo.

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

Although there could be relevant points to take home from either side, it is apparently the number of people and companies that get their daily bread through port operations which prolongs the debate as each one wants to be sure of what will happen next.

The list of stakeholders that depend on the port for their survival and who think their interests need to be safeguarded include shippers, shipping companies, inland container depots (ICDs), clearing and forwarding agents and lorry owners.

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

While the government believes an increase in the amount of cargo would mean more business for every player, including ICD operators, some players say it will all depend on how the government negotiates the local content aspect in the HGA and/or lease/concession agreement stages.

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

TPA expects that with improvement in efficiency, cargo to be handled by Dar es Salaam Port will more than double from 20.43 million tonnes in the 2021/22 financial year to approximately 56.34 million tonnes in 2032/33.

Shipping more cargo through the port could mean more shippers (importers and exporters), which implies more business opportunities for clearing and forwarding agents.

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

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

Meanwhile, Tanzania Shipping Agencies Corporation (Tasac) 2022 data puts the number of registered shipping agents in country at 29.

They get business from ship owners or chartered vessels by facilitating cargo loading and discharge at a port of call.

“An increase in the number of vessel calls at Dar es Salaam Port would mean more business opportunity,” said Mr Mbossa.

Tanzania Shipping Agents Association (Tasaa) chairperson Daniel Malongo shared similar sentiments, expressing confidence that the anticipated improvement in efficiency would enable the country to realise the full potential of its main sea gateway.

Geographically, he said, Dar es Salaam Port has huge potential, not only for the six land-locked neighbouring countries of Democratic Republic of Congo (DRC), Uganda, Rwanda, Burundi, Zambia and Malawi, but also for transshipment.

“We can be getting revenue through that way. The Dubai- based Jebel Al Port, which is operated by DP World, earns a significant amount of revenue from transshipment,” said Mr Malongo.

He added that Jebel Al Port handles 14 million containers annually compared to Dar es Salaam Port’s 800,000 containers, courtesy of modern equipment, technology and know-how.

In another development, efficiency in the clearing of containers will save money through cuts in demurrage charges, which currently stand at $25,000 (about Sh59.8 million) per day, according to TPA.

Under the anticipated efficiency improvement, it is expected that container clearance time is set to be slashed from the current 12 hours to one hour, thanks to the expected improvement in the port’s ICT systems.

This will lead to a cut in the vessel's outer anchorage waiting time from five days to two.

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

But for all the explained benefits to be realised, the government will have to be extra careful during the HGA or lease/concession agreement negotiations with the Duba-based port firm, said Tanzania Truck Owners Association (Tatoa) chairperson Elias Lukumay.

“It’s too early to comment on the matter (regarding whether local players will lose or benefit from the planned investment). Cargo volume can increase, but it will make little or no sense, if local content is not considered,” noted Mr Lukumay.

He said if they are to benefit from expected increase in port’s 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 move goods from the point of origin to the final destination. Unlike other BOLs, the TBL type permits the carrier to pass the shipment via different modes of transportation as required by the cargo.

“With TBL, we will end up being used as sub-contractors,” warned Mr Lukumay.

Business tycoon Rostam Aziz has urged Tanzanians not to be fearful of DP World investment at Dar es Salaam Port.

He voiced his optimism that there will be a large number of Tanzanians who will work with the company.

“If we are not to scare away users of our port, we need to have an investor who will strengthen and bring efficiency,” Mr Aziz said last week.

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

Article 30 of the IGA stipulates that Tanzania will implement the required legal modifications to foster a favourable investment environment.

The Tanganyika Law Society (TLS) considers that the provision, which calls for the enhancement of Tanzania's investment legal infrastructure, may have a positive impact on Tanzania.

TLS, however, is concerned about the phrasing of the article that requires the project to be stabilised in a way that is comparable and satisfactory to the parties and the Project Company.

“It is also widely known that the existing legal environment across all sectors does not favour private or Public Private Sector Partnership (PPP) investments, including the PPP law,” reads a part of the TLS’ statement availed to the media a few days ago.

TLS recommended that the government undertake comprehensive legislative and regulatory reforms sector-wise, taking cues from the Business Environment Strengthening for Tanzania Program.

Attorney General Eliezer Feleshi said the ongoing misleading on the DP World and negative perception towards the company, was unhealthy for the development of the country.

He said the matter could be perceived as Tanzania was discriminating against investors from some countries.

“Discriminatory language uttered by a section of people towards investors from some countries can tarnish the country’s image as a best destination for tourists in the content,” warned Dr Feleshi.

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

For years now, he said, Tanzania has been identifying itself as a country which is not aligned with any side and that welcomes investors from any country on the globe.

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