Monday, July 10, 2017

Plans for State over TICTS investments

PLANS are underway to have more firms operating the container terminals at the Dar es Salaam port, ending monopoly by the Tanzania International Container Terminal Services (TICTS). “It is a long way to go but the plan is still on board; there are issues to sort out before we float the tender for other companies to bid,” the Minister for Works, Transport and Communications, Professor Makame Mbarawa said in an interview. TICTS remains the sole private operator at the harbour, handling container shipments at berth eight to eleven in addition to an inland container depot at Ubungo, which was recently handed back to the Tanzania Ports Authority (TPA) following a review of the lease contract between the two parties. During the interview last week, Prof Mbarawa was clear-cut on the government’s resolve to add on more operators at the port to enhance efficiency. “Now that we have reviewed the agreement with TICTS, the move forward is to seek more players to operate the terminals at the port, the public will be notified once the arrangement are finalised,” noted Prof Mbarawa. It was after almost seven months of discussions that the lease agreement between TPA and TICTS was revised last week following instructions by President John Magufuli who made an impromptu visit at the port on September 29, last year. Dr Magufuli had instructed the two parties to assess the initial lease agreement which was to expire in 2025 to create a win-win situation between the private operator and the government. Few days after the directives were made, Minister Mbarawa formed a government negotiating team under the Tanzania Civil Aviation Authority (TCAA) Director General, Hamza Johari, to renegotiate the agreement. Other distinguished team members were Professor Palamagamba Kabudi whom President Magufuli later appointed a legislator and ultimately Minister of Justice and Constitutional Affairs. 


Tanzania's Minister for Works, Transport and Communications, Professor Makame Mbarawa

Initially, TICTS inked the 10-year lease agreement with TPA in 2000 but mid-way the contract in 2005 the private company and TPA extended the contract dubiously to 2025.  “The revised agreement between TPA and TICTS that has just been signed will be for five years and its renewal will be subjected to performance appraisal,” Prof Mbarawa remarked. Since TICTS monopoly was put to halt in 2009 it is understood that a number of companies had expressed interest to bid for the lucrative container handling services at the country’s main sea port. At that time, both the Tanzania Freight Forwarders Association (TAFFA) and Tanzania Shipping Agents Association (TASAA) had accused TICTS of underperformance. Fast-forward to September 2016, Dr Magufuli wanted the TPA and TICTS to review the agreement to have the government reaping more revenues from TICTS’s operations at the port. Under the revised contract signed last week, TICTS agreed to double the rental fee it pays to TPA to 14 million US dollars (over 30bn/-) from the current 7 million dollars (about 15bn/-). The rental fees will as well attract 3.8 per cent increment per annum. Not only that, the private container operator agreed to pay 20 US dollars (about 45,000/-) per con tainer it handles from 13 US dollars. The fees will as well be subjected to an annual increase of four per cent. TICTS has also been directed to give back to TPA a storage area it has been operating as an inland container depot at Ubungo in Dar es Salaam and tasked to ensure an increase of cargo by 6.5 per cent each year. Hong Kong’s based Hutchison Port Holdings control 51.5 per cent in TICTS while Harbour Investment Holdings and Hutchison Investment Limited control 28.5 and 15.5 per cent, respectively. The company employees hold the remaining five per cent share.

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