June 26 (Bloomberg) -- Tanzania will spend 343 billion shillings ($211 million) over the next 12 months upgrading Dar es Salaam Port as it seeks to match the efficiency of Mombasa in neighboring Kenya, the Tanzania Ports Authority said.
Improvements in the year through June 2014 will include strengthening and deepening seven berths, a new conveyor belt and silos, and construction of additional berths, Janeth Ruzangi, manager of corporate communications for the authority, said in an interview yesterday in Dar es Salaam, the country’s commercial capital.
“We need to accommodate big ships with investments in areas such as dredging,” she said. “Otherwise, we won’t be competitive and all we will be attracting is small ships.”
Dar es Salaam is the fourth-largest container port on Africa’s eastern seaboard after Durban in South Africa, Mombasa and Djibouti, according to the International Association of Ports and Harbors’ website. Tanzania could generate $1.8 billion of additional annual revenue if efficiency levels were improved to match Mombasa, the World Bank said last month.
The Tanzanian facility handles mainly agricultural products, particularly grains, while other key cargo items include fuel, copper and cobalt. The port is used by companies including A.P. Moeller-Maersk A/S, the world’s largest container line, Mediterranean Shipping Co. and Mitsui O.S.K. Lines Ltd.
In May, Transport Minister Harrison Mwakyembe said the East African country plans to boost cargo volumes by 80 percent over the next two years at the port. To reach that capacity, an investment of about $1.5 billion is needed over the next five years to improve efficiency, upgrade existing facilities and build new ones, according to Jacques Morisset, lead economist at the World Bank in Tanzania, Burundi and Uganda.
Dar es Salaam port, which services landlocked countries including Rwanda, Burundi, Uganda, Malawi, Zambia and Zimbabwe, handled about 12.1 million metric tons in 2012. The TPA forecasts it will handle 13 million tons in 2013, Ruzangi said.
Compared with the port in Mombasa, delays and additional monetary costs at Dar es Salaam are equivalent to a tariff of 22 percent on container imports and about 5 percent on bulk imports, according to the World Bank.
Tanzania faces even stiffer competition from neighboring Kenya after President Uhuru Kenyatta announced on June 20 that the country will take steps to reduce transit times from Mombasa port. Traffic at the facility, East Africa’s biggest, grew 10 percent to 21.9 million tons last year.
“Tanzania and Kenya are serving the same landlocked countries,” Ruzangi said. “Firms are going to choose to use the facilities that will handle the goods with the most speed. It is natural that we have to work towards improving our port in order to attract these firms.”
About 90 percent of Tanzania’s international trade goes through Dar es Salaam Port, according to the World Bank. Because of inefficiencies, trade costs are 60 percent higher between Tanzania and China than between Brazil and China, where the distance is almost double.
The port currently generates average revenue of 41 billion shillings a month, Mwakyembe said last month.
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