Tanzania’s $10 billion port project threatens Mombasa hub status

Kenya faces renewed pressure to expand at the port of Mombasa and boost efficiency after Tanzania started construction work on a new $10 billion port and a special economic zone, that aims to transform the country into the regional trade and transport hub.

The new port in Bagamoyo, which will be Tanzania’s biggest, directly threatens Mombasa’s present status as the preferred trade and logistics hub in the region.

The project, backed by China and Oman, will dwarf Kenya’s port at Mombasa as Tanzania aims to capitalise on growth in a region seeking to exploit new oil and gas finds.

“The construction of the Bagamoyo port and a special economic zone is aimed at realising the government’s goal of bringing about an industrial revolution in Tanzania,” Tanzania President Jakaya Kikwete said last Friday during the ground breaking ceremony for the project.

The Bagamoyo port will be able to handle mega-ships - with a container vessel size of 8,000 twenty-foot equivalent units (TEUs) - after the first phase was completed, with room for expansion.

The whole project including roads, railways and the economic zone is expected to take 10 years to complete, but it was unclear in how many phases it will be carried out.

Bagamoyo will have the capacity to handle 20 million containers a year when completed, compared with Mombasa’s 600,000 and Dar es Salaam’s 500,000 containers.

“The sheer capacity of the Bagamoyo port should be a concern to Mombasa port managers because capacity is key in port efficiency which many traders look up to,” James Kinyua a cargo dealer in Nairobi said.

The Mombasa port handled a record one million twenty-foot equivalent units (TEUs) of cargo last year, signifying rising trade volumes in the region.

READ: Tanzania plan for $11bn port threat to Mombasa

Kenya is also building a second container terminal valued at $274 million in Mombasa to handle increased trade within the region driven by a boom in the construction industry, vast infrastructure development and an emerging middle class.

By 2016, the new terminal is projected to have a capacity of 450,000 TEU and this is expected to rise to 1.2 million by 2019.

Kenya and Tanzania are presently caught in a head-to-head race to become the preferred regional transport hub amid massive expansion projects in sea ports, connecting railway and road networks.

Tanzania earlier this year said it plans to spend $14.2 billion to construct a new rail network in the next five years, financed with commercial loans.

Tanzania, like its neighbour Kenya, wants to capitalise on a long coastline and upgrade existing rickety railways and roads to serve growing economies in the land-locked heart of Africa.

Oil and gas discoveries in Kenya, Uganda and Tanzania have turned the East African region into an exploration hotspot, but transport infrastructure in these countries has suffered from decades of under-investment.

“This will be the single biggest project ever to be implemented by the Tanzanian government since our country’s independence,” Reuters quoted Transport Minister Samuel Sitta as having said in a statement, referring to 1961.

The projects include constructing a 2,561 km standard gauge railway connecting the port at the commercial capital of Dar es Salaam to Tanzania’s land-locked neighbours, Rwanda and Burundi at a cost of $7.6 billion, Mr Sitta said.

Two additional lines, to be built at a combined cost of $6.6 billion, will connect Dar es Salaam to the coal, iron ore and soda ash mining areas in the south and northern parts of the country, he said.

Tanzania targets to increase the capacity of its main port to 28 million tonnes a year by 2020 from the 14.6 million tonnes it handled in the financial year 2013/14.

The grand infrastructure expansion plans by Tanzania could help revamp the status of the port of Dar es Salaam which eyes to outwit the rival Kenyan port of Mombasa.