Tanzania’s China-backed $10bn port plan stalls

A planned $10 billion port project in Tanzania backed by China has hit an impasse, with the two sides disagreeing on terms of the infrastructure investment, a senior Tanzanian port official said on Wednesday.

In 2013, Tanzania signed a framework agreement with China Merchants Holdings International, China’s largest port operator, to build the port and a special economic zone that aims to transform the east African country into a regional trade and transport hub.

“The conditions that they have given us are commercially unviable. We said no, let’s meet halfway,” Deusdedit Kakoko, director general of the state-run Tanzania Ports Authority (TPA) told Reuters.

“It would have been a loss … they shouldn’t treat us like schoolkids and act like our teachers.”

The Tanzanian government has officially written to the Chinese port operator on the disputed terms, Kakoko said. “We are waiting for them to begin new talks. When they are ready, we will resume the negotiations.”

China Merchants said in an e-mailed statement to Reuters that many years of negotiations with the Tanzanian side had failed to result in a legally binding agreement.

“This project is a purely commercial, investment project and China Merchants Port has in its overseas investments always followed the principles of commercial feasibility and win-win cooperation,” the company said.

The Chinese foreign ministry did not immediately reply to a request for comment.

Since taking office in late 2015, President John Magufuli’s government has sought to renegotiate major deals with foreign investors in mining, natural gas, telecoms and infrastructure projects as part of a new resource nationalism drive.

The deal for the Bagamoyo port was signed in 2013 by the government of Magufuli’s predecessor, Jakaya Kikwete, during a visit of Chinese President Xi Jinping to the country. It is also financially backed by Oman’s State General Reserve Fund.

Members of Parliament demanded explanation from the government last week on delays in implementation of the project. A ground breaking ceremony for the project was held in late 2015 but actual construction of the port is yet to start.

The port, to be built in Bagamoyo, 75 kilometres north of Dar es Salaam, would dwarf neighbouring Kenya’s port at Mombasa, east Africa’s trade gateway some 300 kilometres to the north, and include an industrial zone and rail and road links to a region hoping to exploit new oil and gas finds.

It is meant to ease congestion at the port in the commercial capital Dar es Salaam and transform a depressed area into a trade and manufacturing hub. Yet there are practical difficulties, not least that Bagamoyo’s port, unlike Dar es Salaam’s, would most likely need regular, extensive dredging.