Inside Tanzania’s Dar port agreement with DP World

President Samia Suluhu Hassan witnessed the signing of the Host Government Agreement (HGA) and contracts for the lease and operation of berths 4-7 and the joint operation of berths 0-3 between TPA and DP World for commercial and governmental activities at Chamwino State House in Dodoma.

Under the signed documents, DP World could potentially increase its investment to $1 billion during the concession period, alongside hinterland logistics projects.

DP World will handle roll-on/roll-off, bulk, general cargo and containers to cater for future trade demand from Eastern and Southern Africa, and connecting the regions to global markets.

The Dubai-based firm will operate berths four to seven at the port and have user rights for berths zero to three.

The parties to the agreement are hopeful that the investment will have a positive impact on Tanzania’s socioeconomic development in terms of job creation and increased access to products and services, among other benefits.

The port will connect to the hinterland of sub-Saharan Africa through a network of roads, highways, railways and dedicated freight corridors and ports, supporting the growing demand for logistics solutions across the continent and connecting businesses in the region to global markets.

The port has greatly benefited from recent investments made by the government to improve its infrastructure.

DP World will work with TPA alongside the port’s existing stakeholders to build on this progress to allow faster cargo clearing and improved cargo planning – strengthening Dar es Salaam’s critical role as the maritime gateway for green energy metals from the copper belt in southern-central Africa.

Improved efficiency will attract more shipping lines and bigger ships into Dar es Salaam, which will ultimately lead to lower ocean freight costs for Tanzanian importers and exporters.

DP World will make future investments in modernising the Port, including potential investments in temperature-controlled storage to enhance Tanzania’s agricultural sector, as well as greater connections to rail-linked logistics.

Investments will also potentially include the future development of a special economic zone together with the broader Port’s logistics sector, which will increase Tanzania’s role and influence on the future of global trade.

Speaking during the event, Sultan Ahmed Bin Sulayem said the agreement was in line with Tanzania’s strategic development plans.

The development will deliver trade opportunities for the region, connecting East Africa and broader sub-Saharan Africa with global markets, driving economic growth, job creation, enhanced access to products and service, and creating value for all our stakeholders.

“Alongside other ports that we operate, this concession agreement marks another milestone in our collective efforts to leverage DP World’s global and local expertise to enhance the region’s supply chain to support the economic growth of the entire continent,” he said.

And, according to Mr Mbossa, the contract between the government and DP World will have a duration of 30 years and the firm’s performance will be evaluated every five years.

“These contracts do not involve all port operations in Dar es Salaam or all other Tanzanian ports,” he said.

He mentioned that they has already begun the process of finding an operator for berths 8-11.

The government will receive fees and other payments from DP World, thus increasing its revenue and reducing operating costs.

Mr Mbossa said the government had been using 90 percent of revenue collected from leased areas in port operations and only retained 10 percent.

“After the signing of these agreements, the government will be able to keep more than 60 percent of all revenue as all operating costs will be borne by DP World,” he said.

Custom duties collected by the Tanzania Revenue Authority (TRA) will be based on the number of serviced ships, leading to a significant increase in revenue as more ships will be serviced.

Mr Mbossa said projections showed that by increasing efficiency there would be a boost to the number of served ships to 130 instead of the current 90.

“We expect that revenue collected by TRA at the port will increase from the current Sh7.8 trillion in 2021/22 to Sh26 trillion by 2032.”

He emphasised that the three contracts considered various issues for the benefit of the country, including operating in a specific number of berths at Dar es Salaam Port and not the entire port.

Performance appraisal

Mr Mbossa also said they would implement key performance indicators that the investor must meet.

“Current employees of TPA will have the option to either remain with TPA or move to DP World,” he said, adding that security at the port would remain the government’s responsibility.

“The investor will pay all government taxes in accordance with Tanzanian laws. Tanzanian laws will be applicable in the execution of these contracts. Tanzanians will also participate in this contract through relevant provisions such as the local content.

“The government has the right to withdraw from this contract if deemed necessary,” Mr Mbossa.

Regarding the benefits of this investment, he said it would enhance the efficiency of services provided to ships and cargo, attracting more ships and cargo to pass through Dar es Salaam Port. It will also improve services by reducing document processing time through the use of modern ICT systems that will be integrated with all port stakeholders.

Mr Mbossa said the time spent transporting cargo from the Middle East would be reduced from 30 days to 15 days. It would also stimulate other transportation sectors, such as railways and roads, due to increased cargo.

“I urge all Tanzanians in various sectors to prepare and utilise the various opportunities that will arise from this investment, including cargo transportation from the port.”

In his remarks, Prof Mbarawa, said the signing of the concession agreement marks yet another significant breakthrough in building best-in-class infrastructure in Tanzania under the Public-Private Partnership model. “With DP World’s expertise the port will play an important role supporting the creation of direct and indirect employment in various sectors such as transportation, distribution and supply chain. Importantly, the Tanzania Ports Authority will be a shareholder of the port concessionaire, and there will be no job losses for employees at the port authority,” he said.