By Allan Olingo

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East African governments are betting on modernising their ports to ease transportation bottlenecks and compete for the regional maritime business.

On Monday, Tanzania announced that construction of the $10 billion Bagamoyo port begins in June, setting the pace of the country’s ambitious plan to have one of the most modern ports on the continent.

Kenya also announced that it had picked Toyo Construction Co Ltd of Japan for a $319 million Mombasa port container-terminal expansion project starting soon.

Djibouti, which has in the past three years inaugurated three new ports worth more than $650 million, had earlier announced that it was in talks with French shipping company CMA CGM to develop a $600 million new container terminal in its biggest port Doraleh, as seeks to become the region’s transport hub.

Djibouti’s race to modernise its ports has shifted focus from Mombasa and Dar ports, especially after Ethiopia unveiled an electric Standard Gauge Railway early this year to ease the movement of goods to and from the country’s port of Ghoubet, which serves as the main gateway for exports from Ethiopia — handling ships of up to 100,000 deadweight tonnes.

Special economic zones

The country’s port upgrades, it says, is part of its four mega ports projects “aimed at providing world-class logistics platforms for shipping…with world class facilities will vastly improve the efficiency and ease of doing business in the Horn of Africa.”

Its latest container terminal upgrade at the strategically located port of Doraleh, which connects Asia, Africa and Europe, and can currently handle 2 million tonnes of cargo a year on its bulk terminal and six million tonnes on the break-bulk terminal, is now the talk of the region with its ambitious transshipment cargo project that now threatens the dominance of the Mombasa and Dar ports.

Last year, Djibouti handled 55 per cent (4 million tonnes) of the transshipments headed to Mombasa, Dar and other Indian Ocean ports as compared with 200,000 tonne transshipments that Mombasa port handled to other ports.

Aboubakar Omar Hadi, chairman of the Djibouti Ports and Free Zone Authority, said that they hope to award the concession for the container terminal construction in July.

The country said that 15 per cent of the project’s cost will be financed through equity. Out of this, the ports authority will provide 85 per cent, with its concession partner providing 15 per cent. The rest will be financed via international institutions and banks.

“We are going to build the Doraleh International Container Terminal that will target transshipment. This is a new plan. We are in discussions with CMA CGM and we hope to break ground in September for the new container terminal project and its construction expected to take two years,” Mr Hadi said.

He added that once operational, the port terminal would boast an annual capacity of 2.4 million twenty-foot equivalent units (TEU), but subsequent expansion phases would bring that up to 4 million TEUs, the largest in the region.

Airport construction

Djibouti’s ports already serve as an entry point for cargo which is then sent by smaller vessels to ports along Africa’s eastern coast, but it is now seeking to become a sea-air trans-shipment hub for the entire continent.

It has already indicated that it will start construction of a $350 million airport later this year and expand Air Djibouti’s fleet of cargo aircrafts.

Djibouti in July last year inaugurated its $64 million port in Ghoubet, the third of four ports designed to boost the tiny Horn of Africa nation’s ability to serve as a platform and trade hub for the region.

It also opened the $90 million Tadjourah port that has an annual capacity to handle 4 million tonnes. The $690 million Doraleh Multipurpose Port, which has capacity to handle 8 million tonnes a year, including container traffic and bulk cargo was also launched last year.

“With this new world class infrastructure, Djibouti confirms its position as a major trading hub for the continent. We are proud to show the world our capacity to deliver major infrastructure projects — some of the most technologically advanced on the continent,” Mr Hadi then said.

Compensating land owners

Tanzania’s breakthrough with its Bagamoyo port now raises the competition given the scale of investment, including the its ambitious special economic zone project within this new proposed port, as it seeks to lock in its traditional Dar port customers, including Rwanda, Burundi, Democratic Republic of Congo and Uganda.

On Monday, Tanzania’s Minister for Works, Transport and Communication Makame Mbarawa told Parliament that they were in final talks with investors of China Merchants Holdings International Limited (CMHI) and the Oman government.

The EastAfrican understands that the issue of land compensation has been finalised and CMHI will now fund the compensation of land owners, something the Tanzanian government was to undertake.

The firm will also construct the port in exchange for running the Bagamoyo port as one of its overseas ports.

In return, Dar will dilute its equity stake in the project but benefit from taxes on the land and occupancy by the investors in the proposed special economic zones.

“The Bagamoyo project has been hit by delays as the talks took too long to be completed. We had to ensure that every project has wider impact to the economy,” Mr Mbarawa said.

Investment zone

Once developed, the Bagamoyo Special Economic Zone will become a strategic investment zone in the region becoming the leading shipping and logistics center attracting more than 700 industries. Some 190 industries have already been marked for development within the SEZ.

CMHI said among the projects envisaged in the Zone are industrial parks worth $120 million, a $70 million tourism Park, free port facilities that will cost $90 million, $70 million free trade zone area, science and technology parks costing $50 million, a $70 million international business centre and industrial sheds costing $20 million.

In September last year, Tanzania signed a $154 million port expansion contract with a Chinese firm Harbour Engineering Company to expand its main port in Dar. The project, once complete, should be able to reposition the Dar port as a notable competitor in the region.

Under the contract funded by a $345 million World Bank loan, Tanzania is building a Roll on/roll off (ro-ro) terminal as well as deepening seven existing berths in order to accommodate larger container ships.

This project has been divided into two parts; with the second phase involving the deepening the berths from the current eight metres to 15 metres.

Currently, Dar has only two container terminals including one run by the Tanzania Ports Authority, and the Tanzania International Container Terminal (TICTs) operated by Hutchison Ports Holdings.

All these are the lift off/lift on (lo-lo) models, which mostly involve the use of cranes, limiting their capacity and efficiency.

Port upgrade

Kenya has in the past three years undertaken port upgrading so as to offers better services than its competitors.

This week, it received the first consignment that included one new Ship to Shore (STS) Gantry crane and eight Rubber Tyred Gantry (RTG) cranes.

The port ordered four STS and 12 RTGs from Japan at a total cost of $66.8 million. It now boasts of 46 RTG cranes and 13 STSs.

The port is also awaiting delivery of four more RTG cranes next month bringing the total to 50. The other three STS cranes are under construction and will be delivered in 2021, which will see the port have 16 STS cranes.

Competitive advantage

“The recent capacity expansion including initial dredging of the port channel, berth construction, upgrading of equipment and ICT systems has given Mombasa port a competitive advantage.

“The port can now accommodate bigger vessels with larger capacities hence offering competitive services. We are currently the deepest in the region and can accommodate panamax container ships of up to 8,000 TEUs,” Kenya Ports Authority managing director Catherine Mturi-Wairi said.

“Given that the shipping industry is shifting towards larger vessels, we are also dredging the navigational and anchorage basins, and installing modern navigation aids to allow access of post panamax vessels,” Mrs Mturi-Wairi added.