President John Magufuli has ordered the Tanzania Ports Authority (TPA) to hold crisis talks with Tanzania International Container Terminal Services (TICTS) as a first step towards reviewing the contract that grants the latter monopoly of container handling activities at berths 8, 9, 10 and 11. 

The contract was signed in 2000, granting TICTS a 10-year licence to offer handling services at the port’s container terminal, the Kurasini Inland Container Depot and at the four berths.

Initially, TPA performed all the functions related to container management. The contract bound TICTS to pay a fixed royalty of $3,680,000 annually, plus wharfage for each container handled.

In 2005, TPA and TICTS signed an addendum to the contract (2nd addendum) that extended the lease period from 10 to 25 years and gave TICTS an additional operational area that included berth 8 and Ubungo Inland Container Depot. This means TICTS  was now allowed to operate container handling services at port of Dar es Salaam until 2025.

The president said the so far served 16 years of the contract have not benefited the government.

“If you think a review won’t be of benefit to us, don’t hesitate to break the contract altogether,” he told the TPA.

The 2005 contract extension was done at a time when the port was experiencing serious congestion and was criticised by Members of Parliament and termed dubious.

The Tanzania Association of Freight Forwarders (TAFFA) said TICTS had not invested enough in equipment like THE cranes and trucks needed for faster offloading of containers from ships and transporting them to designated inland container depots.  

In April 2008, parliament passed a resolution requiring the government to annul the extended period of 15 years to the contract. The government has not executed that resolution to date.

In a 2014/15 report presented to President Magufuli six months ago, Tanzania’s Controller and Auditor General said that the nature of the amendment made in 2005 to the term of the lease was improper because it was prohibited by one of the clauses in the original agreement.

The report also mentioned lack of oversight by TPA as a major short coming that has been putting the interests of the government at stake.

“We noted that TPA does not have control to monitor total number of containers handled at TICTS. TPA only relies on information received from TICTS and does not reconcile this with the actual number of containers handled by TICTS”, the CAG report said.

Because TICTS is supposed to pay TPA a wharfage charge for each container that it handles, TPA’s inability to control container flow at the depot puts government revenues at stake, the CAG report suggests.

President Magufuli also ordered the expeditious purchase of cargo scanners in a move aimed at sealing loopholes for tax evasion and security risks at the port.

The president and his entourage visited a room where Customs officers who were supposed to inspect cargo electronically by scrutinising scanned images of cargo carried by trucks were not able to verify anything since the scanners were not sending images to their computers as the trucks were passing through inspection points.

“With this kind of scanning, how can you tell if containers in a truck passing through the checkpoint outside actually contain elephant tusks?” the president asked. The officers said that only two out of the four installed scanning machines were functioning. 

Magufuli gave the TPA leadership a two-month ultimatum to buy four modern cargo scanning machines to bring the total number of working scanners at the port to six.

“I want each and every piece of cargo passing through this port to be thoroughly scanned and inspected,” he said.