THE UNITED REPUBLIC OF TANZANIA Surface and Marine Transport Regulatory Authority

Transcription

1 THE UNITED REPUBLIC OF TANZANIA Surface and Marine Transport Regulatory Authority FINAL REPORT FOR THE CONSULTANCY SERVICE FOR THE STUDY ON IDENTIFTYING TRANSPORT POTENTIAL DEVELOPMENT AREAS (CONTRACT NO. SUMATRA/CS/06/2009/2010) Submitted by: Bureau for Industrial Cooperation College of Engineering and Technology University of Dar es Salaam P.O. Box DAR ES SALAAM Tel. Direct: +255 (22) Tel./Fax: +255 (22) or Monday, 28 February 2011

2 PREFACE This Draft Final Report is submitted to the Surface and Marine Transport Authority (SUMATRA) in fulfilment of the requirements of a consultancy contract signed on 25 th June, 2010 for a Study on Identifying Transport Potential Development Areas. The overall objective of the consultancy services was to provide necessary information to assist investment decision making on transport potential investment areas in the surface and marine transport subsectors. The present study is not only timely but is expected to be very useful. It serves the laudable function of evolving new initiatives for investment decision making and reviewing relevant policies for restoring the primacy of surface and marine transport infrastructure and services. The study team has worked tirelessly to collect, compile, and analyze the data. An attempt has been made to make a firm foundation from which investment decision making and policy initiatives can be launched for making surface and marine transport an active and vibrant transport subsector in Tanzania. The report therefore presents findings of the survey on the available infrastructure, services and plans in the surface and marine transport subsector as well as transport potential development areas and policy implications of some of the findings. We sincerely wish to thank SUMATRA for extending this opportunity to us to conduct this study. We are also thankful to the numerous stakeholders who freely participated in this study in various ways; interview, providing us with the information and data, and advice. Their inputs were useful and enabled us eventually to come up with this report. Bureau for Industrial Cooperation College of Engineering and Technology University of Dar es Salaam Dar es Salaam, Monday, 28 February 2011 Submitted by BICO i Monday, 28 February 2011

3 TABLE OF CONTENTS Page No. Preface i Table of Contents ii List of Abbreviations v Executive Summary E Introduction I Background I Study Objectives and the Scope I Study Approach I Methodology I Structure of the Report I Acknowledgement I Review of Surface and Marine TransportRelated Legal Framework on Investment II Introduction II Review of National Policies II Review of Regional Agreements II Review of Transport Institutions and the Related Legal Framework II Review of Legislation Directly Related to Promotion of Investment II Review of Legislation Regulating the Transport Sector II Summary of Findings, Recommendations and Policy Implications II Coastal Shipping Infrastructure, Services and Plans III Introduction III Coastal Ports and Shipping Services III Available Plans III Identified Potential Development Areas in Coastal Shipping III Summary of Findings, Recommendations and Policy Implications III Inland Waterways Transport Infrastructure, Services and Plans IV Introduction IV Lake Victoria Ports and Shipping Services IV Lake Tanganyika Ports and Shipping Services IV.2355 Submitted by BICO ii Monday, 28 February 2011

4 4.4 Lake Nyasa Ports and Shipping Services IV Lake Marine Services Companies IV Available Plans in Inland Waterways Transport IV Identified Inland Waterways Transport Potential Development Areas IV Summary of Findings, Recommendations and Policy Implications IV Urban Rail Transport Infrastructure, Services and Plans V Introduction V Tanzania Railway Network V Urban Rail Transport V Competitive Advantages of Urban Rail V Available Plans V Identified Urban Rail Transport Potential Development Areas V Summary of Findings, Recommendations and Policy Implications V Surface Marine Intermodal Transport Infrastructure, Services and Plans VI Introduction VI Tanzania Transit Corridors VI Water and Road Transport Interface VI Water and Rail Transport Interface VI Coordination between Rail and Road Transport Networks VI Available Plans VI Identified Transport Potential Development Areas VI Summary of Findings, Recommendations and Policy Implications VI Cost Benefit Analysis of Transport Potential Development Areas VII Introduction VII Coastal Shipping VII Inland Waterways VII Urban Rail VII Surface and Marine Intermodal Transport VII Prioritization of Investment Options Based on Cost Benefit Analysis VII Summary of Findings, Recommendations and Policy Implications VII Funding Options, Promotion Strategy and Incentive Package VIII.19 Submitted by BICO iii Monday, 28 February 2011

5 8.1 Introduction VIII Financial Resources and Options VIII Promotion Strategy VIII Incentive Package VIII.58 Appendix I: Terms of Reference Appendix II: Stakeholders Comments Appendix III: List of Stakeholders Interviewed Appendix IV: Financial Projections Submitted by BICO iv Monday, 28 February 2011

6 LIST OF ABBREVIATIONS CAPEX DRC DWT EAC EDZ GDP ICD IPO IRR MoID MSCL MTO NIT NPBT PPP PPPFU RAHCO ROA ROI SACCOS SADC SUMATRA SWOT TABOA TACOSHILI TAFFA TANROADS TASAA TAZARA TEMESA TEUs Capital Expenditure The Democratic Republic of Congo Dead Weight Tonnes East African Community Economic Development Zones Gross Domestic Product Inland Container Terminal Initial Public Offer Internal Rate of Return Ministry of Infrastructure Development Marine Services Company Limited Multimodal Transport Operator National Institute of Transport Net Profit Before Taxation Public Private Partnership Public Private Partnership Coordination Unit Railway Holding Company Return on Assets Return on Investment Savings and Credit Cooperatives Societies Southern African Development Community Surface and Marine Transport Authority Strengths, Weakness, Opportunity, Threats Tanzania Bus Owners Association Tanzania Coastal Shipping Line Tanzania Freight Forwarders Association Tanzania National Roads Agency Tanzania Shipping Agents Association Tanzania Zambia Railway Authority Tanzania Electrical, Mechanical and Electronics Services Agency Twenty Feet Equivalent Units Submitted by BICO v Monday, 28 February 2011

7 TIC TICTS TPA TSIP TRA TRC TRL VAT Tanzania Investment Centre Tanzania International Container Terminal Services Tanzania Ports Authority Transport Sector Investment Programme Tanzania Revenue Authority Tanzania Railway Corporation Tanzania Railway Limited Value Added Tax Submitted by BICO vi Monday, 28 February 2011

8 EXECUTIVE SUMMARY I. Introduction The primary objective of the study was to provide necessary information to assist investment decision making for transport potential development areas in the surface and marine transport subsectors. More particularly, the specific objectives of the study as given in the Terms of Reference (TOR) attached as Appendix I were as follows. (a) To identify critical potential areas for investment in the surface and marine transport subsectors so as to (i) Improve transport availability, reliability and accessibility for efficient movement of people and goods; (ii) Improve linkages between urban and rural areas; (iii) Stimulate economic growth; and (iv) Improve access to market bases. (b) To create awareness to potential investors. The study placed significant emphasis on stakeholders expectations and concerns. Thus, a combination of visits to almost all the available surface and marine transport infrastructure, data collection, stakeholders interview, meetings with senior officials in the stakeholders organizations, and review of available documents have all assisted in conducting the study and drawing recommendations for development of the surface and marine transport subsectors. The required data were collected from a number of institutions including various Governmental departments, quasigovernmental organizations, and the private sector. The Consultant wishes to pay special tribute to all persons met for interviews and discussions and all others who in one way or another contributed to the success of this study. II. Review of Surface and Marine TransportRelated Legal Framework on Investment A number of Government policies on investment in Tanzania were reviewed. Pursuant to this exercise the following policies were, accordingly, reviewed: The National Transport Policy, 2003 The National Road Safety Policy 2009 The National Public Private Partnership Policy 2009 Submitted by BICO E.150 Monday, 28 February 2011

9 The National Trade Policy 2003 These Policies were selected and reviewed on the ground that they provided the lead or key policy documents in as far as investment in Tanzania is concerned. It was found that the bottom line of these Policies is to demonstrate Government s commitment to involvement of the private sector in transport sector development and service provision. In particular, the Policies underscore private sector participation in the provision of safe, affordable and reliable transport infrastructure and services to the public. Besides policy review the study also reviewed the legislation directly related to promotion of investments in Tanzania. Basically, the legislation reviewed in this part gives legal effect or force to the National Policies reviewed earlier. The review covered the following legislation. The Tanzania Investment Act 1997 The Public Private Partnership Act 2010 The Fair Competition Act 2003 The East African Community Competition Act, 2006 The Special Economic Zones Act 2006 The Export Processing Zones Act 2006 The Merchant Shipping Act 2003 The Shipping Agency Act 2002 The establishment of the East African Community (EAC) by the Treaty provides another meaningful opportunity for investors interested to invest in Tanzania. Both the Treaty and the Protocol guarantee investors a bigger market for the products and services they produce. Similarly, the spirit to create an enabling environment for the private sector coupled with the strengthening of this sector is underscored in the Treaty. For example, Articles and of the Treaty stipulate, respectively, as follows: The Partner States agree to provide an enabling environment for the private sector to take full advantage of the Community. The Partner States shall endeavour to adopt programmes that would strengthen and promote the role of the private sector as an effective force for the development of their respective economies. Submitted by BICO E.250 Monday, 28 February 2011

10 Besides the promotion of the private sector the Treaty also advocates for cooperation, among the Partner States, in infrastructure and services provision. Few Articles may be cited to demonstrate this contention: In order to promote the achievement of the objectives of the Community as set out in Article 5 of this Treaty, the Partner States undertake to evolve coordinated, harmonised and complementary transport and communication policies (Article 89). Partner States shall coordinate activities with respect to the construction of trunk roads connecting the Partner States to common standards of design and in the maintenance of existing road networks to such standards as will enable the carriers of other Partner States to operate to and from their territories efficiently (Article 90). The Partner States shall harmonise their inland waterway transport policies and shall adopt, harmonise and simplify rules, regulations and administrative procedures governing waterways transport on their common navigable inland waterways (Article 94). The Protocol on the East African Community Common Market is a milestone development in the promotion and realisation of the two objectives of the East African Community highlighted above. The Protocol establishes a Common Market for the five Member states comprising the EAC. In terms of this study few Articles of the Protocol are worthy consideration. First, is Article13 on the Right of Establishment. Under this Article, Partner States guarantee the right of establishment of nationals of other Partner States within their territories. And, a national of a Partner State means a natural or legal person who is a national in accordance with the laws of the Partner States. This definition covers, as well, companies duly incorporated and registered in each Partner State including in Tanzania. As such they are entitled to the right of establishment. The right of establishment entitles a national of a Partner State to take up and pursue economic activities as a self employed person and to set up and manage economic undertaking in the territory of another Partner State. In Article 13(5) the Protocol states categorically that Partner States shall ensure that all restrictions on the right of establishment based on the nationality of companies, firms and self employed persons of Partner States are Submitted by BICO E.350 Monday, 28 February 2011

11 removed, and shall not introduce any new restrictions on the right of establishment in their territories It should further be noted that under this right of establishment, companies and firms established in accordance with the national laws of a Partner State and having their registered office, central administration or principal place of business and which undertake substantial economic activities in the Partner State shall be accorded non discriminatory treatment in other Partner States. For that reason, the Protocol urges Partner States to remove the administrative procedures and practices resulting from national laws or from agreements previously concluded between the Partner States that form an obstacle to the right of establishment. The Consultant is of the view that these provisions of the Protocol coupled with the general spirit of the Protocol seem to guarantee an almost absolute right of establishment to self employed persons or companies of one Partner State which intend to establish themselves in other Partner States. It is on this basis that Partner States are urged to remove any administrative procedures and practices resulting from national laws that form an obstacle to the right of establishment. Indeed, such administrative procedures and practices can not be removed unless the laws themselves are repealed. Thus, citizenship and labour laws cannot escape this exercise. The Protocol s call to remove any agreement previously concluded between the Partner States which form an obstacle to the right of establishment is, yet, another significant milestone. So, it is a matter of time for the EAC to identify such agreements and amend them accordingly in the spirit of the Protocol. The Tripartite Road Transport Agreement which advocates for transit services only could be one such instrument. Amendment of this Agreement to allow provision of services by local and other service providers from the Partner States will probably do away with the complaints that transport services in Tanzania are not fully liberalised. The only limitations on the right of establishment that feature in the Protocol are captured in Article 13(8) which says the right of establishment shall be subject to limitations imposed by host Partner State on grounds of public policy, public security and public health. These Submitted by BICO E.450 Monday, 28 February 2011

12 limitations which are hedged on public interest cannot, at any rate, abolish completely the right of establishment. So, for Tanzania, this public policy, public security and public health considerations should be made public and known to the Partner States as Article 13(9) requires otherwise the country will have no justification in barring nationals from other Partner States from exercising this right. The Article on free movement of services speaks the same language. Under Article 16(2) free movement of services shall cover the supply of services: From the territory of a Partner State into the territory of another Partner State In the territory of a Partner State to service consumers from another Partner State In a service supplier of a Partner State through commerce presence of the service supplier in the territory of another Partner State By the presence of a service supplier, who is a citizen of a Partner State in the territory of another Partner State And, for purposes of realising the free movement of services, Article 16(5) urges Partner State to progressively remove existing restrictions and shall not introduce any restrictions on the provisions of services in the Partner States by nationals of other Partner States. Generally, the spirit of this Article leaves it open for service suppliers from other Partner States to provide such services within the Tanzania market, such as, local marine transport on lake Victoria or Tanganyika etc. Any limitation to this accessibility must be justified on grounds of public policy, public security and public health. Nevertheless, the Protocol requires Partner States to progressively remove the existing restrictions on free movement of services. It is the Consultant s view that the right of establishment together with the right of free movement of services in Tanzania are open to all nationals of the EAC unless the Government publicly pronounces the three limitations based on public policy, public security and public health. At the same time, the Government should take deliberate measures to identify its laws which hinder the effective application of the Protocol in Tanzania and amend them accordingly. This Protocol offers investors in Tanzania, and the EAC generally the Submitted by BICO E.550 Monday, 28 February 2011

13 advantage of accessing a wider market for the goods and services they produce or render without unnecessary restriction or discrimination. The Merchant Shipping Act (MSA) is both an operational and investment related legislation in the marine subsector. The investment aspects of the Act are captured by some of the provisions discussed below and which may be of interest to investors in this sector. It is of importance to note that if a ship is to trade into the major ports of the world without encountering difficulties with the authorities, it must have a nationality to identify it for legal and commercial purposes. The nationality is obtained by registering the ship. Under section 13 of MSA, no ship shall be registered in Tanzania unless she is wholly owned by persons qualified to own a Tanzanian ship, namely; Nationals of Tanzania Individuals or corporations owning ships hired out on bareboat charters to nationals of Tanzania Individuals or corporations in bona fide joint ventures shipping enterprise relationships with nationals of Tanzania as may be prescribed Such other persons as the Minister may by order, specify Thus, it is clear from this provision that registration of a ship in Tanzania is dependent on involving Tanzania nationals. The same requirement is repeated in Regulation 5 of the Merchant Shipping (Registration and Licensing of Vessels) Regulations, 2005, (GN No. 198/2005). On meeting this qualifications and undergoing the procedure of registration as prescribed in sections 19 and 20 of MSA the ship acquires Tanzanian nationality. The qualifications for licensing a ship in Tanzania are contained in section 54 of MSA, which provides, No ship shall be licensed in Tanzania unless she is owned by any of the persons referred to in section 13. This provision demands the nationality of the ship to be Tanzanian. From these provisions it follows that Tanzania law does advocate for open registries of ships. Open registers have been offered by some states as a means of earning revenue for the flag state. The terms and conditions offered by open registers vary considerably, depending on the policy of the country but the bottomline is to offer terms and conditions that are favourable to international shippers or investors. Tanzania s policy to restrict open registries is rightly Submitted by BICO E.650 Monday, 28 February 2011

14 informed by the disadvantages that go with ships registered under open registries particularly in terms of monitoring them to see whether they comply with both national and international law. It is a matter of further study if our regulatory authority SUMATRA is adequately equipped and manned to monitor such ships if our law were to allow it. Much as open registries are not allowed in Tanzania it does not automatically follow that foreign investors in shipping are prohibited. Section 13 above makes it clear that such investors may team up with Tanzania nationals to form bona fide joint ventures and register them here in Tanzania or in other states of their choice. It may be of interest to note that way back in 1967 the governments of China and Tanzania entered into a joint venture to establish a Chinese Tanzania Joint Shipping Company known as SINOTASHIP. However, the spirit of establishing joint venture companies with foreign investors in business of sea going vessels is opposed to the coastal trading which is the major focus of this study in terms of the available terms of reference. In line with section 2 of MSA coastal trade is restricted to the carriage of goods or passengers on a sea voyage solely from any place on the coast of the United Republic to any other place or places on the coast of Tanzania. It is therefore considered that sea going vessels could be another lucrative investment area but this calls for an independent study drawing on the lessons learnt from SINOTASHIP. The Shipping Agency Act 2002, Cap 415 is a law which provides for the regulation and control of the specific business of shipping agency in Tanzania. Under section 3 of the Act shipping agency services include but not limited to the following: Arrangements for the arrival or departure of ships Arrangements for the provision of port services through port operators, Customs and other Government or semigovernmental institutions, firms or private individuals Arrangements for cargo documentation and forwarding of cargo Arrangements for procuring and processing of documents and performing activities required for dispatch of cargo Arrangements for the provisions of ship of services pertaining to crew matters Submitted by BICO E.750 Monday, 28 February 2011

15 Arrangements for the provision of ship stores, supplies, ship repairing and any other related services In so far as the provision of these services is concerned section 7 of the Act says that No person shall be registered and licensed as shipping agent unless that person is: A citizen of Tanzania; A body corporate incorporated under the Companies Act in which more than fifty percent of the share capital is held directly or indirectly by a citizen of Tanzania. This Act, in terms of provision of shipping agency services restricts the entry to Tanzanians only or in case of body corporate to companies whose majority share is held by Tanzanians. But this entry is further restricted by section 11 of the Act which provides that the Authority (which is SUMATRA) shall not issue a business licence to any applicant if the applicant, among others, is a ship owner, an operator or a charterer. This further restriction is unnecessary and it may have the consequence of impairing multimodal transport in Tanzania as explained further in chapter 6 of the Report. Ship repair is a capital intensive investment. Since the law prohibits foreign investors from pursuing this business alone, they can pair with Tanzanian local investors to establish such joint ventures provided that they are not owners, operators or charters and save the nation from the cost of having to repair its ships in foreign countries especially in Mombasa, Kenya. Facilities of this nature may also be established along the great lakes e.g. Lake Victoria, Tanganyika and Nyasa. The review of the legislation was necessary for several reasons. First, as means to attract foreign as well as local capital, the legislation offers a wide range of incentives, fiscal and nonfiscal. Secondly, the legislation guarantees investors against expropriation by the Government or any public agent unless due process of law is set in motion and, thereafter, fair, adequate and prompt compensation is paid to the investor. Thirdly, the legislation establishes institutions, like the Tanzania Investment Centre, (TIC) to specifically assist investors to establish investments in the country, that is, it is a one stop facilitation centre Submitted by BICO E.850 Monday, 28 February 2011

16 for all investors. Fourthly, this legislation promotes and protects competition in trade and commerce leave alone protection of consumers from unfair competition and misleading market conduct. Fifthly, in the case of the Protocol on Common Market, the Protocol advocates for full integration of market and, thus, urges Partner States to repeal policies and legislation which are inimical to an integrated market. Moreover, the Protocol enjoins Partner States from making any new discriminatory policies and laws. The National Investment Promotion Policy 1996 together with its associated legislation, that is, the Tanzania Investment Act 1997 provides only for tax incentives on capital goods that the investor brings in. There is no incentive on operational costs, such as fuel and spare parts which are costly items on the part of the operator. It is therefore recommended that; TIC should devise and promote widely a policy of offering incentives on operational costs to investors on a caseto casebasis especially to investors who would like to invest in the surface and marine transport projects which are environmentally friendly and have wider socio economic impacts to the society, but the projects involve high operational costs in the form of fuel, spare parts and the like. The Government should in collaboration with other Partner States of EAC review all signed Agreements which are in conflict with the smooth implementation of the Protocol on Common Market. The Government should pronounce the three limitations, namely, public policy, public security and public health so that investors from the Partner States do not claim the right of establishment and free movement of services otherwise it will have no justification in barring nationals from other Partner States from exercising this right. The Government should identify and amend accordingly all policies and legislation which are discriminatory contrary to the objectives of the Protocol on Common Market. The Government should liberalise the law on shipping agency services to pave way for multimodal transport so that Tanzania ports can competitively compete with ports in the neighbourhood. Submitted by BICO E.950 Monday, 28 February 2011

17 III. Coastal Shipping Infrastructure, Services and Plans The study attempted to provide new findings on the available coastal infrastructure, shipping services other than the findings contained in the Tanzania Ports Master Plan Study Report (TPA, 2009) and the 10 Year Transport Sector Investment Programme (TSIP) Phase 1 Report (MOID, 2008), which provide comprehensive information on existing infrastructures on major and nonmajor coastal ports in Tanzania as well as available services and plans on the improvements of their operations and infrastructure. It was found that over the last 10 years import volumes have increased by 117% whereas exports increased by 69% on Dar es Salaam port, and on average 79% of the total cargo (import, export, transhipment and bunker services) handled by the port over the last ten years have been import cargo and the share for export cargo is 16%. Figure E.1 illustrates this trend. Additionally, it was noted that on average a conservative capacity utilisation degrees for dry cargo, bulk liquid cargo, general cargo, and containerized cargo has been 0.2, 0.3, 0.3, and 2.1, respectively. Volume in DWT 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Total Import Total Export Grand Total Cargo Year Figure E.1: Trend in Dar es Salaam Port Throughput It was also noted that Tanga port has generally not handled liquid export cargo over the last 10 ten years, and each of the total import and export cargoes handled at the port over the same period accounted for 50% of grand total tonnages of the cargoes. Overall, the total volume of cargo handled at Tanga port has been around 0.24 to 0.64 of the available port Submitted by BICO E.1050 Monday, 28 February 2011

18 capacity, and for import cargo it ranges from 0.11 to 0.38 and 0.17 to 0.29 for export cargo, which indicate very low usage of the available port capacity. This trend reflects the data available between 2000 to 2009, and the low usage can be associated to the collapse of traditional export commodities, mainly sisal, tea and coffee, after the nationalization and poor management of plantations, in particular of the sisal industry and poor infrastructure links to the port s hinterland. It was further found that Mtwara port also has not handled liquid export cargo over the last 10 ten years as well, and the total import and export cargoes handled at the port over the same period of time accounted for 44% and 56% of the grand total tonnages of the cargoes, respectively. Basing on the available data from 2000 to 2009, the total volume of cargo handled at Mtwara port has been around 0.12 to 0.24 of the available port capacity, and for import cargo it ranges from 0.06 to 0.11 and 0.06 to 0.15 for export cargo, which indicate very low usage of the available port capacity as well. On nonmajor coastal ports, all cargo is loaded and unloaded manually and dhows are the primary marine vessels and are privately owned and mainly used for passenger and cargo movements. On the coastal shipping potential development areas, the study proposes two specific investments areas, that is, urban coastal shipping for the city of Dar es Salaam and coastal shipping across the Channel. Investment in these areas is supported by the stakeholders interviewed, available data and cost benefit analysis results. Dar es Salaam Urban Coastal Travel. The cost benefit analysis results show that introduction of coastal passenger services between the city centre via several stops, that is, Ununio, Bahari Beach, Kunduchi, Kawe and Msasani is financially viable. There are two alternative investment options as follow; o First, encourage the Government to construct jets and private investors to acquire and operate either large passenger vessels with a carrying capacity of a minimum of 500 passengers and 110 cars or medium vessels with carrying capacity of 350 passengers without cars. o The second option is to construct floating docks together and to purchase shipping vessels. For the purposes of implementing the option, a further Submitted by BICO E.1150 Monday, 28 February 2011

19 comprehensive study is required to establish suitable sites and type of docks to be used. Across the Channel. Introduction and/or expansion of scheduled sea ferry services between Dar es Salaam and Zanzibar, Pemba and Mafia. Formation of coastal shipping Transport SACCOS as one of the ways to improve coastal shipping services on nonmajor coastal ports. Several legislative, coordination and support measures can be designed and taken, which focuses on: Creating favourable conditions for services and the development of infrastructures on nonmajor ports. This includes supporting scheduled services and facilitating access to capital for proposed transport SACCOS. Providing incentives for the manufacturing, modernisation and repair of coastal shipping vessels locally, e.g. by developing and promoting the use of innovative concepts and technologies for the construction of new vessels. IV. Inland Waterways Transport Infrastructure, Services and Plans Lake Victoria The MSCL is among the major transporters of cargo and passengers across Lake Victoria. Despite the increase in economic activities and population within and around the Lake, MSCL has not been able to record significant growth in passenger and cargo services. MSCL passenger services trend as recorded over time reflects a decline on the number of passengers using the vessels, with the exception of the Mwanza Nansio route which is recording a significant growth. Apart from the fact that MSCL vessels are facing stiff competition from private vessel/boat operators in the market they had predominantly maintained over the years, the Consultant identified other parameters that has resulted to the MSCL passenger decline in recent years: A modal competition between the road and the inland waterways transport. Poor performance of the TRL services. A modal shift for the Muleba, Bukoba and Kemondo pasengers to and from Dar es Salaam, who are now opting for a road mode via Singida, Kahama and Biharamulo to Bukoba. Submitted by BICO E.1250 Monday, 28 February 2011

20 Frequent breakdowns of MSCL vessels, which results into longer idle stay of vessels in port pending repair of which in most cases take a longer time to accomplish. These breakdowns are often associated with the aging of the fleet. Uganda Cargo Traffic Uganda had initially been the major user of Mwanza Port between the years of 2004 and 2006 when both the marine and the railway intermodal services were owned and managed smoothly by the former TRC. By then, prior to the year 2006, Uganda had a control over the intermodal connection with three wagon ferries at her disposal i.e. MV Pamba, MV Kabarega and MV Kahwa. A number of incidences occurred during the period of , where all the three EAC member countries were busy looking at how they can improve their surface and marine transport services, where concessioning was considered to be the best option. Kenya Railways and the Uganda Railways were concessioned to a newly formed company called the Rift Valley Railways (RVR), where at the same time; the former TRC was concessioned to Rites of India forming a company named TRL. It was prior and during this transition period when a very low quality of intermodal services started at Mwanza South Port, which went on to impact on the decline of total cargo (both local and transit cargo) transiting through the Mwanza terminals as shown in Figure E.2. Figure E.2: Grand Total Cargo Traffic through Mwanza Ports (Source: TPA Mwanza Branch) Submitted by BICO E.1350 Monday, 28 February 2011

21 Available data from both TPA and MSCL, as shown in Figures E.3 to E.5, show the referred impact on the poor intermodal performance that resulted into a fall on the Uganda traffic volume transiting through Mwanza South Port. As shown in Figure 4.5, the impact is subsequently reflected on the fall of the Uganda volume, transiting through the Dar es Salaam port. Figure E.3: Uganda Import and Export through Mwanza South Port (Source: TPA Mwanza) Figure E.4: Uganda Traffic as Handled by MSCL at Mwanza Port (Source: MOID / MSCL) Submitted by BICO E.1450 Monday, 28 February 2011

22 Figure E.5: Uganda Import and Export Cargo through the Dar es Salaam Port (Source: TPA) The data show that Uganda made a big shift between 2005 and 2006, for almost the large part of her imports and exports are now being channelled through Port Mombasa in Kenya. However, Uganda is still making efforts at establishing an alternative route through Tanzania, which will sustain the national supply chain particularly after the nation found itself vulnerable to political strife during the January, 2008 Kenyan postelection scuffle, that went on to paralyze the life line of Uganda (The Northern Corridor). Kenya Cargo Traffic Kenya a member state of the EAC is one of the major trading partners to Tanzania, where industrial goods and machineries are traded across the border as well as foodstuff and other consumables. Initially before the improvement of the Sirari Mwanza Highway, Mwanza South Port used to be a preferred alternative offering a gateway for goods shipped to or from Kisumu to Mwanza South Port. As Figure E.6 shows, there has not been a significant growth in terms of an increased Mwanza throughput to or from Kenya. The figure shows a staggering record of import growth, which implies that incentives offered to member states aimed at stimulating export business among them, has continued to record a very low volume. One of the reasons behind a low volume could be highly attributed to an increase in road traffic competition, where both Submitted by BICO E.1550 Monday, 28 February 2011

23 Tanzanian and Kenyan Businessmen are using the road mode as against the traditional marine services between Mwanza and Kisumu. Figure E.6: Kenya Traffic Volume through the Mwanza South Port (Source: TPA Mwanza) Local Cargo Traffic As Figure E.7 shows, there is a significant increase in the outward trend on domestic cargo moving through Mwanza South Port i.e. Bulk Oil, Sugar, Construction Materials, Coffee, Beer and Soft Drinks, Tobacco, Foodstuffs and other consumables to various locations within and along the shores of Lake Victoria. Figure E.7: Mwanza Local Cargo Traffic (Source: TPA Mwanza) Submitted by BICO E.1650 Monday, 28 February 2011

24 Observed Challenges at the Lake Victoria Cluster Ports Lake victoria has a number of habited islands in all the regions bordering Lake Victoria, namely Mwanza, Kagera and Mara. These regions have cluster ports some of which are developed with jetties that offer frequent services to passengers and cargo on privately run boats other than the ones owned by MSCL which have daily and weekly schedules on specific routes between Mwanza, Kemondo, Bukoba three times a week, and on a daily operations between Mwanza and Nansio, Ukerewe. Despite the lack of jetties among the islands, poor and unsafe boats that are frequently used to transport passengers within the lake pose a high risk to life and properties of passengers. The marine accident that occurred in Mwanza on the early hours of the 5 th of August, 2010 involved 37 primary school children who had taken a ride on one of those unsafe boats to school, ending up with a fatal accident resulting into a loss of life to 18 students, following a boat capsize that was heavily caused by overloading under a severe August wind, where the boat skipper could not manage to control. There are restrictions on uncertified boats to engage in ferrying passengers and cargo across the cluster ports to minimize loss of life and properties in the event of marine accidents. Areas where TEMESA considers the fact that they may potentially be prone to accidents due to their long distances apart, the Agency restrict unsafe boats from engaging in ferrying passengers. An example of a cluster port that is attended by TEMESA with a single ferry, where no private operator is allowed to engage in ferrying passengers, is between the two known locations in Sengerema district, that of Kome Island and Nyakalilo Township on the shore, where the two locations are at a distance of about 6 km apart. In view of the above circumstances, the following were noted to be the common challenges facing Lake Victoria cluster ports: The need for a systematic survey on the demand for transport services, so as to enable the provision of jetties, where possible. The need for the general public and passengers in particular, to be sensitized on marine safety and on environmental issues. Submitted by BICO E.1750 Monday, 28 February 2011

25 The need for improving the types of boats that are used along and within the lake, while offering transport service to cluster ports considering the safety parameters as well as their optimum economic sizes. The creation of economic groups that will facilitate the establishment of desirable communal Transport SACCOS to enable the group own and operate medium capacity boats through suitable financing mechanism. Lake Tanganyika MSCL Operations MSCL efficient operations for both passengers and cargo are directly dependent on the efficient running of the railway network. From the Consultant s observations, on the national railway services as well as from Kigoma port operational perspective, the situation does not differ with respect to the experiences being faced by the Mwanza South port, where the railway infrastructure has an important role in the entire supply chain, as far as intermodal services are concerned. The railway subsector has been performing very badly over the last 10 years, much as it is reflected on the MSCL traffic volume shown in Figure E.8, where the decline apart from the internal MSCL challenges, is greatly attributed to a poor and dilapidated railway infrastructure which renders services that are quite below standard due to outdated equipments and the prone shortages of locomotives and wagons. Figure E.8: MSCL Traffic Volume at Kigoma Port (Source of data: MOID / MSCL) Submitted by BICO E.1850 Monday, 28 February 2011

26 The downward trend is further sustained by the withdrawal of MV Mwongozo from servicing Lake Tanganyika freight and passengers due to identified technical problems related to its stability. MV Mwongozo has since November, 2008 remained idle at the MSCL passenger terminal. As Figure E.9 shows, the MSCL steady passenger growth between 2006 to mid of the year 2007 is accrued to the fact that both MV Liemba and MV Mwongozo were operational. The withdrawal from service of MV Mwongozo, reflects a continued decline in services rendered, thus affecting the socioeconomic wellbeing of the population along the shore of Lake Tanganyika, all along to the Rukwa Region. Figure E.9: MSCL Passenger Traffic at Kigoma Port (Source of data: MSCL Kigoma) Most of the cluster ports that are south of Sigunga along the lake, do not have access to any of the surface modes (road or rail), other than depending on the inland water transport. MSCL services are linked with the TRL passenger services that often one becomes the feeder of the other. The irregular sailing schedule of MV Liemba on a twice per month, as against a single passenger train service once in a weeks time for the Kigoma residents creates an overwhelming demand for transport services, given the circumstance that TANROADS are yet to finalize the construction of a road linking Kigoma and Tabora over the Malagarasi River, where the construction of a bridge is underway. Submitted by BICO E.1950 Monday, 28 February 2011

27 Cargo Traffic As shown in Figure E.10, Kigoma port has continued to record lower levels of total cargo throughput comparatively over the years, and this has largely been the result of a poor intermodal connectivity, that is caused by the lack of adequate wagons and locomotive engines by the TRL at both ends (Kigoma and Dar es Salaam), that would have facilitated a proper transit. The trend is a reflection of a combination of a total throughput for Kigoma port, which covers import/export/local/transit for the period of /10. For example, Burundi coffee which used to be a traditional transit cargo at the Kigoma port enroute to Dar es Salaam port, for the last 20 years when the rail was perfectly functioning, has now moved to Mombasa port. Figure E.10: Total Cargo Throughput at Kigoma Port (Source: TPA Kigoma Branch) DRC and Burundi Imports through Dar es Salaam Port Figure E.11 shows that the DRC import traffic volume as monitored through the Dar es Salaam port, started to decrease in year 2008 whereas Burundi imports, though they were lower than the DRC volumes, registered a relatively growth during the same reporting period. On the other hand, Figures E.12 and E.13 show that since 2004, there has been a decline in the DRC and Burundi cargo traffic at Kigoma port despite the corresponding relatively growth in imports through Dar es Salaam port. This suggests that cargo destined to Burundi and the DRC from Dar es Salaam port have been shipped to these countries through other means of transport, and more particularly by the road transport. Submitted by BICO E.2050 Monday, 28 February 2011

28 The prevailing inefficiency of the Kigoma port necessitated the former DRC and Burundi customers whom have traditionally been using the Kigoma port both for their imports and export shipments, to opt for other alternatives either by road through Tunduma across Zambia to Lubumbashi, or by TAZARA to Kapiri Mposhi onwards for the DRC, while Burundi uses a road network from Dar es Salaam to Bujumbura via Kahama and Kabanga border into Burundi. Similarly, the TRL intermodal connectivity at Isaka faces problems. Figure E.11: Burundi and DRC imports through Dar es Salaam Port (Source of data: TPA Planning Department) Figure E.12: DRC Transit Traffic at Kigoma Port (Source: TPA Kigoma Branch) Submitted by BICO E.2150 Monday, 28 February 2011

29 Figure E.13: Burundi Transit Traffic at Kigoma Port (Source: TPA Kigoma Branch) With the vast existing opportunities offered by the DRC and Burundi traffic volume, that is potentially suitable for Kigoma port, the need for improvements on intermodal connectivity can not be over emphasized. Local Cargo Traffic On the other hand, Figure E.14 shows the domestic trade volume handled at Kigoma port through the years under consideration. The shipments that are involved on a domestic trade include foodstuffs, construction materials, agriculture inputs and other industrial consumer goods. On the other hand, Figure E.15 illustrates the throughput trend as a combination of a total throughput at Kigoma port i.e. import/export/local/transit from /10. It can be noted that there has been a gradual decline with effect from the year 2006 when the railways had shown some critical operational problems that resulted into a reduction of services between Kigoma and Dar es Salaam on cargo freight trains, while passengers under the TRL were scheduled to operate three times a week from a daily passenger train services which was later on reduced to a single trip per week currently. The deterioration in the quality of service offered by the then TRC, combined with the poor condition of road, means that Kigoma is not benefiting from the large increase in DRC and Burundi traffic handled through the Dar es Salaam port. This has a tremendous effect in terms of the socioeconomic needs of the regional population, who have limited access to other affordable means of Submitted by BICO E.2250 Monday, 28 February 2011

30 transport, due to the fact that Lake Tanganyika shoreline topography is just too unfavourable for road construction. Figure E.14: Kigoma Port Local Inward/Outward Cargo Traffic Figure E.15: Grand Total Throughput at Kigoma Port (Source: TPA Kigoma Branch) Observed Challenges on Lake Tanganyika Cluster Ports Similar characteristics appear on Lake Tanganyika cluster ports like the ones in Lake Victoria, although most of Lake Victoria Cluster ports are on habited islands, while the ones in Lake Tanganyika are basically on the shoreline, due to the fact that, Lake Tanganyika s depth limits the availability of islands. Submitted by BICO E.2350 Monday, 28 February 2011

31 Despite the lack of jetties along the Lake Tanganyika shoreline, poor and unsafe boats that are frequently used to transport passengers and cargo (Figure 4.19) within and along the lake, other observed challenges on cluster ports include. The need for investment on bigger vessels carrying both passengers and cargo between ports of Kigoma and Kasanga as well as offering transit business to and from other neighbouring countries. MSCL should explore technical options that could revive the services of MV Mwongozo, currently grounded at the Kigoma port for two years now, apart from the fact that MSCL in its corporate plan, have planned to acquire new vessels each, to all the three lakes. TPA/ SUMATRA should look into a feasible way that can be used to bring about marine safety awareness and environmental concern, to many of the passengers travelling along and across the lake. Development of a railway section from Mpanda to Karema port where a terminal at Karema will be able to offer container services to the DRC across to ports of Moba, Muliro and Kalemie. The need for encouraging the use of bigger boats through communal owning and operation to solve local transport problems to many of the cluster ports that are not served by the MSCL, which has a twice a month sailing schedule. Lake Nyasa Its inland waterways has an infrastructure system that comprises of 13 ports of which two of them at the end points appear to be the major ports, where the rest being in between forming a list of Lake Nyasa cluster ports. Tanzanian communities living along the northeast shore (some without road access due to the steep terrain) are linked by ferry services between Kiwira and Mbamba Bay ports, where the MSCL serves a number of cluster ports in between the way (Figure E.16). Submitted by BICO E.2450 Monday, 28 February 2011

32 Figure E.16: Lake Nyasa Passenger Volume Observed Challenges on Lake Nyasa Cluster Ports Since the characteristics and the formation of Lake Nyasa are similar to Lake Tanganyika as they are all related to the Great Rift Valley, cluster ports that appear on Lake Nyasa are also similar to those along Lake Tanganyika which are on most part feature a background of a very steep escarpment for the most part of the northeastern coastline, to make the construction of roads unfeasible. Most of these shore cluster ports lack other surface connectivity, save for the MSCL marine services together with other private boat operators in the lake. Despite the lack of jetties along the Lake Nyasa shoreline, poor and unsafe boats that are frequently used to transport passengers and cargo within and along the lake continue to pose a higher risk to life and properties of passengers. By enabling the boat operators acquire desirable bigger boats of a medium capacity (100 tons GRT or so) through a suitable communal financing mechanism where the government is urged to offer guarantee, preferably under the proposed community based Transport SACCOS, that could offer solution to cluster ports mobility problems with respect to gender and demographic parameters, while taking into consideration on their limited purchasing power. Submitted by BICO E.2550 Monday, 28 February 2011

33 Recommendations and Policy Implications Investments in inland waterways were identified based on the survey on the available waterways across Tanzania, stakeholders views as well as cost benefit analysis results. In consideration of these factors the Consultant makes the following recommendations. Local transport perspective Since a bigger population concentration is within and around the inland water bodies, the Consultant recommends that the government should offer support on the required infrastructure as well as helping community groups within and around the inland water bodies acquire funds to purchase modern boats preferably those manufactured locally, at affordable prices. As a pilot project, the Consultant has taken time to study the establishment, management and operational movement of the UWAMAKI group at Kigoma Kibirizi, where he was impressed of the fact that UWAMAKI was a formal organized group of Kigoma boat owners, very experienced with both local and regional trade, where the Consultant suggest that this group could shade some light on the mechanism of how the Transport SACCOS could be introduced in the country, so as to enable the provision of safer and affordable services across all the cluster ports in the inland water ways. The program and the subsequent services will simplify SUMATRA regulatory work, while promoting safe navigation across the inland water bodies. UWAMAKI therefore is to be used as a pilot project group in the establishment of a community based Transport SACCOS, where through appropriate publicity and training, could warrant the establishment of many others after being emulated elsewhere in the three lakes, to demonstrate community approaches towards solving local transport problems. The proposed project is expected to give a relief to many users of lake transport, and hence improve the level of transport services offered in terms of the size of the boats used, safety parameters and the level of appropriate technology used. It can also include training of skilful employed skippers to handle the vessels of which will be fully licensed, registered and attending scheduled inspections to determine their worthiness to remain afloat, and engage in the business of ferrying passengers and their goods. Mwanza has three established ship builders i.e. a private company named Songoro Marine Transport limited, formerly a public organization then named Pansiasi Boat Submitted by BICO E.2650 Monday, 28 February 2011

34 Builders Limited, the Kamanga Ferry Limited and the one operating at Mwanza South port using TPA facilities. Given the vast water bodies of the inland lakes that Tanzania is privileged with, deliberate measures should be undertaken to attract investors in ship / boat building both along Lake Nyasa and Tanganyika accordingly, where there are no fully fledged established boat builders nor ship repair facilities, to promote marine transport. The private sector should be encouraged to be involved actively in ownership and operations of vessels for cargo and passenger movement, construction and operations of inland ports and terminals, provision of mechanized handling systems, maintenance of navigational facilities as well as on port miscellaneous services. Regional transport perspective The Consultant is of the view that in promoting trade across inland waterways through regional routes, the demand for introducing bigger vessels with appropriate capacities and the applicable level of technology, should be looked into. In the advent of the potential growth in transit freight volumes across the region through our coastal ports, and the development plans that are aimed on revamping the national railway services, it is proposed that investments on modern multipurpose vessels with minimum capacities of 500 passengers and 350 tons be introduced. For the case of wagon ferries they should be able to effect train loads of between wagons respectively. The Government should provide conducive environment that can attract investors on shipyard and repair shops to construct facilities along the inland lakes, under the TIC or EPZ /EDZ modalities where incentives offered under the two could be equally extended to the EPZ /EDZ manufacturers. Beside the local market, the shipyards in inland lakes could attract foreign orders from neighbouring countries sharing the borders with Tanzania i.e. Mozambique, Malawi, Zambia, The DRC, Burundi, Uganda as well as Kenya respectively. Lake Victoria ferry services should be offered between Mwanza ports and Bell and Jinja ports in Uganda, as well as Kisumu port for cargo and Passengers. In the case of Lake Tanganyika, ships should ply between Kigoma and Bujumbura to take advantage of Burundi export and import trade that is recording a positive trend at the Dar es Salaam port. Similar approach is required for the connectivity between the Submitted by BICO E.2750 Monday, 28 February 2011

35 Kalemie port (DRC) and Kigoma which currently the route has lost traffic due to poor railway services between Kigoma and Dar es Salaam. The Kasanga port is potentially feasible for development to enable it assume a central hub for cargo destined to or from the DRC through Moba or Muliro ports, Rwanda and Burundi. Policy Implications Numerous legislative, coordination and support measures through regional protocols can be designed and taken, of which are aimed at stimulating investments in inland water transport such as on: Creating favourable conditions for the provision of transport services and the development of infrastructures. This includes facilitation of community groups to access the required capital for owning and operating inland water vessels through their own transport SACCOS. Incentives for the manufacturing and modernisation of the marine vessels locally, e.g. by developing and promoting the use of innovative concepts and technologies for the construction appropriate vessels that are affordable and capable of revolutionalizing the inland water transport. Training of skippers as well as sensitizing on safety and environmental concerns. Promotion of inland navigation as a successful partner in business, e.g. through more intensive publicity work; A regional coordination (EAC) or bilateral/ multilateral agreements/ arrangements between governments for the provision of appropriate technical oriented infrastructure through which the improvement and maintenance of the inland waterway network, could facilitate the movement and handling of modern cargo and passenger vessels, move across the regional ports in all the inland water bodies. V. Urban Rail Transport Infrastructure, Services and Plans There is growing interest in using rail transit, trams, metros, light rail to solve urban transportation problems, particularly road congestion and air pollution. In developing urban rail projects, a range of major cities around the world have turned to publicprivate partnership models, to leverage both public and private resources and expertise. New urban rail systems are complex, capital intensive, and typically customized to a particular city or Submitted by BICO E.2850 Monday, 28 February 2011

36 transportation corridor. Managing such complexity and the associated risks can be a daunting challenge for even the most experienced and sophisticated public authorities. Also, there has been growing interest in urban rail publicprivate partnerships (PPPs) over the past 10 years. Cities around the world from Dublin to Jakarta, from Jerusalem to Lagos, from Mumbai to St. Petersburg have recently embarked on such ventures. The record of urban rail PPPs underscores the importance of effectively allocating risk between the public and private partners. When an urban rail system is developed by a publicprivate partnership (PPP), a key factor in determining the success of the scheme is how risk is allocated between the parties. Achieving the right allocation of demand risk between the public and private sectors is critical. So is ensuring adequate physical infrastructure and integration with other modes of public transportation, both of which have a direct effect on demand. Despite the aforementioned trend worldwide, there is no city or town in Tanzania, which is operating urban rail transport. Even the situation of long distance rail transport has been worsening ever since the privatisation of the former TRC. Although there have been a lot of discussion about the possibility and the need for starting Dar es Salaam urban rail transport, the study found that way back in between 1998 and 2002 there was a plan initiated by the then Ministry of Communication to establish commuter trains in Dar es Salaam. The plan was to establish a two routes commuter system, one from the current central TRL Station to Ubungo, and the other one to Pugu. There were also plans to construct a new track line from Ubungo to Wazo Hill in Kunduchi. The project had reached implementation stage in that TRC had used TATA bus bodies to convert a few wagons into coaches ready for leasing them to potential private operator. However, towards the end of 2002 the project was unceremoniously dropped down irrespective of the sourcing expenses incurred by all parties that were involved in the project. The main reason for dropping the project was said to be the future (by then) concession of TRC to a private investor, which came to be so in Furthermore, this study found that an integral part of the Phase 3 Dar es Salaam BRT implementation proposal envisages the use of the existing railway corridor that runs from the city centre rail station, crosses Nyerere road and runs parallel to the Dodoma line before veering north at TAZARA/Buguruni to Tabata and Ubungo. However, the consultant is of the Submitted by BICO E.2950 Monday, 28 February 2011

37 opinion that instead of uprooting the sidelines to pave the way for the BRT the same can be used to revive the commuter railway transport within the city since the commuter railway services from the city railway station can be extended beyond Banana (referred to as route 2 in the following section) to areas such as Pugu and Morogoro. The consultant noted concerns among stakeholders of the TRL on the deteriorating passenger services even on the long distance routes e.g. Mwanza Dar es Salaam. It was noted that they would prefer rail transport, for both urban and interurban, to road transport because of the comparative accident records as railway transport is safer than road transport. Generally, there were stronger needs for railway transport within and between the following cities: Dar es Salaam City Dar es Salaam Morogoro Moshi Arusha Some sidelines in Dar es Salaam are extensive enough to form commuter rail infrastructure. The City centre to Ubungo side line that was made to serve the Ubungo industrial area is long enough and strategically positioned to serve as commuter railway services. Similarly, the other part of the central line track from the city centre to Banana area (Ukonga) can also be used to operate commuter services. The consultant proposes an urban rail system in Dar es Salaam to alleviate the current congestion in the city. As a pioneering project, the system routes will make use of part of the existing rail network that will have to be maintained and improved to meet the commuter rail standards. The improvements will include (see Figure E.17): Construction of at least two extra track lines at each identified terminal to facilitate shunting and possible crossing of two opposing trains. The terminal tracks are to be 150 m long, i.e. 150 m x 2 = 300 m or 0.3 m of track at each terminal. Fencing each terminal with a gate or gates to facilitate pretrip ticket purchases and minimize stoppage time at each terminal. Number of gates per terminal will be determined by the commuter approach ways configurations. Construction of a boarding/disembarking platform at each terminal with simple overhead shelter to protect commuters from sun and rain. Submitted by BICO E.3050 Monday, 28 February 2011

38 Construction of small ticket sale offices/booths at each gate for temporary cash custody. Installation of lighting system for both security and normal operation purposes. Based on the information on roadrail crossings, characteristics of the crossing environment and users, the physical and operational improvements can be made at roadrail grade crossings to enhance the safety and operation of both road and rail traffic over crossing intersections. Long term improvements may include: Construction of standard gauge (1.435 m). Construction of double track infrastructure to facilitate frequent operations. Construction of fly over roads at all railroad crossings to minimize interference with the road commuter system. Introduction of electric powered engines for more efficient motive power performance. Figure E.17: Typical intermediate proposed terminal Based on the survey findings, it is recommended that: It is possible to establish urban rail transport in the city of Dar es Salaam due to its high population and the current pressing challenges on the public transport system especially traffic congestion. Submitted by BICO E.3150 Monday, 28 February 2011

39 Two routes are proposed which will make use of part of the existing railway lines. The two routes are Kamata to Ubungo via Buguruni, and Buguruni Mwakanga (TAZARA line). The operation of the other route from Kamata to Banana via Buguruni (TRL line) will depend on the effectiveness of mitigation measures taken to avoid the interference with the existing TRL operator. Rehabilitation and improvement of the existing rail network should entail construction of two extra track lines on each side of the existing network at identified stop centres to facilitate shunting and crossing. The project should acquire 6 locomotives each pulling 4 couches. A separate body to operate and manage the commuter rail system with a wider, vision to match with the rapid expansion of the Dar es Salaam City. The vision may include the development and expansion of its own infrastructure or have a concession relationship with RAHCO or TAZARA, which will have to modify the RAHCO Act to include urban rail infrastructure development. In order to implement this proposal properly, it is recommended that a dedicated study should be carried out to identify specific areas for development of the proposed stations and appropriate ways of integrating urban rail with other passenger transport modes and more importantly on promoting a switch from private car to public transport. It is assumed that the proposed routes shall make use of the current RAHCO and TAZARA railway infrastructure. RAHCO will have to modify the RAHCO Act to include urban rail infrastructure development or concession its infrastructure to a separate body which will operate and manage the commuter rail system with a wider vision to match with the rapid expansion of cities including the development and expansion of its own infrastructure. VI. Surface Marine Intermodal Transport Infrastructure, Services and Plans Intermodal transport involves the use of at least two different modes in a trip from origin to destination in the entire transport supply chain. Intermodality enhances the economic performance of a transport chain by using modes in their most productive manner. Generally, intermodal transport involves: Submitted by BICO E.3250 Monday, 28 February 2011

40 A logistically linked system using two or more transport modes (e.g., ship, rail, and truck) with a single transport document (rate) Modes having common handling characteristics, permitting freight (or people) to be transferred between modes during a movement between an origin and a destination Cargo which do not need to be handled, just the load unit such as a pallet or a container A summary of the results of the survey on the available ports and road transport interfaces, show that all major coastal ports are connected by roads which are still in good condition whereas most of the inland waterways cluster ports have no road connectivity particularly on some sections of Lake Tanganyika and Nyasa. Where there is surface connectivity, all of the Lake Tanganyika ports are connected by unpaved roads. This implies that ports operations often come to a complete standstill during rainy season because of the poor condition of the roads which become impassable during the rainy season. The survey also revealed that the Dar es Salaam and Tanga ports are the only coastal ports that have railway connection, whereas a number of inland waterways ports have no railway connectivity with the exception of Mwanza and Kigoma. Kemondo and Musoma ports have railway marine facilities (link span) that facilitate the handling of wagon ferries attended at the port compound only. None of Lake Nyasa ports are connected by rail. As a general remark with respect to the country s intermodal linkage, (surface and marine) heavy investments on infrastructure requirements are expected before the country can realize the envisaged vision 2025 goals ushering economic and social prosperity. The intermodal connectivity as far as surface and marine transport system countrywide is concerned, looks abandoned where as per the Consultant s view, there is a need for a deliberate and immediate remedial measures to revamp the entire intermodal transport network that will act as a catalyst for traffic growth. It was also noted that an active approach towards capturing the market for transit traffic to the neighbouring landlocked countries involve the use of ICD facilities around strategic port cities/towns and terminals. Statistics from the TPA indicate that there is a growing trend in throughput for cargo destined to or from the neighbouring countries of DRC and Zambia, where Rwanda is also registering a positive growth through the Isaka station. The increased Submitted by BICO E.3350 Monday, 28 February 2011

41 cargo, however, has posed a challenge to the limited facilities currently available to connect surface and marine transport services particularly on the traditional route via the Kigoma port for the DRC and Burundi. Further, a survey on the available plans in the surface and marine interface revealed major (national and regional) projects that are being planned or are currently being implemented on unilateral/ multilateral agreements. Identified Transport Potential Development Areas Connection by Railway Transport As pointed out in the TSIP (MOID, 2008), a number of projects can be implemented to remove the critical bottlenecks along the Tanga corridor. The projects include the construction of Tanga Musoma railway. There are high agricultural potentials, tourist attractions, mineral deposits which make investment in railway line economically very viable. The challenges facing this proposal, which need to be addressed, include environmental concerns about the possible railway alignment. The development and construction of the Dar Isaka Kigali/ Msongati via Keza railway which will ultimately be a multinational venture involving Rwanda, Tanzania, Burundi, the DRC and Uganda. The Consultant is of the view that Isaka be developed as a freight depot to link the proposed railway lines, i.e. DarIsakaKigali and Tanga Musoma. Such a link can be attained by developing three new sections; a new section from Arusha to Makuyuni extending through the Minjingu Mines (with a projected output volume of 300,000 Mts per annum) and another one heading north to Lake Natron Soda Ash Deposits (projected at 200,000 Mts yearly output) can be developed as well. The proposed Arusha Minjingu section can be extended to Kiomboi westward where it is proposed that another new section links with Singida to Manyoni. Kiomboi Township will be a railway junction, where the section will connect at Isaka Railway Station to make a loop that leads to the Mwanza South Port. In addition, the TPMP 2008 report proposes a railway link from Tunduma to Kigoma via Sumbawanga and Mpanda, while the Consultant has reviewed the need for transit connectivity via the proposed section from Sumbawanga to Port Kasanga (TPA, 2009) and suggests an extension of the Mpanda section to a cluster port of Karema along the Lake Tanganyika. The construction of a railway line to Kasanga port will facilitate intermodal Submitted by BICO E.3450 Monday, 28 February 2011

42 services at Kasanga port to the DRC Ports of Kalemie, Moba and Muliro as well as Bujumbura port in the North. The route via Kasanga Port would relieve the DRC traffic going through Zambia as a middle transit country, thus save time on multiple border custom s clearance transactions and the distance covered across. Lake Victoria As noted from the previous sections, intermodal transport on Lake Victoria is challenged by the poor rail system operations, of which have of late resulted into a diversion of Uganda freight traffic through the Mombasa port and those coming through the Dar es Salaam port to be hauled by road. TRL should therefore invest in areas which will revamp its services on daily deliveries, while investors should be encouraged to invest in either ships capable of carrying a minimum of 500 passengers and 350 tons of cargoes, RoRo vessels with a similar carrying capacity, towing tug, and with barges with a similar carrying capacity. On the passenger transport services, the marine services are expected to be complemented by railway passenger services through offering marine link between the regional towns of Bukoba, Jinja, Entebbe, Musoma and Kisumu. Despite the lack of detailed statistics for cargo deliveries (mostly local) from smaller cluster ports, there is a significant amount of informal trade crossing the cluster ports within and along the lakes. Lake Tanganyika Lake Tanganyika investments call for cargoship services to and from Kassanga, Kigoma, Bujumbura and Kalemie/Moba/Muliro (in the DRC) where this is expected to stimulate trade and thereby attract more shipments destined to or from Rwanda, Burundi, and the DRC. As noted in Chapter 4, there has been a decline in the DRC and Burundi cargo traffic across Lake Tanganyika ports through Kigoma despite the corresponding relatively growth on imports through the Dar es Salaam port. This suggests that cargo destined to Burundi and the DRC from the Dar es Salaam port have significantly declined transiting through the traditional port of Kigoma along the Lake Tanganyika ports, reflecting the fact that these landlocked countries are using other means of transport, and more particularly by the road mode through Tunduma destined to the DRC as well as via Isaka, Kahama for those consigned to or from Rwanda and Burundi, respectively. There is a great need to revamp the Submitted by BICO E.3550 Monday, 28 February 2011

43 railway transport between Dar es Salaam and Kigoma, as well as installing modern cargo equipment at the port that will facilitate container trade to the catchment areas. On the other hand, private investors should be encouraged to invest in either ships capable of carrying a minimum of 500 passengers and 350 tons of cargoes, RoRo vessels with a similar carrying capacity, towing tug, and with barges with a similar carrying capacity. Similar to the expected intermodal practice at Mwanza, the Lake Tanganyika passengers coming as well as those travelling to the cluster ports along the elongated shore line with a very sharp escarpment that do not allow any surface connectivity, the need for railway and marine modal complimenting is of higher importance. The existing infrastructure gap calls for investments from the government to provide the necessary infrastructure as a basic social need. Lake Nyasa Cargo traffic across and along Lake Nyasa is more of a passenger influx rather than on cargo. There are few vessels that provide cargo services across the lake most of which are Malawi flag carriers and shuttle between Kiwira port and Nkata Bay in Malawi. MSCL, as explained in Chapter 4 of this report, has two cargocumpassenger vessels that have a limited capacity for cargo. Inland Intermodal Terminals As shown in Figure E.18, the overall throughput drawn from Tanzania Ports Authority for the Dar es Salaam port hinterland reflects the transit pattern as recorded between the year 2000 and 2008 by country. The Consultant observed that Zambia and the DRC are the major player in the Tanzanian transit market relatively, while statistics reflecting the rest of the countries using the port of Dar es Salaam i.e. Burundi, Rwanda, Malawi and Uganda have over the period recorded a relatively stagnant growth, save for the little growth as monitored specifically for Rwanda which have since continued using Isaka via the railway and road intermodal. Submitted by BICO E.3650 Monday, 28 February 2011

44 Figure E.18: Dry Cargo Throughput for Landlocked Neighbouring Countries (Source: TPA) On interviewing officials of Mwanza TPA Branch, the Consultant was shown the area earmarked for developing a container terminal at the Mwanza South Port with a dimension of 33,000 square meters that will be able to accommodate about 4,000 TEUs at 3 high. This would facilitate a maximum utilization of the intermodal connectivity between Uganda and Tanzania immediately after investments in the railway infrastructure and new wagon ferries are done to handle the anticipated Ugandan traffic that is envisaged to transit through Tanzanian coastal ports, as an alternative route to Mombasa. The infrastructure development at the Mwanza South port is expected to takeoff soon irrespective of the minimal transit traffic to Uganda, whereas TPA harbours the concept of creating capacity ahead of the anticipated demand. Improvements on the railways, as well as revamping the MSCL services would go on to attract more traffic away from the Northern Corridor, where Uganda holds 75% of the Mombasa transit traffic market share. On the other hand, Isaka should allocate additional land with a stacking area of about 12,000 square meters that can enable the terminal handle traffic destined to Rwanda, Burundi and Uganda estimated at 550,000 DWT as per the total 2009 Dar es Salaam cargo throughput. Isaka Submitted by BICO E.3750 Monday, 28 February 2011

45 ICD therefore will serve as an important transit point for onward movement of cargo to the Great Lakes Region and hinterland countries, as well as economies that lie on the Central Corridor. The Isaka Terminal will require additional equipments to cater for the envisaged growth in traffic such as one rail mounted gantry crane (RMG), two rubber tyred gantry crane (RTG), reach stackers (RS), MT container handler, two 5 tons fork lifts, two 3 tons fork lifts, and a generator. In view of the above, the consultant proposes two potential investment areas, namely Isaka ICD and a container terminal at Mwanza South Port. The Mwanza South Port will have a Container Terminal while the Isaka Station will act as a custom controlled Interchange Terminal undertaking railway marshalling work, where an Inland Container Depot is proposed thereof. These two container depots are earmarked to function as points for transit cargo, that are capable of handling consolidation or deconsolidation services, servicing the Central Corridor route where Isaka is currently serving as an intermodal terminal for goods delivered to or from Rwanda and Burundi via road (before the new rail is constructed) or rail to the Dar es Salaam port or the proposed one at Mwambani (Tanga). The proposed railway from Isaka Terminal to Kigali/ Msongati is also going to make use of this proposed expansion of the Isaka Inland Container Depot. The Mwanza South proposed Container Terminal as a facility along the central corridor is still at its conception stage, where no allocation of resources has yet been determined. Recommendations and Policy Implications This section draws the specific recommendations based on the survey findings presented in the previous sections as follows. Rehabilitate the national railway networks and the major inland ports. Establish ICDs at strategically located hub centres i.e Isaka and Katosho (Kigoma), which will facilitate the attraction of traffic to or from the coastal ports. The proposed ICD at Isaka with a stacking area of about 12,000 sq. m. will enable the railway to optimize the potential by consolidating cargo to or from Rwanda by either way road or through the proposed railway line linking Burundi (Isaka Kigali/ Msongati via Keza). The TPA proposed Container Terminal at the Mwanza South port should be designed to offer intermodal terminal services for transit traffic destined to or from Uganda Submitted by BICO E.3850 Monday, 28 February 2011

46 transiting through Mwanza. The terminal is expected to be complemented by marine and railway services offered. The final report on the agreed route for the Tanga Musoma railway is yet to be issued by the authorities, where in the event all the suggested mitigation measures may fail to satisfy environmental requirements, the Consultant suggests that the Tanga Mwanza route via Isaka to Mwanza South Port should be considered. As mentioned earlier, the connection at Isaka will open a gateway for Rwanda and Burundi, as well as Eastern DRC attain access to the Indian Ocean through both the Mwambani and the Dar es Salaam port. In this aspect, the Consultant suggests the need for incorporating Rwanda and Burundi in the MoU, so that they may also participate in the entire infrastructure layout and on the project investment, as partner states. The government through the NDC should make a review on the emerging regional developments with respect to the Mtwara Corridor Development Programs, as earlier mentioned on the impact of the Nsanje Project, which is likely to attract much of Malawi and the Zambia s traffic through the Zambezi waterways. Zambia has consecutively registered higher traffic volumes over the last 7 years, therefore leading the transit market share for the port of Dar es Salaam. Zambia has recorded a transit throughput of over 20% in 2009 against the total Dar es Salaam annual throughput (excluding liquid bulk volumes), in terms of deadweight tonnage. The Consultant is of the view that, with improved surface transport, as well as the inland intermodal facilities, appropriate measures should start to take ground particularly on legal implications that the government may be willing to license Multimodal Transport Operators (MTO), to operate competitively in the market, where MTO participation will assist the country in opening up the hinterland for the generation of traffic. Some of the advantages of MTO services refer to economies of scale (on freight chargeable), the extensive liabilities that MTO s assume in the course of delivering consignments up to final destinations, will subsequently extend or raise credibility to our ports for handling big transit volumes without any logistics incidences. Rwanda and Burundi are signatory of the UNCTAD Multimodal protocol, while Tanzania as a potential transit nation has not ratified the treaty to date. The government should review the modality affecting the operations of ICDs in the country, to bring about a meaningful capacity of our coastal ports with reference to the prevailing demand and supply of our shipping services in and around the region. Submitted by BICO E.3950 Monday, 28 February 2011

47 As a local leverage, the government should consider linking together the two organizations of the MSCL on one part, and TEMESA on the other, prior to their identification of interested investors, whom could be deterred by their current status, particularly the MSCL aged fleet. The unified unit could establish a sustainable vibrant organization. Since the inland waterways are best served by the railway mode, the Consultant advises SUMATRA to work on establishing policies that will guide stakeholders giving a threshold of about 10 years, pending the reconstruction of the National Railway Network for which laws are to be enacted, prohibiting Shippers or Transporters on delivering goods weighing more than 20 tons to destinations which exceed 500 km by road. Railway where possible should be the only permitted option. This would stimulate and sustain railway services while serving the country from excessive repetitive road and highway maintenance costs that have become extremely exorbitant. SUMATRA Act 2001 limits intermodal operations, where a carrier would have subcontracted a local transporter to facilitate an overland intermodal delivery to destination through a Multimodal Transport Document. It does not permit such an arrangement, where the Consultant considers the negative implications on creating a more competitive environment to national coastal ports, where this would have guaranteed a linear supply chain handled with professionalism through the entire customs clearance and the overall delivery processes. The government should consider exercising flexibility to shippers and/or carriers in deciding the delivery modality with particular essence on large consignments that could largely offer convenience to the consignees in terms of discounts freight bargains, etc. However, the applicability of this approach would call for the maximum efficiency to our ports, as well as adequate availability of indigenous intermediary organizations that will be contracted by the MTO on hiring Clearing Agents as well as providers of overland transport services, and their immediate interchange service providers elsewhere around. For MSCL to improve its services along the three lakes, appropriate rates should be charged for services rendered, of which are to be based on commercial principles. This will enable MSCL realize financial sustainability and consequently ensure a high quality of service to its clients. Submitted by BICO E.4050 Monday, 28 February 2011

48 VII. Cost Benefit Analysis of Transport Potential Development Areas On reviewing the cost benefit analysis, it was necessary to critically review the investment capital for each option and the associated profitability, including key financial ratios in order to determine the most optimal investment out of the following options. Costal shipping involving the provision of a vessel which can carry both passengers and motor vehicles by the private sectors where the construction of permanent jetties is done by the Government. Coastal shipping involving vessels for passengers without carrying vehicles Coastal shipping with the provision of floating docks Coastal shipping across the channel, i.e. Dar es Salaam Zanzibar Inland waterways transport on Lake Victoria Inland waterway transport on Lake Tanganyika Urban Train Mwanza Container Terminal Isaka ICD On the basis of the summary of results shown in Table E.1, it can be noted that out of the nine investment options that were subjected to cost benefit analysis only six investment options are cost effective and profitable. Shipping across the channel was found to be the most profitable investment option in the area of coastal shipping. Detailed projected financial cashflow of each investment option is shown in Appendix IV. Investment Area Table E.1: Summary of Investment and Returns of identified Areas CAPEX (Biln) ROI ROA IRR Loan Rate Tenor COSTAL SHIPPING Permanent Jets & Large Vessel % 14.30% 8% 10 yrs Floating Docks % 10 yrs Without Car carrier % 10.95% 8% 10 yrs Across the Channel % 16.00% 10 yrs TRAIN Urban Train % 13.70% 8% 10 yrs SURFACE & MARINE INTERMODAL 10 yrs Isaka ICD % 17.09% Mwanza Container Terminal % 35.12% 8% 10 yrs Submitted by BICO E.4150 Monday, 28 February 2011

49 The financial viability demonstrated in the areas of coastal shipping investments and urban train has assumed that the Government will bear the costs of constructing and maintaining the supportive infrastructure e.g. land acquisition, construction of jetties, provision of a floating dock, railways tracks, etc, given the social benefits associated to these investments. Coastal shipping options which were found to be financially viable involve the use of a large vessel with a minimum of 500 passengers and 110 motor vehicles carrying capacity, shipping across the channel with a 350 passengers carrying capacity vessel, and use of a floating dock. However, shipping across the channel was found to be the most profitable investment option in the area of coastal shipping. The other investment options which were financially viable are the urban rail transport option, Mwanza South Container Terminal and Isaka ICD. The PPP arrangement is worth consideration here, they leverage resources by taping resources from both the private and the public thereby minimizing the gearing burden of the project. Some of the proposed investment options were found to be financially unviable because of the following main factors. Low vessel capacity Unlike the vessels which carry vehicles, of which will generate additional income, this vessel relies only on passenger fares Low fares charged to the passengers against the high operating While acknowledging and appreciating the role of SUMATRA in setting and regulating fare rates, the process nevertheless, should be revisited to make it responsive to the demands of market forces and inflation. SUMATRA can borrow a leaf from EWURA on this aspect, where prices are tracked and operators (petrol related) are adjusted accordingly to allow the benefit to be transferred to the operators. Recommendations Basing on the cost benefit analysis results, the following four identified transport potential development areas in the surface and marine transport subsectors are recommended for implementation. Submitted by BICO E.4250 Monday, 28 February 2011

50 Coastal Shipping Investment in coastal shipping, which is financially viable, has been divided into two components. First, Dar es Salaam urban coastal travel and, secondly, travel across the channel. Dar es Salaam Urban Coastal Travel o Introduce coastal passenger services running from Mbweni to the city centre via several stops, that is, Bahari Beach, Kunduchi, Kawe and Msasani. In order to implement this option, the Government should construct the infrastructure required for the operations of sea ferries namely jetties/ docks and encourage investors who will provide coastal passenger services to acquire large passenger vessels with a minimum carrying capacity of 500 passengers and 110 cars. For the purposes of providing suitable floating dock, a further comprehensive study is needed to determine the coastal behaviour that will determine a suitable type of dock to be used or constructed at the designated areas. Across the Channel. This was the most viable investment option among the coastal shipping options. It involves the following: o Introducing and/ or expansion of scheduled sea ferry services between Dar es Salaam and Zanzibar, Pemba and Mafia. o Encouraging investors to secure vessels with carrying capacity ranging from 200 to 350 passengers excluding cars. Inland Waterways Transport Investments in inland waterways were found to be financially unviable. However, the following specific recommendations are drawn based on socioeconomic considerations. Although financial analysis renders investment in the three lakes financially not viable due to operational costs, the Consultant recommends the introduction of passenger and cargo scheduled services on Lakes Victoria, Tanganyika and Nyasa. In Lake Victoria, services should be offered between Mwanza and Port Bell and Jinja all in Uganda as well as to Kisumu (Kenya) and Musoma. In the case of Lake Tanganyika, ships should ply between Kigoma and Bujumbura to take advantage of Burundi export and import trade that is recording a positive trend at the Dar es Salaam port. Submitted by BICO E.4350 Monday, 28 February 2011

51 Urban Rail Transport The Consultant having made a review and analysis of the various urban areas traversed by rail transport came up with the following recommendations: Urban rail transport should be established in the city of Dar es Salaam due to its high population and the current pressing challenges on the public transport system especially traffic congestion. Two routes are proposed which will make use of part of the existing TRL and TAZARA rail standards. TRL routes are Kamata to Ubungo via Buguruni and Kamata to Banana via Buguruni whereas the TAZARA route is from Buguruni (TAZARA) to Mwakanga. Rehabilitation and improvement of the existing rail network should entail construction of two extra track lines on each side of the existing network at identified stop centres to facilitate shunting and crossing. The project should acquire 6 locomotives each pulling 4 couches On the basis of the financial performance analysis, this model is highly recommended for investment out of the four areas. Surface and Marine Intermodal On the basis of the cost benefit analysis results, the Consultant recommends the establishment of: An ICD at Isaka with a stacking area of about 12,000 sq. m. to enable the terminal to handle all traffic destined to and from Rwanda, and Burundi and Uganda. A Container Terminal for Mwanza South port designed to serve as an intermodal terminal for goods destined to and from Uganda via rail or road from the Dar es Salaam port. For effective utilisation of the ICD at Isaka, the Consultant proposes that both the Container Terminal at Mwanza and the newly proposed Isaka ICD call for an approach towards ensuring that the existing TRL line between Dar es Salaam and Mwanza via Isaka is rehabilitaed and a new section be built to link Tanga port and Isaka so as to attract cargo to and from the hinterland of both Dar es Salaam and Tanga ports. The ICD will also act as a hub for the envisaged DarIsakaKigali/ Msongati via Keza railway. For example, Burundi coffee, which used to be a traditional transit cargo at the Kigoma port enroute to Dar es Submitted by BICO E.4450 Monday, 28 February 2011

52 Salaam port for the last 20 years when the rail was perfectly functioning, has now moved to Mombasa port. Policy Implications The National Investment Promotion Policy 1996 together with its associated legislation, that is, the Tanzania Investment Act 1997 provides only for tax incentives on capital goods that the investor brings in. There is no incentive on operational costs, such as, fuel and spare parts which are costly items on the part of the operator. All the proposed investments in the four areas will require investors cum operators to incur operational costs in form of fuel and spare parts purchases. The Consultant recommends that investors in the four areas should be granted incentives on operation costs. Since inland waterways are best served by a railway intermodal, the Consultant advises SUMATRA to issue directives to Stakeholders (Shippers) that will deliberately reduce modal competition, and give the railway mode the exclusive right to transport/ haul cargo weighing over 20 tons to destinations exceeding 500 km where there is a railway track, by offering a 5 10 year threshold, pending the perfection of the national railway system. This directive is expected to serve the country from repetitive road maintenance caused by truck overloading, which ultimately are the major causes of highway pavement damage. With the increased volume of the transit trade across the ocean ports of Tanzania, isn t it the right time for SUMATRA to consider allowing the licensing of MultiModal Transport Operators (MTO or NVOCCs) where these companies could assist in offering liabilities to cargo in transit, in the event of any loss or damage to cargo, thus build credibility to users and hence attract most of the landlocked customers. TRL, as noted by the Consultant, accepts goods at owners risk, the reason why customers considers TRL as the last option irrespective of the costs. VIII. Funding Options, Promotion Strategy and Incentive Package Financing Sources and Options Having reviewed such parameters as the basis of the financing structure, efforts were made to identify various available financing structures so as to come up with either a single structure or a Submitted by BICO E.4550 Monday, 28 February 2011

53 combination of various structures for recommendations as financing models of each investment plan. The reviewed financing options included: o Public private partnership o Public private partnership and debt o Debt financing Senior Debt Mezzanine Debt Combination of Senior and Mezzanine Debt o Equity financing o Combination of debtequity financing o Public financing through either Infrastructure Bonds or Initial Public Offer (IPO)s of shares On the reviewed financing options, the following options have been identified and selected as the best options suitable for financing of the identified investment opportunities either as single option or combination of several options. Table E.2 presents the investment areas and the identified option and source for financing. Table E.2: Financing Sources and Options S/N Investment Area CAPEX Proposed Funding Proposed Sources Structure D/E Ratio 1 Costal shipping Across the Channel Equity, Debt, PPP 40:60 Private Investors, banks, Public 2 Mwanza Container Equity, Debt, PPP 40:60 Private Investors, banks, Terminal Public 3 Urban Train Equity, Debt, PPP 40:60 Private Investors, banks, Public 4 Isaka ICD Equity, Debt, PPP 40:60 Private Investors, banks, Public Promotion Strategy Based on the diversified nature of the areas of investment, efforts were made to design an integrated advertising modal with integrated themes targeting each segment of the targeted investors namely, Local, Regional and International Investors. The communication thematic has Submitted by BICO E.4650 Monday, 28 February 2011

54 therefore followed the same pattern. Figure E.19 illustrates the planned outreach, indicating the targeted segment and medium to be used. Thus, the following 3 Pillars guided our Rebranding Efforts Local Investors 1 Integrated Thematic Advertising TV, Radio, Newspaper Brochures 2 3 Regional Investors Integrated Outreach International Investors Integrated Outreach Figure E.19: Promotion Strategy The following medium of communication has been identified to allow maximum outreach: Television Radio Newspapers (local, regional and international such as Economist) Brochures Direct Contact (to identified investors) Website To achieve good results of promotional programme and for it to have the desired impact, we propose a 100 Amplification programme to complement the implementation programme. After 100 days earmarked for the programme, an evaluation should be carried out to identify Submitted by BICO E.4750 Monday, 28 February 2011

55 responses and outcome of the programme. Non responsive areas should be identified and where possible the programme be repeated. Incentive Package The investment incentive role for all business sectors in Tanzania is vested upon Tanzania Investment Centre under the Tanzania Investment act, The investment incentives offered are categorized into two main areas namely fiscal and nonfiscal incentives. Fiscal incentives The Fiscal Incentives are available in two main areas: Import duty and VAT exemption on project capital goods. Import Duty Draw Back Scheme. Under this scheme, refund of duty charged on imported inputs used for producing goods for export and goods sold to foreign institutions and its agencies operating in Tanzania is made to the investor. The existing tax incentives structure falls under the Tanzania Investment Policy, 1996 and the Tanzania Investment Act 1997 and are pegged on capital goods mobilised by the investor for investment in the designated area. No tax incentives are provided on operating costs, such as fuel and spare parts. The review of cashflow on all investment options that were subjected to cost benefit analysis in Chapter 7 indicates a very high operational costs because of large amount of fuel consumed by the envisaged surface and marine vessels. Nonfiscal incentives Under this category, incentives include: Immigration (i.e. allowed working permits) quota of up to 5 people Guaranteed transfer of: o Net profits or dividends of the investment o Payment in respect of foreign loans o Remittance of proceeds net of all taxes and other obligations o Royalties fees and other charges o Payment of emolument and other benefits to foreign personnel Submitted by BICO E.4850 Monday, 28 February 2011

56 Strategic Investor Status For a big project of over US$ 20 million offering specific/great impact to the society or economy, investors can request for special incentives from the Government. All investments options under consideration are qualified for these incentives. Most of the projects under review, however, are of turnkey nature and may qualify for the Category No. 3 on Strategic Investor Status where projects with investments exceeding USD 20 million with both economic and society impact may request for special incentives from the Government. The review of cashflow on all modals indicates a very high operational costs on fuel, since tax exemption has already been granted on capital goods under the existing incentive, the Consultants proposes that a special incentive be requested on the waiver of taxes of fuel and lubricant products to assist the operators to reduce the high operating costs resulting from fossil fuel. Proposed Incentives In reviewing the operations and viability of projects proposed in the areas of costal shipping, inland waterways, surface and marine intermodal and urban rail transport, the most costly item in operations is the fuel. This study found that about 60% of the cost components of fuel cost is from various taxes and levies charged on fuel by the Government. The Consultant, therefore, recommends that the Government should consider providing special incentives on operating costs, especially on fuel, for such projects with high social economic impact to the society. On the basis of the financial analysis done by the Consultant, most of the reviewed projects which are currently financially unviable could become viable if the fuel cost element is lessened from the operation costs, thereby allowing attraction of investment and social benefits that are associated with the reviewed investment options. It is worthy noting that transport fares and charges in Tanzania are highly influenced by the following major factors namely: Depreciation of the Tanzania shilling against major currencies and in particular USD which is the main import currency. Increase in fuel prices resulting from international price changes or as result of depreciation of local currency against the USD used to import the fuel Local taxes Submitted by BICO E.4950 Monday, 28 February 2011

57 Review by the Consultant has shown that Tanzania shilling has continued to depreciate since 2000 from TZS 800/USD1 to TZS1500/USD 1 by November 2010, a depreciation of over 76% in nine years as illustrated in Figure E.20. Equally fuel per litre has continued to rise as shown in Table E.3. The Depreciation of the local currency also affects prices of spare parts and associated accessories which are imported through major foreign currencies. Local taxes would affect transportation fares where new taxes either national or local government tax are imposed direct or indirectly to the operations of the transport sector. It is important therefore that SUMATRA as a regulator sets up a mechanism where review of fares to accommodate such changes brought by the market forces may be accommodated on time so as to ensure that private operators adjust the fares to cushion any loss that may be brought about by the above mentioned factors. Figure E.20: USD/TZS Mean Exchange Rate, (Source: Bank of Tanzania) Table E.3: Fuel Price (TZS) Item Jan09 Dec09 Feb10 Jun10 Nov10 Indicative Price 1, , , , ,673.0 Price Cap 1, , , , ,799.0 Source: EWURA Price for Dar es Salaam Submitted by BICO E.5050 Monday, 28 February 2011

58 CHAPTER ONE INTRODUCTION 1.1 Background In Tanzania the contribution of transport to Gross Domestic Product (GDP) accounts for about 6%. Transport costs are estimated to account for about 10% of the total household expenditures. Improvements in transport services in terms of availability, reliability and accessibility will therefore significantly reduce the household expenditures on transport services and improve the contribution of transport to the GDP. The Surface and Marine Transport Regulatory Authority (SUMATRA) is a multisectoral regulatory Authority established by the Act of Parliament No. 9 of 2001 to regulate Rail, Road and Maritime transport services. One of the duties of SUMATRA is to promote availability of regulated services to all consumers including low income, rural and disadvantaged consumers. It is with a view to promote transport availability, reliability and accessibility that SUMATRA decided to conduct a study on possible investment opportunities in the surface and marine transport subsectors. 1.2 Study Objectives and the Scope The primary objective of the consultancy services was to provide necessary information to assist investment decision making for potential investment areas in the surface and marine transport subsectors. More particularly, the specific objectives of the study as given in the Terms of Reference (TOR) attached as Appendix I, were as follows. (a) Identify critical potential areas for investment in the surface and marine transport subsectors so as to (i) Improve transport availability, reliability and accessibility for efficient movement of people and goods; (ii) Improve linkages between urban and rural areas; (iii) Stimulate economic growth; and Submitted by BICO I.111 Monday, 28 February 2011

59 (b) (iv) Improve access to market bases. Create awareness to potential investors. Likewise, the scope and nature of work as given in the Terms of Reference (TOR) were as follows. (a) Review of existing surface and marine transportrelated legal framework on investment; (b) Survey on available transport infrastructure, services and plans in the surface and marine transport subsectors; (c) Cost benefit analysis of potential areas for investment in the surface and marine transport subsectors; (d) Prioritization of transport potential development areas for investment in the surface and marine transport subsectors basing on cost benefit analysis; (e) Establishment of amount of investment required for inland waterways transport services, coastal shipping services, surface and marine interfaces, and urban rail transport; (f) Assessment of current funding capability, sources and options available for carrying out transport investment in the proposed investment areas; (g) Development of promotion strategy for each of the identified potential investment area; (h) Development of investment incentive package for each identified potential investment area; (i) Show policy implications of the findings and recommendations; and (j) Presentation of the identified potential investment areas to the Management of SUMATRA and stakeholders. 1.3 Study Approach The approach used in this study involved breaking down the study into ten (10) groups of activities termed as Work Packages (WP) and each WP was comprised of a number of Tasks (T) that related to each work package as follows. WP 1: Project and Quality Management T11: Planning, coordination, monitoring of progress and quality control Submitted by BICO I.211 Monday, 28 February 2011

60 T12: Preparation and submission of 10 copies of Inception Report to be submitted 14 days after the effective date. T13 Preparation and submission of 10 copies of Draft Final Report to be submitted not less than 21 days before the completion of the consultancy service. T14 Preparation and submission of 15 hard copies and a soft copy of Final Report to be submitted seven days before the completion of the consultancy service. WP 2: Review of existing surface and marine transportrelated legal framework on investment T21 Review of institutional framework T22 Review relevant policies, legislation, regulations, rules and agreements T23 Identification of bottlenecks and to recommend appropriate measures with policy implications, if any. T24 Reporting WP 3: Survey on available transport infrastructure, services and plans in the surface and marine transport subsectors T31 Survey on available transport infrastructure, services and plans in inland waterways T32 Survey on available transport infrastructure, services and plans in coastal shipping services T33 Survey on available transport infrastructure, services and plans in surface and marine intermodal transport T34 Survey on available transport infrastructure, services and plans in urban rail transport with focus on; Dar es Salaam City, Moshi Arusha link, Dar es Salaam Morogoro link, and other major cities. T35 Carry out SWOT analysis of transport subsectors T36 Surface and marine transport needs assessment and identification of potential areas for investment (i.e. in inland waterways transport services, coastal shipping services, surface and marine interfaces, and urban rail transport) T38 Reporting WP 4: Cost benefit analysis of potential areas for investment in the surface and marine transport subsector Submitted by BICO I.311 Monday, 28 February 2011

61 T41 Review current cost structures on surface and maritime transport T42 Carry out various financial and economic analyses to determine ROA, ROI, IRR, BEP, Payback Period T43 Carry out cost benefit analysis on each category and recommend the most cost effective avenue T44 Reporting WP 5: Prioritization of potential transport development areas for investment in the surface and marine transport subsector basing on cost benefit analysis T51 Based on WP4, prioritization of potential areas for investment T52 Accommodate stakeholders views with respect to output T51 T53 Recommend potential areas for investment T54 Reporting WP 6: Establishment of amount of investment required for the inland waterways transport services, coastal shipping services, surface and marine interfaces, and urban rail transport T61 Determine investment cost elements for each category T62 Determine implementation/deployment costs for each category T63 Reporting WP 7: Assessment of current funding capability, sources and options available for carrying out transport investment in the proposed investment areas T71 Review funding options including PPP, Debt and Equity, and public financing T72 Determine the most cost effective funding options T73 Determine Gearing and Debt coverage ratios T74 Recommend most economical and cost effective financing model T75 Reporting WP 8: Development of promotion strategy for each of the identified potential area T81 Determine and recommend the best promotional approach that will achieve market entry, positioning and branding and roll out plan Submitted by BICO I.411 Monday, 28 February 2011

62 T82 Determine most appropriate and cost effective mediums of promotion (TV, Radio, Billboard, newspapers, brochures, and banners) T83 Reporting WP 9: Development of investment incentive package for each identified area T91 Determine existing sector incentives T92 Review, design and propose incentive package in line with the existing national policies T93 Reporting WP 10: Policy implications of the findings and recommendations T101 Based on the results of previous work packages, analyse findings drawn from various policies and legislations on transport and recommend how existing policies, rules and regulations may be reviewed to accommodate the investment in four identified transport categories T102 Recommend any amendment to the existing agreements which may seem to hinder the development of the four identified transport categories T103 Reporting WP 11: Stakeholders Workshop: Presentation of the identified potential transport development areas to the Management of SUMATRA and stakeholders Methodology and Acknowledgement This section describes in detail the methodology used to accomplish the aforementioned work package other than WP 1 which involved project management and quality management Review of existing surface and marine transportrelated legal framework on investment (WP 2) The methods used to carry out the tasks under this Work Package included: a) Review of institutional framework b) Review relevant policies, legislation, regulations, rules and agreements c) Interviewing key stakeholders in the surface and marine transport subsectors Submitted by BICO I.511 Monday, 28 February 2011

63 d) Identification of bottlenecks and to recommend appropriate measures with policy implications, if any A number of documents were reviewed including the following. (a) National Policies (i) The National Transport Policy, 2003 (which is currently under revision by the Ministry of Infrastructure Development) (ii) The National Investment Promotion Policy (NIPP) 1996 (iii) National Road Safety Policy (NRSP) 2008 (iv) Public Private Partnership Policy, 2009 (v) National Trade Policy, 2003 (b) Regional Agreements (i) Treaty for the Establishment of the East African Community (ii) SADC Protocol on Transport Communications and Meteorology (iii) Protocol on the Establishment of the EAC Common Market (c) Transport Institutions and their Related Legislation (i) The Surface and Marine Transport Regulatory Authority Act, 2001 Cap 413 (as amended) (ii) The Tanzania National Roads Agency (TANROADS) Establishment Order, 2000 (iii) The Tanzania Zambia Railways Act, 1995 Cap. 143 (d) Legislation Directly Related to Promotion of Investment (i) The Tanzania Investment Act, 1997 Cap 38 (ii) The Special Economic Zones Act, 2006 (iii) The Export Processing Zones Act, 2002 as amended by the Export Processing Zones (Amendment) Act, 2006 (iv) Public Private Partnership Act 2010 (v) Fair Competition Act 2003 (vi) The EAC Competition Act 2006 Submitted by BICO I.611 Monday, 28 February 2011

64 (e) Legislation Regulating the Transport Sector (i) The Road Traffic Act 1973, Cap 168 (ii) The Transport Licensing Act 1973, Cap 317 (iii) The Motor Vehicles Driving Schools Act, 1965 Cap 163 (iv) The Roads Act, 2007 (v) The Carriage of Goods by Sea Act, 1927 Cap 164 (vi) The Merchant Shipping Act, 2003 (vii) The Inland Water Transport Act, 1938 Cap 172 (viii) The Ferries Act, 1928 Cap Survey on available transport infrastructure, services and plans in the surface and marine transport subsectors (WP 3) Under this package, a survey on available transport infrastructure, services and plans in the inland waterways transport, coastal shipping, urban rail transport, and surfacemarine intermodal services was carried out as follows: a) Review of relevant documents as indicated in the reference list. b) Interviewing key stakeholders. c) Physical visits to areas with available transport infrastructure, services and plans in the inland waterways transport, coastal shipping, urban rail transport, and surfacemarine intermodal services. d) Establishment of means to improve/expand existing services or to introduce new services. e) In consultation with various stakeholders to identify potential investment areas in view of improving the surface and marine transport system. f) Collection of data and information on services supply, service speed and reliability, mode split, traffic volumes, price patterns, parameters affecting price behaviour, investment costs, operating costs (e.g. insurance, fuel), userperceptions of key service attributes, and operators perceptions on service supply Cost benefit analysis of potential areas for investment in the surface and marine transport subsectors (WP 4) Under this WP, the Consultant carried out the following: a) Review of current cost structures on surface and maritime transport. Submitted by BICO I.711 Monday, 28 February 2011

65 b) Identify specific areas served by maritime transport (both coastal and inland waterways shipping services) and railway transport services. c) Establish throughput and determine frequency of use, volumes per day, month and year d) Determine if there is any seasonality of use. e) Determine existing historical fare prices for each area and each mode. f) Determine factors that may have lead to any change on fares (e.g. fuel, spares parts, currency depreciation/appreciation, national Policies, taxes) and percentage change factor. g) Identify investment costs (CAPEX) of various vessels including ships, boats, ferries, rolling stocks, etc. h) Determine operating costs of each mode of transport, including insurance, fuel, maintenance, and labour. i) Determine most appropriate and cost effective mediums of promotion (TV, Radio, Billboard, newspapers, brochures, and banners) and their respective costs that will achieve market entry, positioning, branding and roll out plan of the identified transport mediums. j) Having established the operating assumptions of each transport mode, prepare a financial projections covering transport mode within maritime and surface transport. k) From the projections, carry out various financial and economic analyses to determine both the economic and financial viability of each identified potential area for investment in the surface and marine transport subsectors. l) Examine the following financial ratios: Return on Assets (ROA) Return on Investment (ROI) Internal rate of return (IRR) Break Even Analysis (BEP) Payback Period on each transport model Gearing ratio Growth ratio and Net Present value m) Based on the findings, carry out cost benefit analysis on each category and recommend the most cost effective option. Submitted by BICO I.811 Monday, 28 February 2011

66 1.4.4 Prioritization of potential transport development areas for investment in the surface and marine transport subsector basing on cost benefit analysis (WP 5) The main task under this work package was to prioritise the investment areas in order of significance and urgency. The prioritisation methodology focused on assessing the results of the projections, economic and financial ratios developed Establishment of amount of investment required for the inland waterways transport services, coastal shipping services, surface and marine interfaces, and urban rail transport (WP 6) Two tasks were planned to be carried out under this work package: 1 Based on the projections and Established Capital Investment (CAPEX) of each infrastructure and/or service option advise the amount of investment required for the four identified areas (i.e. inland waterways transport services, coastal shipping services, surface and marine interfaces, and urban rail transport). 2 Determine and advise implementation/deployment costs for each category and provide implementation programme Assessment of current funding capability, sources and options available for carrying out transport investment in the proposed investment areas (WP 7) This work package involved: a) Basing on the established CAPEX of each model, make assessment of current funding options, capability and sources and options available for carrying out transport investment in the proposed investment areas. b) Examine the following financing and resource options Public Private Partnership Debt financing Equity financing Combination of debtequity financing Public financing through either Infrastructure Bonds or Initial Public Offer (IPO)s of shares c) Based on the proposed financing models/options, determine and recommend the most cost effective funding options Submitted by BICO I.911 Monday, 28 February 2011

67 d) Carry out Strength Weakness Opportunity and Threat (SWOT) analysis on all identified potential areas of investment and advise where opportunities may be maximized, weaknesses addressed, opportunities capitalised on and threats mitigated. e) While reviewing the SWOT analysis, to review barriers to both private participation and capital; flow to this sector. f) Draw experiences learned from other countries/regions on similar operations and examine how such experiences may benefit the local operations Development of promotion strategy for each of the potential investment (WP 8) Under this work package, the following tasks were planned to be carried out: a) Development of promotion strategy for each of the identified potential area and estimate costs associated with each of the following promotion media. Televisions Radio Billboard, newspapers, Brochures and banners b) Draw up and recommend a promotional implementation programme clearly outlining a medium, time scale and frequency Development of investment incentive package for each identified area (WP 9) Under this WP, the development of investment incentive package for each identified area involved: a) Determination of existing sector incentives b) Review and design of an incentive package in line with the existing national policies Policy implications of the findings and recommendations (WP 10) The main task under this WP was to show clearly policy implications of the identified investment areas thus enabling the investments to be implemented with favourable implications socially, economically and politically. Submitted by BICO I.1011 Monday, 28 February 2011

68 Stakeholders Workshop (WP 11) The Stakeholders workshop was held on Wednesday, 5th January 2011 at Dar es Salaam International Conference Centre to discuss the Draft Final Report. The workshop was attended by members of the SUMATRA Management and other stakeholders. Appendix II presents the summary the Stakeholders comments. The Final Report incorporates the comments raised by the Stakeholders and SUMATRA Management. 1.5 Structure of the Report The report is organized into nine chapters. Each of chapters two through chapter nine begins with an introductory section setting out the objective of that chapter. Chapter One presents the introduction part of the report. The chapter comprises of the background of the study, objectives and the scope of the study. Chapter Two presents a review of transportrelated legal framework on investment. The chapter elaborates on the policies, legislation, regulations, rules and agreements related to investments in the surface and marine transport subsectors. Chapter Three presents a survey on available coastal shipping infrastructure, services and plans. The chapter identifies transport potential development areas as well. Chapter Four outlines a survey on available inland waterways transport infrastructure, services and plans as well as transport potential development areas. Chapter Five is on urban rail transport infrastructure, services and plans. Likewise, the chapter covers transport potential development areas as well. Chapter Six presents available infrastructure, services and plans as well as transport potential development areas in the surface and marine intermodal transport. Chapter Seven provides the cost benefit analysis of transport potential development areas. Chapter Eight outlines various funding options, promotion strategy and incentive package in view of the existing policies and regulations. All chapters elaborate on the policy implications of the findings and draw recommendations. 1.6 Acknowledgement One of the most important activities was data collection. A lot of data were needed for the study so as to thoroughly cover the scope of the assignment. As part of the data collection exercise, the Consultant interviewed several stakeholders whose contact addresses are attached to this report as Appendix III. The relevance of the collected data and information was assessed for the study tasks. Submitted by BICO I.1111 Monday, 28 February 2011

69 CHAPTER TWO REVIEW OF SURFACE AND MARINE TRANSPORTRELATED LEGAL FRAMEWORK ON INVESTMENT 2.1 Introduction This chapter reviews the policies, legislation and regional agreements relating to investments in the surface and marine transport subsectors in Tanzania. In response to this task this chapter attempts to review the applicable policies, legislation and regional agreements on investments in Tanzania. The thrust of the policies reviewed show that they all strongly advocate for private investment in the transport sector. Outstanding policy documents propagating for private investments include the National Transport Policy 2003, the National Investment Promotion Policy 1996, the National Trade Policy 2003, the National Public Private Partnership Policy 2009, and the National Road Safety Policy The National Investment Promotion Policy, though a general policy, in the sense that it does not only apply to the transport sector, goes further to specify the types of incentives accorded to investors in Tanzania. Most of the incentives are fiscal and basically they relate with tax exemptions. There are also nonfiscal incentives as discussed later. The review of the legislation on the establishment of transport institutions, similarly, points in the same direction. The legislation seeks to create a conducive environment for private sector participation in the provision of infrastructure and services in the transport sector. Apart from creation of the enabling environment, the legislation enacts into legal force the various incentives highlighted in the Policies. More importantly, the legislation guarantees investors against nationalisation that the Government cannot nationalise any investment unless due process under the law is taken and fair, adequate and prompt compensation is paid to the investor. The review of policies, legislation and regional agreements in the context of this report has been undertaken as described in the following sections. Submitted by BICO II.130 Monday, 28 February 2011

70 2.2 Review of National Policies The National Transport Policy (NTP), 2003 The NTP is now under review to accommodate the new developments in the transport sector which might have arisen since the passage of the Policy in For example, the passage of the Public Private Partnership Policy in 2010 and the enactment of the attendant law might have spurred the review. Nevertheless, the following brief review of the document is aimed at outlining the Government s commitment in involving the private sector in the provision and management of the surface and marine transport systems. Generally, the National Transport Policy 2003 (NTP) was a key promotional document to people interested to invest in the transport sector. It was a committal document by the Government to promote and implement what is contained in the Policy in accordance with the various laws enacted from time to time. The commitment by the Government features in the Mission of the Policy wherein the Government intends to develop safe, reliable, effective, efficient and fully integrated transport infrastructure and operations which will best meet the needs of travel and transport by improving levels of services at lower costs in a manner, which supports Government strategies for socioeconomic development whilst being economically and environmentally sustainable. While making this commitment the 2003 NTP acknowledges the weaknesses in the development and management of the transport sector. These include inadequate formalised coordination and consultation among principal actors; and insufficient dialogue between the public and private sector due to poorly developed service providers as well as service users or consumer associations. As far as the first weakness is concerned NTP proposes the following measures, among others, to counter it, namely, to establish an institutional framework which ensures that appropriate mechanisms exist to effectively promote intermodal coordination and communication between the user, the operator, the regulatory agency and the Government on all transport questions and issues. Submitted by BICO II.230 Monday, 28 February 2011

71 As for the second weakness NTP has several policy statements which encourage the participation of the private sector in the provision of infrastructure and services in the road, railway and maritime transport subsectors. The following few statements from the Policy demonstrate this: NTP underlines the need for the private sector participation including the local communities in the planning and rehabilitation of the roads that pass through their area. The role of railway transport for efficient intermodal transit cannot be over emphasized. NTP underlines the need for further development of modal and intermodal interface facilities and institutions. For this to happen, involvement of private sector in infrastructure development and operation of railways is considered necessary. NTP recognises the need for further restructuring of ports for increased infrastructure, safety, security and operations efficiency. Private sector involvement in the enhancement of infrastructure, services in port development, operations and in shipping services is underlined. On panterritorial transport NTP enumerates a number of policy directions on the nine road transport corridors identified by the Policy. The bottom line of these directions is to promote private sector participation in investing and financing the surface and maritime transport subsectors particularly those sections which have potential commercial viability. On the basis of this short review of NTP it is evident that the Government has seriously committed itself to involvement of the private sector both local and foreign in the provision of integrated infrastructure and services in the surface and maritime transport subsectors. Supposedly, the 2003 NTP offers private investors a redcarpet and guarantees them of total protection to transport investments should they decide to invest in Tanzania The National Investment Promotion Policy (NIPP) 1996 NIPP is another important promotional document for investment generally in Tanzania. Its significance lies not only in the promotion of investment opportunities but also its advocacy for a transparent legal framework that guarantees of protection to all forms of investments in Submitted by BICO II.330 Monday, 28 February 2011

72 the country. With reference to the transport sector, which is the subject matter of this report, NIPP subscribes to the following policy objectives: To encourage private sector, public sector and foreign investment in the transport sector, as well as regional cooperation and investments in transport services and facilities; To encourage investments in inland water and maritime transport facilities; To promote an integrated and linked national, regional and international road, railway and air transport networks in order to enjoy not only the benefits of economies of scale, but also to maintain international standards and levels. In order to achieve these objectives NIPP offers, among others, the following investment policy strategies: It commits the Government, as a promoter and facilitator of both local and foreign investments, to put in place conducive legal framework for protection, promoting, facilitating and guaranteeing investments; It establishes the Tanzania Investment Centre (TIC) as the focal point of the promotion, coordination, and monitoring of local and foreign investments in Tanzania. It invests TIC with the obligation to provide the investors with services that aim at assisting both new and old investors with regulatory problems and the identification of new markets or opportunities for the expansion of business. The prominence of this Policy also lies in the investment incentives that it offers to investors. The investment incentives are categorized into fiscal and nonfiscal. The fiscal or tax incentives include investment allowances on capital expenditure, reinvestment allowances on capital expenditure, infrastructure allowances on infrastructure expenditure, preferential tax rates for withholding tax on dividends, royalties and interest, preferential tax rates on personal income, preferential rates on indirect taxes and double deductions of approved/specified costs and expenses. Meanwhile, nonfiscal incentives include, access to land, priority access to utilities, transportation and communication services, expatriate employment and access to regional and subregional markets, such as SADC, COMESA and EAC. The provisions of the NIPP have been translated into the Tanzania Investment Act Submitted by BICO II.430 Monday, 28 February 2011

73 1997. The Tanzania Investment Guide 2008 issued by the Tanzania Investment Centre is an important toolkit for investors in Tanzania. In short, NIPP gears towards creating an open market economy by, among other things, creating an enabling environment for private sector development and investment. The Policy provides a vision for future investment in Tanzania including investment in the transport sector National Road Safety Policy (NRSP) 2009 The NRSP, as the document itself says, is a critical initiative in the efforts to elevate road safety issues to a position of high priority on the national agenda. It provides the basis for working towards attaining the vision of a safe traffic environment. Thus, potential investors in the road subsector must comply with the requirements of this Policy in as far as safety in road transport is concerned. The underlying theme of the Policy is that, all concerned actors in society, including investors in this case, should work in harmony by cooperating and sharing knowledge, expertise and resources to reduce road crashes. NRSP, like the preceding Policies, attaches significant importance to multimodal transport and the participation of the private sector in road safety issues. Accordingly, the Policy observes, inter alia, that; Use of multimodal systems like railway facilities, marine vessels is not given a significant priority at both planning and investment particularly in highly congested cities like Dar es Salaam. To mitigate this problem the Government plans to introduce railway and maritime transport to decongest cities like Dar es Salaam. Use of other infrastructures including rail for commuter services in urban centres in Tanzania is nonexistent. To counter this problem the Government will encourage the participation of the private sector in the development of other modes of transport such as rail, marine and tram transport services for coastal cities, towns and other urban areas that will divert traffic from congested arterial roads. Submitted by BICO II.530 Monday, 28 February 2011

74 To sum up, the NRSP advocates broad outlines of measures to be taken and, at the same time, addresses most of the pertinent issues consequential to road safety in the country. To achieve this objective investors from the private sector have not been left out. In this context, NRSP is another motivational document upon which private investors, local and foreign can rely on to pull up their capital and invest in the areas recommended by this study, as long as such investments give due preference to road safety issues National Public Private Partnership (PPP) Policy, 2009 According to PPP Policy, the Government of Tanzania recognizes the role of private sector in bringing about socioeconomic development through investments. Public Private Partnership framework provides avenues for attracting investments. The PPP Policy acknowledges that Public Private Partnerships have been identified as viable means to effectively address constraints of financing, managing and maintaining public goods and services. Moreover, PPP can enable the Government to fulfil its responsibilities in efficient delivery of socioeconomic goods and services by ensuring efficiency, effectiveness, accountability, quality and outreach of services. The PPP Policy aptly defines the concept of PPP as follows: PPP entails an arrangement between public sector and private sector entities whereby the private entities renovate, construct, operate, maintain, and or manage a facility in whole or in part in accordance with output specifications. The private entity assumes the associated risks for a significant period of time and in return, receives benefits and financial remunerations according to agreed terms; which can be in the form of tariffs or user charges. PPP is therefore a cooperation venture built on the expertise of each partner that best meets clearly defined public needs through the most appropriate allocation of resources, risks and rewards. PPP in Tanzania, according to the PPP Policy, is of two forms. PPP for operation of existing public assets includes service contracts, management contracts, lease contracts and concessions. The other form is PPP for development and operation of new facilities and a variety of arrangements exist here, such as, Design and Build (DB); Design Build and Operate (DBO); Build, Operate and Transfer (BOT); Build, Lease and Transfer (BLT); Submitted by BICO II.630 Monday, 28 February 2011

75 Design, Build, Finance and Operate (DBFO); Design, Build, Finance and Maintain (DBFM); Build, Own and Operate (BOO); and Buy, Build and Operate (BBO). Investors in the recommended areas will obviously fall under the latter form. The Government concedes that PPP arrangement is beneficial to a country and is justifiable in view of the potential benefits that accrue to all parties. The potential benefits include, among others, facilitating creative and innovative approaches in stimulating private sector to engage in specific PPP; with the government allowing bidders to compete on the basis of their ability to develop unique and creative approaches to the delivery of a required output; and accessing technical and managerial expertise, financial resources and technology from the private sector. For investors under PPP the main and specific objectives of the PPP Policy may be of interest to them in terms of guarantee and incentives in addition to fair competition amongst themselves. The main objective of the PPP Policy is to promote private sector participation in the provision of resources for PPP in terms of investment capital, managerial skills and technology. Specifically, the Policy seeks to develop an enabling legal and institutional framework to guide investments in PPP and to introduce fair, equitable, transparent, competitive and costeffective procurement processes for PPP. Thus, the PPP Policy is another important promotional investment policy particularly for those investors who would like to invest in the recommended areas under PPP. The Policy offers a variety of PPP arrangements through which investors may negotiate with the Government and other public transport institutions, such as, TPA, TAZARA, TRL, TANROADS, Local Government Authorities etc depending on the nature of their investment. The policy pronouncements in this document have now been translated into an enabling legal framework, namely, the National Public Private Partnership Act, 2010 which is discussed later. Submitted by BICO II.730 Monday, 28 February 2011

76 2.2.5 National Trade Policy, 2003 The National Trade Policy is yet another crucial policy document for local and foreign investors interested to open business in Tanzania. The Policy emphasises the role of the government as implementer of trade policy and that of the private sector as the engine of growth as well as partners in the formulation and implementation process. It sets new and modern rules on how to increase international competitiveness, establishes how these rules are made and implemented, elevates the role of the private sector and creates opportunities for its development and promotes a new philosophy of economic management based on serious commitment to openness. The Policy advocates for a legal and regulatory framework that seeks to lower transaction costs enhance business compliance and improve efficiency and competitiveness. The Policy contends that the ultimate objective of the legal framework should among others, be to protect the interests of consumers through enhancing the capacity of government institution to perform their regulatory functions efficiently and by maintaining regulations only where they are necessary for this objective. The Fair Competition 2003 discussed below attempts to domesticate this objective. Talking of the private sector, the Trade Policy categorically says that the private sector is now formally recognized and accepted as the producer of goods and lead provider of services for the domestic and export markets and consequently the leading employer and primary vehicle for poverty eradication. On infrastructure development, the Policy advocates for several strategies one of which is; modernisation and expansion of the transportation infrastructure based on increasing recourse to private sector resources through Build, Own, Operate and Transfer (BOOT) and Build, Operate and Transfer (BOT) schemes. These schemes have been mentioned in the PPP Policy above. The role of the private sector in this policy document, like the others reviewed above, cannot be overemphasized. The private sector is considered to be the lead implementer and economic agent responsible for the production of goods and services that will enable Tanzania to take its rightful place in the global, regional and local market. Submitted by BICO II.830 Monday, 28 February 2011

77 2.3 Review of Regional Agreements Treaty for the Establishment of the East African Community The establishment of the East African Community (EAC) by the Treaty mentioned above provides another meaningful opportunity for investors interested to invest in Tanzania. Both the Treaty and the Protocol guarantee investors a bigger market for the products and services they produce. Similarly, the spirit to create an enabling environment for the private sector coupled with the strengthening of this sector is underscored in the Treaty. For example, Articles and of the Treaty stipulate, respectively, as follows: The Partner States agree to provide an enabling environment for the private sector to take full advantage of the Community. The Partner States shall endeavour to adopt programmes that would strengthen and promote the role of the private sector as an effective force for the development of their respective economies. Besides the promotion of the private sector the Treaty also advocates for cooperation, among the Partner States, in infrastructure and services provision. Few Articles may be cited to demonstrate this contention: In order to promote the achievement of the objectives of the Community as set out in Article 5 of this Treaty, the Partner States undertake to evolve coordinated, harmonised and complementary transport and communication policies (Article 89). Partner States shall coordinate activities with respect to the construction of trunk roads connecting the Partner States to common standards of design and in the maintenance of existing road networks to such standards as will enable the carriers of other Partner States to operate to and from their territories efficiently (Article 90). The Partner States shall harmonise their inland waterway transport policies and shall adopt, harmonise and simplify rules, regulations and administrative procedures governing waterways transport on their common navigable inland waterways (Article 94). Submitted by BICO II.930 Monday, 28 February 2011

78 The EAC has embarked on several programmes directed at actualising the latter and spirit of these Articles for betterment of the Partner States generally but also for promotion of private investments in the respective States. The programmes include the signing of the EAC Tripartite Road Transport Agreement, whose objective is to facilitate and reduce the cost of transport of transit goods in the region through reduction of documentation procedures, including costs related customs, immigration and police checks. While emphasizing on transport of transit goods this Agreement, does not however, empower service providers from one Partner State to engage in the business of carriage of passengers or goods in another Partner State. This seems to be a policy issue that was agreed on by the Partner States to safeguard the local business community engaged in the provision of such services in Partner States. But it seems that this Agreement is in conflict with the Protocol discussed below. Nevertheless, the Consultant is of the view that the EAC Treaty is helpful to investors in the surface and marine transport subsectors generally Protocol on the Establishment of the East African Community Common Market The Protocol on the East African Community Common Market is a milestone development in the promotion and realisation of the two objectives of the East African Community highlighted above. The Protocol establishes a Common Market for the five Member states comprising the EAC. Article 3 of the Protocol enumerates the principles of the Common Market to which Partner States are bound. These are: Observe the principle of nondiscrimination of nationals of other Partner States on grounds of nationality. Accord treatment to nationals of other Partner States not less favourable than the treatment accorded to third parties. In pursuant of these principles the Protocol commits each Partner State to: remove restrictions on the right of establishment and residence of nationals of other Partner States in their territory in accordance with the provisions of the Protocol; and remove measures that restrict movement of services and service suppliers, harmonise standards to ensure acceptability of services traded. Submitted by BICO II.1030 Monday, 28 February 2011

79 The overall objective of the Common Market is to widen and deepen cooperation among the Partner States in the economic and social fields for the benefits of the Partner States. In particular, the Common Market seeks to accelerate economic growth and development of the Partner States through the attainment of the free movement of goods, persons and labour, the rights of establishment and residence and the free movement of services and capital. It also intends to sustain the expansion and integration of economic activities within the Community, the benefits of which shall be equitably distributed among the Partner States. In terms of this study few Articles of the Protocol are worthy consideration. First, is Article13 on the Right of Establishment. Under this Article, Partner States guarantee the right of establishment of nationals of other Partner States within their territories. And, a national of a Partner State means a natural or legal person who is a national in accordance with the laws of the Partner States. This definition covers, as well, companies duly incorporated and registered in each Partner State including in Tanzania. As such they are entitled to the right of establishment. The right of establishment entitles a national of a Partner State to take up and pursue economic activities as a self employed person and to set up and manage economic undertaking in the territory of another Partner State. In Article 13(5) the Protocol states categorically that Partner States shall ensure that all restrictions on the right of establishment based on the nationality of companies, firms and self employed persons of Partner States are removed, and shall not introduce any new restrictions on the right of establishment in their territories It should further be noted that under this right of establishment, companies and firms established in accordance with the national laws of a Partner State and having their registered office, central administration or principal place of business and which undertake substantial economic activities in the Partner State shall be accorded non discriminatory treatment in other Partner States. For that reason, the Protocol urges Partner States to remove the administrative procedures and practices resulting from national laws or from agreements previously concluded between the Partner States that form an obstacle to the right of establishment. Submitted by BICO II.1130 Monday, 28 February 2011

80 The Consultant is of the view that these provisions of the Protocol coupled with the general spirit of the Protocol seem to guarantee an almost absolute right of establishment to self employed persons or companies of one Partner State which intend to establish themselves in other Partner States. It is on this basis that Partner States are urged to remove any administrative procedures and practices resulting from national laws that form an obstacle to the right of establishment. Indeed, such administrative procedures and practices can not be removed unless the laws themselves are repealed. Thus, citizenship and labour laws cannot escape this exercise. The Protocol s call to remove any agreement previously concluded between the Partner States which form an obstacle to the right of establishment is, yet, another significant milestone. So, it is a matter of time for the EAC to identify such agreements and amend them accordingly in the spirit of the Protocol. The Tripartite Road Transport Agreement which advocates for transit services only could be one such instrument. Amendment of this Agreement to allow provision of services by local and other service providers from the Partner States will probably do away with the complaints that transport services in Tanzania are not fully liberalised. The only limitations on the right of establishment that feature in the Protocol are captured in Article 13(8) which says the right of establishment shall be subject to limitations imposed by host Partner State on grounds of public policy, public security and public health. These limitations which are hedged on public interest cannot, at any rate, abolish completely the right of establishment. So, for Tanzania, this public policy, public security and public health considerations should be made public and known to the Partner States as Article 13(9) requires otherwise the country will have no justification in barring nationals from other Partner States from exercising this right. The Article on free movement of services speaks the same language. Under Article 16(2) free movement of services shall cover the supply of services: (a) (b) (c) from the territory of a Partner State into the territory of another Partner State; in the territory of a Partner State to service consumers from another Partner State; in a service supplier of a Partner State through commerce presence of the service supplier in the territory of another Partner State; and Submitted by BICO II.1230 Monday, 28 February 2011

81 (d) by the presence of a service supplier, who is a citizen of a Partner State in the territory of another Partner State. And, for purposes of realising the free movement of services, Article 16(5) urges Partner State to progressively remove existing restrictions and shall not introduce any restrictions on the provisions of services in the Partner States by nationals of other Partner States. Generally, the spirit of this Article leaves it open for service suppliers from other Partner States to provide such services within the Tanzania market, such as, local marine transport on lake Victoria or Tanganyika etc. Any limitation to this accessibility must be justified on grounds of public policy, public security and public health. Nevertheless, the Protocol requires Partner States to progressively remove the existing restrictions on free movement of services. In conclusion, it is the Consultant s view that the right of establishment together with the right of free movement of services in Tanzania are open to all nationals of the EAC unless the Government publicly pronounces the three limitations based on public policy, public security and public health. At the same time, the Government should take deliberate measures to identify its laws which hinder the effective application of the Protocol in Tanzania and amend them accordingly. In short this Protocol offers investors in Tanzania, and the EAC generally the advantage of accessing a wider market for the goods and services they produce or render without unnecessary restriction or discrimination SADC Protocol on Transport Communications and Meteorology This is another Regional Agreement promoting interregional investments in transport infrastructure. The Agreement commits the Tanzania Government to cooperating with other Member States of SADC in the provision of, inter alia, road, railway and maritime infrastructure and services through the involvement of both public and private sectors. To this effect, the general objective of the Member States under the Protocol is to establish transport, communications and meteorology systems which provide efficient, cost effective and fully Submitted by BICO II.1330 Monday, 28 February 2011

82 integrated infrastructure and operations, which best meet the needs of customers and promote economic and social development while being environmentally and economically sustainable. Further, the Protocol underscores the provision of integrated transport infrastructure and services in the SADC region. For example, it is the object of the Protocol that Member States shall cooperate in providing, operating and maintaining transport infrastructure which supports the provision of integrated transport services, considering that infrastructure should progressively be selfsustaining with funding based on a user pay principle and that Member States shall promote private sector involvement in railway investment with a view to improving railway network and services standards and lowering unit costs for services. In conclusion, it is to be noted that the Protocol, like the other documents reviewed here, unhesitatingly recognizes the role of the private sector in the provision of transport infrastructure and services in all modes of transport. Moreover, the Policy underscores the need to provide transport infrastructure and services with backward linkages with other modes of transport. For reasons mentioned earlier this Protocol, like the others, will hardly offer added benefits to potential investors in the recommended areas. 2.4 Review of Transport Institutions and the Related Legal Framework Transport institutions established by various laws and relevant to this study are, among others, reviewed in the following subsections The Surface and Marine Transport Regulatory Authority Act, 2001 Cap 413 (as amended) This Act was enacted to provide for the establishment of a regulatory authority, SUMATRA, in relation to the surface and marine transport subsectors. SUMATRA is charged with a number of functions which may be of interest to those intending to invest in the subsectors recommended by this study and, especially, if their investments are meant to provide goods and services which are regulated under the Act. The functions of SUMATRA are, among others: subject to relevant sector legislation, to: o issue, renew and cancel licences; Submitted by BICO II.1430 Monday, 28 February 2011

83 o establish standards for regulated goods and regulated services; o establish standards for the terms and conditions of supply of the regulated goods and sources; o regulate rates and charges. to monitor the performance of the regulated sectors, including in relation to: o levels of investment; o availability, quality and standards of services; o the cost of services etc. In discharging these functions SUMATRA is enjoined to enhance the welfare of the Tanzania society by protecting the interests of consumers of the services and goods rendered under the Act. SUMATRA, as a regulatory authority is thus concerned with the setting of standards and competition rules while safeguarding the interests and rights of consumers of transport services and products. For that matter, investors in the surface and marine transport subsectors should strive to provide or supply goods and services which do not offend the requirements of this Act and SUMATRA as a regulatory authority The Tanzania National Roads Agency (TANROADS) Establishment Order, 2000 TANROADS was established in 2000, by the said Order as a road authority under auspices of the Executive Agencies Act It is responsible for the day to day management of trunk and regional roads in Tanzania Mainland. Its primary functions as a road authority include, among others, to undertake procurement and management of contracts for design, maintenance, emergency repairs, spot improvement, rehabilitation, upgrading and construction of roads under its control. Other functions of road authorities are specified in section 6 of the Roads Act, 2007 which are, inter alia, to negotiate concession agreements with private sector entities for facilitating financing and development of selected roads in accordance with guidelines prescribed by the Minister. In the context of this study, this function implies that investors interested in investing in road infrastructure in trunk and regional roads are required to enter into concession agreements with TANROADS. The forms of agreements have been highlighted Submitted by BICO II.1530 Monday, 28 February 2011

84 by the PPP Policy discussed earlier. Arguably, private investors should not hesitate from investing in road infrastructure since the Roads Act 2007 promotes involvement of the private sector in development, maintenance and management of roads backed up by the PPP Policy and the supportive legislations, such as the Investment Promotion Act 1997, the Public Private Partnership Act 2010, and the Tanzania Trade Development Authority Act The Tanzania Zambia Railways Act, 1995 Cap. 143 This Act establishes the Tanzania Zambia Railways Authority as a body corporate. The Authority is charged with many functions including: to operate roadrail services; and to enter into agreement with any person carrying on business as a carrier of passengers or goods within or outside Tanzania or Zambia providing for the carriage of passengers or goods by, or on behalf of, the Authority, and of that other person, under one contract or at a through fare or rate. The last function seems to promote intermodal transport by empowering the Authority to enter into agreements with any person including private investors engaged in the provision of passenger and goods services within or outside Tanzania and Zambia. Section 8 of the Act empowers the Authority to construct new railway lines or branch lines on approval by the Council of Ministers responsible for transport. In view of the 2003 NTP directions discussed before and in consideration of the PPP Policy and the PPP Act 2010 it follows that this is a virgin area upon which potential investors in the recommended areas may wish to join hands with TAZARA to make the provisions of the Act fruitful. Similar provisions feature in the Railways Act establishing the Tanzania Railway Limited (TRL). The Railways Assets Holding Corporation which is the holding corporation of TRL and responsible for management of railway assets can equally enter into similar PPP with the private sector for purposes of expanding and or improving the existing infrastructure facilities The Energy and Water Utilities Regulatory Authority Act, 2002, Cap 414 This Act establishes a regulatory Authority (EWURA) to regulate services offered in certain sectors. Under section 3 of the Act, regulated sector includes, among others, petroleum and natural gas pipeline transmission and natural gas distribution. Specifically, the functions of Submitted by BICO II.1630 Monday, 28 February 2011

85 the Authority are enumerated in section 7 of the Act. These include, in the case of petroleum and natural gas, to regulate transmission and natural gas distribution. Thus, natural gas, like petroleum, though an important ingredient in the transport sector is not regulated by a transport related authority like SUMATRA. The input of natural gas in cutting down costs in the transport sector will, in the finally analysis, depend on how EWURA is able to regulate this sector much as natural gas is now locally available. 2.5 Review of Legislation Directly Related to Promotion of Investment The Tanzania Investment Act, 1997 Cap 38 This Act was passed in 1997 pursuant to the promulgation of the National Investment Promotion Policy 1996 discussed before. The Act establishes the Tanzania Investment Centre (TIC). TIC was established in 1997 to be the primary agency of Government to coordinate, promote and facilitate investment in Tanzania and to advise the Government on investment related matters. TIC is the first point of call for potential investors under the Act. Statutorily, it is a one stop facilitation centre for all investors interested to invest in Tanzania in accordance with the scheme provided under the Act. Thus, under section 4 of the Act, TIC is required, among others, to: Initiate and support measures that will enhance the investment climate in the country for both local and foreign investors; Collect, collate, analyse and disseminate information about investment opportunities and sources of investment capital, and advise investors upon request on the availability, choice or suitability of partners in joint venture projects; Assist all investors, including those who are not bound by the provisions of the Act, to obtain all the necessary permits, licences, approvals, consents, authorisations, registrations and other matters required by law for a person to set up and operate on investment; and to enable certificates issued by the Centre to have full effect. This Act offers a wide range of incentives to investors under the umbrella of the Centre provided the investment capital is not below US$ 300, and US$ 100, for foreign and local investors respectively. The incentives include benefits under the Income Tax Act, Submitted by BICO II.1730 Monday, 28 February 2011

86 Customs Tariff Act and the Value Added Tax Act. Nonfiscal incentives are also provided by the Act. Lastly, but not least, investors under the Act are guaranteed fair, adequate, and prompt compensation should the Government desire to acquire any of those investments. The acquisition must be under the due process of the law with an unrestricted right of access to courts or arbitration tribunals. The role of this Act to investors in Tanzania cannot be overemphasized. Would be investors in the surface and marine transport subsectors are strongly advised to elicit the assistance of TIC and obtain the appropriate advice on request, before proceeding to invest in those subsectors under any one of the arrangements discussed above. At present, TIC has opened Zonal Offices upcountry, that is, in Kilimanjaro, Mwanza and Mbeya in a drive to bring its services closer to potential investors in the regions The Special Economic Zones Act, 2006 This Act was enacted with several objectives in mind, namely, to make provisions for establishment, development and management of the special economic zones; to create an enabling environment for attraction of local and foreign investment in the special economic zones; and to facilitate expansion of employment opportunities and attachment of economic growth targets. The Act establishes an authority known as the Special Economic Zones Authority which is responsible for overall policy formulation, coordination and implementation of activities related to establishment and development of special economic zones. In particular, the Authority is charged with the power to declare an area to be a special economic zone and to determine priority sectors to be promoted in a particular special economic zone. For the purposes of establishment of special economic zones, priority shall be given to economic activities that have maximum propensity to accelerate domestic production, exports promotion or employment generation. The location of special economic zones shall target areas that provide comparative advantages for attracting investments. Special economic zones include, inter alia, export processing zones, free trade zones, and free ports. Submitted by BICO II.1830 Monday, 28 February 2011

87 The prime importance of this Act to the transport services provision and infrastructure development lies in the various incentives offered to investors in the special economic zones depending on the category to which the investor belongs. For investors in Category A, dealing with the development of infrastructure, they are entitled to the following package: Exemption from payment of taxes and duties for machinery, infrastructure equipment, heavy duty vehicles, building and construction materials, etc.; Exemption from payment of corporate tax for the initial period of 10 years; Exemption from payment of withholding tax on rent, dividends and interest for the first 10 years. Exemption from payment of property tax for the first 10 years; Remission of customs duty, VAT and any other tax on one administrative vehicle, ambulance, fire fighting equipment, fire fighting vehicles, and two buses for use by employees; Exemption from payment of stamp duty; Entitlement to initial automatic immigration quota of up to 5 persons during the start up period; Exemption from payment of VAT on utility charges; Exemption from preshipment or destination inspection requirements; Treatment of goods destined into special economic zones as transit cargo. Investors in Category B, that is, investors producing for sale into the Customs Territory are entitled to incentives listed in section 39 of the Act including remission of customs duty, VAT and other taxes on raw materials and goods of capital nature related to the production in the special economic zones. Generally, there are seven incentives. Finally, investors in Category C those producing for export markets, are also entitled to a hoist of incentives (about 15) including some of those mentioned above. It follows that investors who will be attracted to invest in the provision of transport services and infrastructure which is the priority of this study will enjoy the benefits and incentives enumerated above. Submitted by BICO II.1930 Monday, 28 February 2011

88 2.5.3 The Export Processing Zones Act, 2002 as amended by the Export Processing Zones (Amendment) Act, 2006 This Act establishes an authority known as the Export Processing Zones Authority. The Authority is charged with the function to initiate, develop and manage the operations of the publicly owned export processing zones. Generally, the Act seeks to promote export oriented investments within the designated zones. Besides, the Act offers a range of attractive fiscal, physical and procedural incentives to investors in the zones. Thus an investor in the export processing zones, like in special economic zones, is entitled to a wide range of incentives enumerated in section 15 of the Act. They include: Access to the export credit guarantee scheme; Remission of customs duty, VAT and other taxes charged on raw materials and goods of capital nature; Exemption from payment of withholding tax on rent, dividends and interest for first 10 years; Exemption from payment of all taxes and levies imposed by local government authorities for the period of 10 years; Exemption from preshipment or destination inspection requirements; On site customs inspection of goods in the EPZs; Access to competitive modern and reliable services available within the EPZs; Unconditional transferability through any authorised dealer bank in free convertible currency of profits, dividends, royalties, etc; Allowance to sell 20% of goods in the domestic market. Other incentives are as provided in Category A under the Special Economic Zones Act, Presently, the following areas have already been developed for investment by private investors. Benjamin William Mkapa Special Economic Zone, Mabibo External, Dar es Salaam. Millennium Business Park Ubungo Dar es Salaam. Hifadhi EPZ Ubungo, Dar es Salaam. Vector Health EPZ Kisongo Arusha. Kamal Industrial Park Mbegani, Bagamoyo. Submitted by BICO II.2030 Monday, 28 February 2011

89 Moreover, the following areas have been set aside for EPZ infrastructure development. Mbegani area Coastal Region Malula area Arusha Region KIA area Kilimanjaro Region Kiyegeya area Morogoro Region Bunda Tairo area Mara Region Mtwara Port area Mtwara Region Ujiji area Kigoma Region Kitengule area Kagera Region Luwawasi Mkuzo area Ruvuma Region Neema area Tanga Region Usagara/Nyahomango area Mwanza Region Mererani Manyara Region Sisitila Mbeya Region Ngongo Lindi Region The Public Private Partnership Act 2010 This Act has been enacted to give effect to the public private partnership policy; to provide for institutional frameworks for the implementation of publicprivate agreements between public sector and private sector entities; to set rules, guidelines and procedures governing public private procurement, development and implementation of public private partnership and to provide for other related matters. The Act establishes a Unit within the Tanzania Investment Centre which shall be an integral part of the Centre. The primary function of the Unit is to deal with promotion and coordination of all matters relating to publicprivate partnership projects undertaken within the Mainland Tanzania. The projects may be undertaken in various sectors of the economy, including infrastructure projects such as roads, bridges, railways, airports, aviation, shipping and navigation. The agreements for executing the projects must be signed between the private party (investor) and a contracting authority, that is, any Ministry; government department; local government authority or statutory corporation depending on the speciality of the project and the jurisdictional authority. The procedure for funding PPP projects is narrated in the Act. All Submitted by BICO II.2130 Monday, 28 February 2011

90 projects for PPP funding must be submitted to the Public Private Partnership Coordination Unit (PPPCU) within TIC. PPPCU will assess and evaluate the project and give its recommendations to the Public Private Partnership Finance Unit (PPPFU) in the Ministry responsible for finance for purposes of ascertaining the funding affordability by the contracting authority (party). After consideration of the project and the feasibility study PPPFU will submit the project to the finance Minister for purposes of appraising the Government. If the project undertaken involves public finance the Minister shall initiate funding process. The Minister is given 30 days within which to make a decision for the funding. If after the expiry of the 30 days no reason for delay is given by the Minister it shall be deemed that the Government has consented to the funding arrangement and the project may proceed to implementation. It remains to be seen how effective this procedure will work in practice. The benefits for enjoyment by investors under PPP are provided in 22(1) of the Act as follows: A project undertaken in accordance with the provisions of this Act which ought to qualify for benefits granted to similar investment in respect of which a certificate has been granted under the Tanzania Investment Centre Act shall be entitled to such benefits granted under that Act, excluding taxable incentives. The nonfiscal incentives include priority access to utilities, transportation and communication services, expatriate employment, and access to regional and subregional markets The Fair Competition Act 2003 The Fair Competition Act, 2003 is another investment promotion law apart from those discussed above. The Act seeks to promote and protect effective competition in trade and commerce; and to protect consumers from unfair and misleading market conduct. To investors, it is promotional in the sense that it regulates competition among themselves particularly for those rendering same services or producing similar products. By protecting Consumers the Act encourages greater consumption of services and products from producers or providers and in the long run promotes investments for upright investors. Submitted by BICO II.2230 Monday, 28 February 2011

91 In pursuant of these objectives Part II of the Act deals with restrictive trade practices. Thus, section 8 of the Act prohibits a person to make or give effect to an agreement if the object, effect or likely effect of the agreement is to appreciably prevent, restrict or distort competition. Similarly, section 9 prohibits a person to make or give effect to an agreement if the object, effect or likely effect of the agreement is: price fixing between competitors; a collective boycott by competitors; or output restrictions between competitors; and collusive bidding or tendering. Further, a person with a dominant position in a market shall not use his position of dominance if the object, effect or likely effect of the conduct is to appreciably prevent, restrict or distort competition. This latter provision is very important because it attempts to protect even new entrants in the market irrespective of the old dominant investors. In as far as protection of consumers is concerned, section 16 of the Act prohibits any person, in connection with supply or possible supply of goods to, inter alia; falsely represent that services are of a particular standard, quality or grade; falsely represent that goods are new; make a false or misleading representation with respect to the price of goods or services; falsely represent that goods are of a particular standard, quality grade, composition, style or model, etc. Finally, section 19 prohibits persons to engage in conduct that is liable to mislead the public as to the nature, the characteristics, and the suitability for their purpose or the quantity of any services. Unfair business practices such as, bait advertisements and unconscionable conduct are equally prohibited. In order to ensure that disputes arising under the Act are dealt with fairly, effectively, efficiently and expeditiously the Act establish a Fair Competition Tribunal chaired by a Chairman who is the holder of the office of a judge. The fact that the Tribunal is chaired by a Judge of the High Court shows how serious the Government is committed to dispensation of justice in disputes on fair competition. In conclusion, the Fair Competition Act 2003 lays down a fair ground for investors interested in investing in Tanzania whether old or new, big or small The East African Community Competition Act, 2006 Unregulated competitions among the business community can discourage potential investors. Similarly, leaving the consumer community at the mercy of service producers and providers Submitted by BICO II.2330 Monday, 28 February 2011

92 may equally have a negative impact on business in the long run. In view of this truism the EAC has enacted the East African Community Competition Act, 2006 to, among other things: promote and protect fair competition in the Community; to provide for consumer welfare; and to establish the East African Community Competition Authority which is charged with the determination of any violation of the Act. In short this Act is intended to promote and protect fair competition in trade within the Community and to protect consumer welfare. The Act applies to all economic activities and sectors involved in crossborder trade. It also aims at restraining malpractices by enterprises through prohibition of anticompetitive concerted practices and abuse of market dominance through consumer exploitation. Further, the Act requires the member states to issue notification before effecting of mergers and acquisitions. At the same time it allows Partner States to grant subsidies, subject to notification of the East African Community Competition Authority established under section 37 of the Act. The utility of this law to investors in the surface and marine transport subsectors is equally important since investments in this sector may aspire for cross border trade The Merchant Shipping Act, 2003 The Merchant Shipping Act (MSA) is both an operational and investment related legislation in the marine subsector. The investment aspects of the Act are captured by some of the provisions discussed below and which may be of interest to investors in this sector. It is of importance to note that if a ship is to trade into the major ports of the world without encountering difficulties with the authorities, it must have a nationality to identify it for legal and commercial purposes. The nationality is obtained by registering the ship. Under section 13 of MSA, no ship shall be registered in Tanzania unless she is wholly owned by persons qualified to own a Tanzanian ship, namely; nationals of Tanzania; Submitted by BICO II.2430 Monday, 28 February 2011

93 individuals or corporations owning ships hired out on bareboat charters to nationals of Tanzania; individuals or corporations in bona fide joint ventures shipping enterprise relationships with nationals of Tanzania as may be prescribed; such other persons as the Minister may by order, specify. Thus, it is clear from this provision that registration of a ship in Tanzania is dependent on involving Tanzania nationals. The same requirement is repeated in Regulation 5 of the Merchant Shipping (Registration and Licensing of Vessels) Regulations, 2005, (GN No. 198/2005). On meeting this qualifications and undergoing the procedure of registration as prescribed in sections 19 and 20 of MSA the ship acquires Tanzanian nationality. The qualifications for licensing a ship in Tanzania are contained in section 54 of MSA, which provides, No ship shall be licensed in Tanzania unless she is owned by any of the persons referred to in section 13. This provision demands the nationality of the ship to be Tanzanian. From these provisions it follows that Tanzania law does advocate for open registries of ships. Open registers have been offered by some states as a means of earning revenue for the flag state. The terms and conditions offered by open registers vary considerably, depending on the policy of the country but the bottomline is to offer terms and conditions that are favourable to international shippers or investors. Tanzania s policy to restrict open registries is rightly informed by the disadvantages that go with ships registered under open registries particularly in terms of monitoring them to see whether they comply with both national and international law. It is a matter of further study if our regulatory authority SUMATRA is adequately equipped and manned to monitor such ships if our law were to allow it. Much as open registries are not allowed in Tanzania it does not automatically follow that foreign investors in shipping are prohibited. Section 13 above makes it clear that such investors may team up with Tanzania nationals to form bona fide joint ventures and register them here in Tanzania or in other states of their choice. It may be of interest to note that way Submitted by BICO II.2530 Monday, 28 February 2011

94 back in 1967 the governments of China and Tanzania entered into a joint venture to establish a Chinese Tanzania Joint Shipping Company known as SINOTASHIP. That Company is still operational today. However, the spirit of establishing joint venture companies with foreign investors in business of sea going vessels is opposed to the coastal trading which is the major focus of this study in terms of the available terms of reference. In line with section 2 of MSA coastal trade is restricted to the carriage of goods or passengers on a sea voyage solely from any place on the coast of the United Republic to any other place or places on the coast of Tanzania. It is therefore considered that sea going vessels could be another lucrative investment area but this calls for an independent study drawing on the lessons learnt from SINOTASHIP The Shipping Agency Act 2002, Cap 415 This is a law which provides for the regulation and control of the specific business of shipping agency in Tanzania. Under section 3 of the Act shipping agency services include but not limited to the following: arrangements for the arrival or departure of ships; arrangements for the provision of port services through port operators, Customs and other Government or semigovernmental institutions, firms or private individuals; arrangements for cargo documentation and forwarding of cargo; arrangements for procuring and processing of documents and performing activities required for dispatch of cargo; arrangements for the provisions of ship of services pertaining to crew matters; arrangements for the provision of ship stores, supplies, ship repairing and any other related services. In so far as the provision of these services is concerned section 7 of the Act says that No person shall be registered and licensed as shipping agent unless that person: (a) is a citizen of Tanzania; Submitted by BICO II.2630 Monday, 28 February 2011

95 (b) is a body corporate incorporated under the Companies Act in which more than fifty percent of the share capital is held directly or indirectly by a citizen of Tanzania. This Act, in terms of provision of shipping agency services restricts the entry to Tanzanians only or in case of body corporate to companies whose majority share is held by Tanzanians. But this entry is further restricted by section 11 of the Act which provides that the Authority (which is SUMATRA) shall not issue a business licence to any applicant if the applicant, among others, is a ship owner, an operator or a charterer. This further restriction is unnecessary and it may have the consequence of impairing multimodal transport in Tanzania as explained further in chapter 6 of the Report. Ship repair is a capital intensive investment. Since the law prohibits foreign investors from pursuing this business alone, they can pair with Tanzanian local investors to establish such joint ventures provided that they are not owners, operators or charters and save the nation from the cost of having to repair its ships in foreign countries especially in Mombasa, Kenya. Facilities of this nature may also be established along the great lakes e.g. Lake Victoria, Tanganyika and Nyasa. 2.6 Review of Legislation Regulating the Transport Sector The transport sector, particularly, the three subsectors are regulated by a myriad of pieces of legislation. These pieces of legislation basically seek to regulate the business and conduct of operators in engaged those areas. Other pieces of legislation lay down the various standards for compliance by the operators ranging from technical to safety standard. Licensing is another common feature in these regulatory laws. By its nature this legislation, hardly deals with promotion of investment like the legislation discussed above. For this reason, the review has refrained from carrying out a thorough and detailed review of each of the following pieces of legislation apart from making this general observation: the Road Traffic Act 1973, Cap 168 the Transport Licensing Act 1973, Cap 317 the Motor Vehicles Driving Schools Act, 1965 Cap 163 the Roads Act, 2007 Submitted by BICO II.2730 Monday, 28 February 2011

96 the Carriage of Goods by Sea Act, 1927 Cap 164 the Inland Water Transport Act, 1938 Cap 172 the Ferries Act, 1928 Cap Summary of Findings, Recommendations and Policy Implications Summary This chapter has presented a review of a number of Government policies and legislation on investment generally in Tanzania. However, two of the policies reviewed were found to be specifically tailored for the transport sector. Pursuant to this exercise the following policies were, accordingly, reviewed: The National Transport Policy, 2003; The National Road Safety Policy 2009; The National Public Private Partnership Policy 2009; and The National Trade Policy These Policies were selected and reviewed on the ground that they provided the lead or key policy documents in as far as investment in Tanzania is concerned. It was found that the bottom line of these Policies is to demonstrate Government s commitment to involvement of the private sector in transport sector development and service provision. In particular, the Policies underscore private sector participation in the provision of safe, affordable and reliable transport infrastructure and services to the public. Besides policy review the study also reviewed the legislation directly related to promotion of investments in Tanzania. Basically, the legislation reviewed in this part gives legal effect or force to the National Policies reviewed earlier. The review covered the following legislation. The Tanzania Investment Act 1997 The Public Private Partnership Act 2010 The Fair Competition Act 2003 The East African Community Competition Act, 2006 The Special Economic Zones Act 2006 The Export Processing Zones Act 2006 The Merchant Shipping Act 2003 The Shipping Agency Act 2002 Submitted by BICO II.2830 Monday, 28 February 2011

97 The review of the legislation was necessary for several reasons. First, as means to attract foreign as well as local capital, the legislation offers a wide range of incentives, fiscal and nonfiscal. Secondly, the legislation guarantees investors against expropriation by the Government or any public agent unless due process of law is set in motion and, thereafter, fair, adequate and prompt compensation is paid to the investor. Thirdly, the legislation establishes institutions, like the Tanzania Investment Centre, (TIC) to specifically assist investors to establish investments in the country, that is, it is a one stop facilitation centre for all investors. Fourthly, this legislation promotes and protects competition in trade and commerce leave alone protection of consumers from unfair competition and misleading market conduct. Fifthly, in the case of the Protocol on Common Market, the Protocol advocates for full integration of market and, thus, urges Partner States to repeal policies and legislation which are inimical to an integrated market. Moreover, the Protocol enjoins Partner States from making any new discriminatory policies and laws Policy Implication and Recommendations The National Investment Promotion Policy 1996 together with its associated legislation, that is, the Tanzania Investment Act 1997 provides only for tax incentives on capital goods that the investor brings in. There is no incentive on operational costs, such as fuel and spare parts which are costly items on the part of the operator. It is therefore recommended that; TIC should devise and promote widely a policy of offering incentives on operational costs to investors on a caseto casebasis especially to investors who would like to invest in the surface and marine transport projects which are environmentally friendly and have wider socio economic impacts to the society, but the projects involve high operational costs in the form of fuel, spare parts and the like. The Government should in collaboration with other Partner States of EAC review all signed Agreements which are in conflict with the smooth implementation of the Protocol on Common Market. The Government should pronounce the three limitations, namely, public policy, public security and public health so that investors from the Partner States do not claim the right of establishment and free movement of services otherwise it will have no justification in barring nationals from other Partner States from exercising this right. Submitted by BICO II.2930 Monday, 28 February 2011

98 The Government should identify and amend accordingly all policies and legislation which are discriminatory contrary to the objectives of the Protocol on Common Market. The Government should liberalise the law on shipping agency services to pave way for multimodal transport so that Tanzania ports can competitively compete with ports in the neighbourhood. 2.8 Selected Readings 1. URT: Ministry of Communications and Transport, National Transport Policy, URT: President s Office, Planning Commission, the National Investment Promotion Policy URT: Ministry of Infrastructure Development, National Road Safety Policy URT: Prime Minister s Office, National Public Private and Partnership (PPP) Policy, URT: Ministry of Trade and Industries, Trade Policy, Tanzania Investment Centre, Tanzania Investment Guide 2008 and Beyond. 7. Export Processing Zones Authority, Investment Opportunities in Tanzanian Export Processing Zone (EPZs). 8. EAC, Treaty for the Establishment of the East African Community, EAC, Protocol on the Establishment of the East African Community Common Market EAC, Tripartite Agreement on Inland Waterways Transport, Submitted by BICO II.3030 Monday, 28 February 2011

99 CHAPTER THREE COASTAL SHIPPING INFRASTRUCTURE, SERVICES AND PLANS 3.1 Introduction Tanzania has a total area of 945,000 sq. km. of which 883,000 sq. km. is land made up of 881,000 sq. km. in the Mainland and 2,000 sq. km. in Zanzibar. The Indian Ocean provides a coastline of 804 km on the eastern part of the country, which stretches from Mozambique to Kenya. An exceptionally large territory and concomitant population is a boon for developing a veritable domestic market. But it is also a challenge in terms of developing adequate transport infrastructure and services which would take advantage of the strategic location of the coastline as a gateway to the neighbouring and landlocked countries of Zambia, Malawi, Burundi, Rwanda, Uganda, and the Democratic Republic of the Congo as well as from within these countries to Europe, Australia, the America, and the Far East. Before the demise of a public company named the Tanzania Coastal Shipping Line (TACOSHILI), the domestic coastal transport services were being offered by TACOSHILI and the SMZ Shipping line which offered services between Dar es Salaam and Zanzibar channel. Until recently, the marine mode of transport has however been liberalised where private operators are abound, although no large investors have been identified so far. A number of these private operators are offering the services that were formally being managed by public companies i.e. TACOSHILI and the SMZ, which stopped their operations following a myriad of financial and operational related problems. Therefore this chapter presents survey findings on the available coastal infrastructure, shipping services and plans. It also covers potential transport development areas in the coastal shipping. As part of the survey, the study recognises the Transport Sector Investment Programme (TSIP) report (MoID, 2008) and Tanzania Ports Master Plan Study (TPA, 2009) which provides comprehensive information on existing infrastructures on major and nonmajor coastal ports in Tanzania as well as available plans on improvements of operations and infrastructure on these ports. The survey findings presented by the study attempts to avoid the repetition of what is covered by these reports. Submitted by BICO III.124 Monday, 28 February 2011

100 3.2 Coastal Ports and Shipping Services Tanzania has a number of coastal ports on the coastline of the Indian Ocean and all of them are managed by the Tanzania Ports Authority (TPA). Major coastal ports are Dar es Salaam, Tanga and Mtwara whereas nonmajor coastal ports include Lindi, Kilwa Masoko, Mafia, and Pangani Dar es Salaam Port The Dar es Salaam port is Tanzania's major port, located on the shores of eastern Africa off the Indian Ocean in Dar es Salaam. It is about km southsouthwest of the Zanzibar port and some km south of Kenya's Mombasa port. It is strategically positioned to move goods not only within East and Central Africa but between Africa and Europe, Australia, the America, and the Far East. The Dar es Salaam Region had a population of 2,497,940 as of the official 2002 census and with a population rate increase of 4.39% annually the population is estimated at 3 million in 2010 making the city one of the fastest growing cities in Africa. The port is the main export point for most of the country's agricultural and mineral exports. It also serves the neighbouring and landlocked countries of Zambia, Malawi, Burundi, Rwanda, Uganda, and the Democratic Republic of the Congo. The port handles about 95% of the country's international trade. It has a rated capacity for 4.1 million tons of dry cargo, 6.0 million tons of bulk liquid cargo, 3.1 million tons of general cargo, and one million tons of containerized cargo. The port contains two kilometers of quays with 11 deepwater berths. Tanzania International Container Terminal Services (TICTS) operates the Dar es Salaam port container terminal. The container terminal has four berths (8 11) totalling a quay length of 735 m in length with a built capacity to handle 250,000 TEUs per annum. Improvements are being made for the terminal to be able to handle a bigger throughput where it handled 307,986 TEUs in 2009 surpassing its initial built capacity. The terminal currently has a holding capacity of 11,000 TEUs (equivalent to 310,000 TEUs per annum) where it covers about 18 hectares and contains 12,000 sq. m. of paved area. The equipments that are available at the terminal include Ship to Shore Gantry Cranes (SSG), Rubber Tyred Gantry Cranes (RTGC), Rail Mounted Gantry Crane (RMGC) serving the two railway lines (TRL and TZR), Mobile Harbour Cranes, Front loaders, Tractors and Trailers. Submitted by BICO III.224 Monday, 28 February 2011

101 The TICTS terminal has an inland container facility where most of the port to port containers are stripped, contents of which are stored pending delivery to designated consignees. TPA also runs an inhouse container terminal between berths 3 5 where it was able to handle a total of 45,752 TEUs in 2009, thus making a total throughput of 353,738 TEUs per annum for the Dar es Salaam port. The general cargo terminal contains eight deepwater berths. It includes eight covered sheds covering 81,000 sq. m. and an open storage areas of 52,400 sq. m. The grain terminal has holding capacity for 30,000 tons of cargo and is aerated and temperaturecontrolled, and it offers fumigation services. On the other hand, the passengers travelling on coastal vessels as well as cruise vessels are served by the Malindi wharf as there is no dedicated cruise terminal yet. a) Passenger Traffic Dar es Salaam port serves at the Malindi wharf passenger vessels as well as cruise vessels travelling to Zanzibar, Bongoyo Island, and Mtwara. Also, the port serves about 23 major international shipping lines that offer their services from a number of areas including South, West and East Africa, Canada, Persian Gulf, India Sub Continent, the Gulf and Europe, and Far East. The Dar es Salaam Zanzibar route is served by five major operators, namely: AZAM Coastal Fast Ferries Limited Star Ferries Limited (Sea Express) Sea Star Services Seagull Company Limited Flying Horse Limited The route is served by vessels of varying capacities, where some vehicles have a capacity of 450 passengers, 300 and others 200 passengers. There are also smaller vessels of capacities 48 and 68, which are primarily on hire for tourism and sight seeing purposes. Fares per trip on the route ranges from Tshs. 13,000/= to Tshs. 15,000/= for third class, 18,000/= to 20,000/= for economy, and 23,000/= to 25,000/= for 1st class. Fares between 20,000/= to 23,000/= dominates during morning and evening peak hours whilst slack fare ranges between 13,000/= to 18,000/= during mid day. Boats with passenger capacity consumes a Submitted by BICO III.324 Monday, 28 February 2011

102 one way total of about 750 litres of fuel whereas boats with capacity of 450 (4 engines) passengers consumes a one way total of about 1,000 litres of fuel. The Tanzania Ports Master Plan Study (TPA, 2009) noted that since 2001 the average growth rate for passengers travel to/ from Zanzibar has been 5.6% per annum. Even with the low forecast at a growth rate of 2.5% per annum, the study found an increase in passengers travel to/ from Zanzibar until Likewise, cruise ships activities are poised to increase if a provision is made for construction of an attractive cruise terminal and redevelopment of the Dar es Salaam waterfront. Overseas experience from Turkey on ferry travel, where the capital city of Istanbul is bisected into two one on Asia while the other on the European side of the Istanbul city shows that there are over 200 ferry boats offering services across the creek like our Kigamboni ferry services. There is also a link bridge which flies over the creek and a road toll charged to motorists who opt to go by car. Boat fares are collected and services offered to any passenger using a common ticket, where revenue are later on established by the firm assigned for the task of revenue collection. b) Cargo Traffic Table 3.1 depicts the performance of the Dar es Salaam port for the years 2000 to 2009 in terms of imports and exports of containerised cargo, conventional cargo, liquid cargo, and break bulk cargo. The statistics are further shown in Figures 3.1 to 3.3. It can be seen from Figure 3.1 that the import volumes of liquid cargo, containerised cargo, and dry bulk cargo have relatively been increasing over the past years compared to conventional cargo. On the other hand, Figure 3.2 shows a declining trend in export volumes of liquid and conventional cargo. Generally, over the last 10 years import volumes have increased by 117% whereas exports increased by 69%. It can be deduced from Table 3.1 and Figure 3.3 that on average 79% of the total cargo (import, export, transhipment, bunkers) handled by the port over the last ten years have been import cargo whereas the share for export cargo is 16%. Additionally, it can be noted that, on average a conservative capacity utilisation degrees for dry cargo, bulk liquid cargo, general cargo, and containerized cargo has been 0.2, 0.3, 0.3, and 2.1, respectively. Submitted by BICO III.424 Monday, 28 February 2011

103 It was difficult to get the amount of cargo handled at the Malindi wharf, however, it is estimated that about 3,000 tons of cement is handled at the Malindi wharf through the Cement Distributors (E.A.) which has depots in Mtwara, Zanzibar and Pemba. Cement shipping to Lindi is around 600 tons per month and the demand for Mtwara, according to the distributors, is not well know because a large amount of cement is supplied to these regions by road transport. 7,000,000 6,000,000 Volume in DWT 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Containerised Cargo Conventional Cargo Dry Bulk Cargo Liquid Bulk Cargo Total Import Year Figure 3.1: Trend in Import Volume at Dar es Salaam Port 1,400,000 Export Volume in DWT 1,200,000 1,000, , , , ,000 0 Containerised Cargo Conventional Cargo Liquid Bulk Cargo Total Export Year Figure 3.2: Trend in Export Volume at Dar es Salaam Port Submitted by BICO III.524 Monday, 28 February 2011

104 Volume in DWT 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Total Import Total Export Grand Total Cargo Year Figure 3.3: Trend in Dar es Salaam Port Throughput Submitted by BICO III.624 Monday, 28 February 2011

105 Table 3.1: Dar es Salaam Port Throughput (in DWT), Year Imports Containerised Cargo 727, , ,899 1,024,133 1,265,159 1,371,970 1,347,186 1,915,714 2,171,699 2,056,040 Conventional Cargo 699, , , , , , , , , ,868 Dry Bulk Cargo 376, , , , , ,342 1,115,885 1,129, ,341 1,270,115 Liquid Bulk Cargo 1,254,214 1,573,849 1,603,386 1,798,268 2,006,373 1,936,594 2,060,676 2,074,384 2,142,309 2,645,599 Sub Total 3,057,915 3,512,177 3,630,716 4,041,779 4,763,537 4,829,009 5,225,448 5,676,488 5,807,153 6,629,622 Of which Transit in Exports Containerised Cargo 458, , , , , , , ,375 1,068,129 1,067,392 Conventional Cargo 219, , , , , , , , , ,212 Liquid Bulk Cargo 66,268 38,586 53,621 39,467 54,252 77,233 41,387 47,202 52,570 43,779 Sub Total 745, , , , ,925 1,051,184 1,003,974 1,316,992 1,242,699 1,259,383 Of which Transit out Grand Total 3,803,039 4,177,945 4,355,060 4,923,163 5,678,462 5,880,193 6,229,422 6,993,480 7,049,852 7,889,005 Transhipment 31,538 93, , , , , , , , ,016 Bunkers 1, , Total all Cargo 3,836,168 4,271,574 4,524,509 5,168,964 6,054,019 6,285,060 6,657,496 7,427,274 7,421,204 8,102,956 Container Traffic TEU's 124, , , , , , , , , ,738 Total Vessel Calls 5,240 3,746 3,881 3,912 4,494 4,486 4,147 4,380 4,275 4,349 Source: TPA Planning Department Submitted by BICO III.724 Monday, 28 February 2011

106 3.2.2 Tanga Port Tanga is located on the north side of the Tanzania coastline, about 354 km north of Dar es Salaam. The port is located inside a natural bay sheltered from the sea. Tanga as a harbour offers a safe anchorage for ocean going vessel up to 213 m. Another harbour has three anchorages for vessels up to 9.45 m draught. Lighterage is performed for 24 hours using tugs, lighters and pontoons. The port also has two lighterage wharves for small vessels of up to 3.5 m draft with a total length of 381 m and nine handling points, and on the average receives 50 liner vessels, 40 coastal vessels and 25 coastal tankers. Tanga port has storage of nine transit sheds with a total storage capacity of 24,000 sq. m. It has a container stacking yard of about 17,000 square metres with capacity of more than 500 TEUs and a plug in points for refrigerated container. Port capacity has increased from 500,000 tons to 750,000 tons per year due to: Rehabilitation of quay number 1. Expansion of container slots from Improved documentation procedures of removing cargo from the port. Outsourcing of port activities. a) Passenger Traffic According to 2009 statistics of the National Bureau of Statistics, the population of Tanga was estimated at million from million in the year 2002 census. Likewise, the population density was noted to be 71 persons per square kilometre. The port serves at the dhow wharf or quay passenger traffic crossing the channel between Tanga and Zanzibar, Pemba and Dar es Salaam. Such services are offered using a mix of traditional and modern vessels served at the port such as cruise ships, speed boats and dhows that are privately owned for passenger volume ranging between 100 and 240 per day. b) Cargo Traffic Table 3.2 presents the performance of the Tanga port for the years 2000 to 2009 in terms of imports and exports of containerised cargo, conventional cargo and liquid cargo. The statistics are further shown in Figures 3.4 to 3.6. It can be seen from Figure 3.4 that the Submitted by BICO III.824 Monday, 28 February 2011

107 import volumes of containerised cargo have relatively been increasing over the past years compared to conventional and liquid cargoes which have witnessed a decline in volumes since years 2009 and 2007, respectively. On the other hand, Figure 3.5 shows a relatively staggering trend in export volumes of both containerised and conventional cargoes since years 2005 and It is interesting to note that Tanga port has generally not handled liquid export cargo over the last 10 ten years, and each of the total import and export cargoes handled at the port over the same period accounted for 50% of grand total tonnages of the cargoes (Figure 3.6). Overall, the total volume of cargo handled at Tanga port has been around 0.24 to 0.64 of the available port capacity, and for import cargo it ranges from 0.11 to 0.38 and 0.17 to 0.29 for export cargo, which indicate very low usage of the available port capacity. This trend reflects the data available between 2000 to 2009, and the low usage can be associated to the collapse of traditional export commodities, mainly sisal, tea and coffee, after the nationalization and poor management of plantations, in particular of the sisal industry and poor infrastructure links to the port s hinterland. 350,000 Cargo Volume in DWT 300, , , , ,000 50,000 0 Containerised Cargo Conventional Cargo Liquid Bulk Cargo Total Import Year Figure 3.4: Trend in Import Volume at Tanga Port Submitted by BICO III.924 Monday, 28 February 2011

108 Table 3.2: Tanga Port Traffic (in DWT), Year Imports Containerised Cargo 45,315 58,332 67,647 74,661 79,078 88,253 49,651 83,308 71,126 93,105 Conventional Cargo 27,058 18,945 10,151 22,982 21,419 38, ,324 96, , ,533 Liquid Bulk Cargo 11,056 23,479 22,394 33,335 28,427 57, ,921 97,004 46,692 6,654 Sub Total 83, , , , , , , , , ,292 Exports Containerised Cargo 37,541 63,905 77,560 89,396 92,979 88,797 55,791 57,997 10,122 51,123 Conventional Cargo 58,145 66,860 90, , , , , , ,094 97,323 Liquid Bulk Cargo 110 Sub Total 95, , , , , , , , , ,446 Grand Total 179, , , , , , , , , ,738 Container Traffic TEU's 10,102 11,637 10,987 12,410 12,674 13,682 8,624 8,894 12,263 14,796 Total Vessel Calls 1,564 1,632 1,688 1,756 1,660 1,484 1, Source: TPA Planning Department Submitted by BICO III.1024 Monday, 28 February 2011

109 250,000 Cargo Volume in DWT 200, , ,000 50,000 0 Containerised Cargo Conventional Cargo Liquid Bulk Cargo Total Export Year Figure 3.5: Trend in Export Volume at Tanga Port 350,000 Cargo Volume in DWT 300, , , , ,000 50,000 0 Total Import Total Export Year Figure 3.6: Trend in Total Cargo Volume at Tanga Port Mtwara port Mtwara Port has two deepwater berths of about 9.8 m deep with total length of 380 m. The quay length allows two deep sea vessels and one coaster to berth at the same time. The entrance is 20 m deep and an inner basin with the pier. Sheltered anchorage can accommodate six vessels of 2,175 m. The port has four transit sheds with a total floor area of 16,723 sq. m. and a container stacking round of about 13, 000 sq. m. The port can handle up to 750,000 metric tonnes of imports and exports per annum including containerised cargo. Submitted by BICO III.1124 Monday, 28 February 2011

110 Table 3.3 presents the performance of the Mtwara port for the years 2000 to 2009 in terms of imports and exports of both containerised and conventional cargoes. The statistics are further shown in Figures 3.7 to 3.9. It can be noted from Figure 3.7 that on average there has been a decline in import cargo volumes at the port over the past ten years with a notable decrease in liquid cargo. On the other hand, Figure 3.8 shows a relatively staggering trend in export volumes of both containerised and conventional cargoes. Likewise, Mtwara port has generally not handled liquid export cargo over the last 10 ten years as well, and the total import and export cargoes handled at the port over the same period accounted for 44% and 56% of the grand total tonnages of the cargoes, respectively (Figure 3.9). Basing on the available data from 2000 to 2009, the total volume of cargo handled at Mtwara port has been around 0.12 to 0.24 of the available port capacity, and for import cargo it ranges from 0.06 to 0.11 and 0.06 to 0.15 for export cargo, which indicate very low usage of the available port capacity as well. Submitted by BICO III.1224 Monday, 28 February 2011

111 Table 3.3: Mtwara Port Traffic (in DWT), Year Imports Containerised Cargo 6,651 12,591 10,519 5,821 9,340 9,771 9,266 6,642 7,249 11,334 Conventional Cargo 49,050 37,339 48,030 53,391 44,186 33,915 45,178 33,931 39,940 41,716 Liquid Bulk Cargo 23,138 21,388 20,185 10,745 12,235 11,604 8,154 5,600 6,513 0 Sub Total 78,839 71,318 78,734 69,957 65,761 55,290 62,598 46,173 53,702 53,050 Exports Containerised Cargo 43,217 79,713 86,647 24,649 67,780 35,086 55,090 14,758 1,292 64,019 Conventional Cargo 51,298 30,803 14,080 46,728 21,362 19,821 37,236 28,798 57,945 36,166 Liquid Bulk Cargo Sub Total 94, , ,727 71,377 89,142 54,907 92,326 43,556 59, ,185 Grand Total 173, , , , , , ,924 89, , ,235 Container Traffic TEU's 5,242 10,077 9,693 3,703 7,615 6,900 7,140 4,835 6,445 6,782 Total Vessel Calls Source: TPA Planning Department Submitted by BICO III.1324 Monday, 28 February 2011

112 Cargo Volume in DWT 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Containerised Cargo Conventional Cargo Liquid Bulk Cargo Total Import Year Figure 3.7: Trend in Import Cargo Volume at Mtwara Port 120,000 Cargo Volume in DWT 100,000 80,000 60,000 40,000 20,000 0 Containerised Cargo Conventional Cargo Liquid Bulk Cargo Total Export Year Figure 3.8: Trend in Export Cargo Volume at Mtwara Port Submitted by BICO III.1424 Monday, 28 February 2011

113 Cargo Volume in DWT 120, ,000 80,000 60,000 40,000 20,000 0 Total Import Total Export Year Figure 3.9: Trend in Total Cargo Volume at Mtwara Port NonMajor Coastal Ports a) Lindi Port Lindi is located about 100 km North West of Mtwara in an estuary. The port has small pier designed for a 4 m draft. The pier is a sheet pile structure with a concrete deck with a length of 15 m to 20 m. The area owned by TPA is about 5.7 ha. The port has one dhow jetty, three transit sheds with a floor area of about 1,505 sq. m. The last National Population Census of 2002 showed that Lindi urban had a population of 41,549 and 215,784 for Lindi rural where the national growth rate was estimated at 2.8%. In order to assess the user perception of key attributes on coastal shipping, a survey was conducted in Lindi during the months of August and September of 2010 and it involved 119 respondents whose main trip purposes are shown in Figure The main trip purposes of the travellers was found to be work and business activities and hence the majority of the respondents category, whose usage of coastal passenger services is very low as shown in Figure 3.11 Submitted by BICO III.1524 Monday, 28 February 2011

114 Other purpose, 24.20% Education,, 5.90% Work, 35.30% Business, 33.60% Figure 3.10: Main Trip Purpose of a Cross Section of a Sample of Travellers in Lindi Other modes, 14.30% Boat/dhow, 4.50% Walking, 42.90% Bicycle, 21.40% Bus, 17.00% Figure 3.11: Main Trip Purpose of a Cross Section of a Sample of Travellers in Lindi b) Mafia port Mafia is an Island located 125 km southwest of Dar es Salaam. The port is located in Kilindoni and is mostly used for local import and export from and to Dar es Salaam, mostly through Kisiju. The port has just a jetty and consists of a beach with a concrete ramp and pier Submitted by BICO III.1624 Monday, 28 February 2011

115 which is used for loading and unloading of dhows. A temporary pier structure was built using bags filled with sand and contained by wire mesh. The island of Mafia is highly dependent on sea passenger traffic and as a result passengers use dhows to Nyamisati and thereafter buses from there to Dar es Salaam and viceversa. A combined one way trip costs about Tshs. 10,000/=, and daily traffic is estimated at 30 passengers. Additionally, the island is highly dependent on sea cargo for local import of consumption goods, construction materials and foodstuffs whereas export flows are insignificant. Cargo handled at the port includes cashew nuts, coconuts frozen fish, cement and foodstuffs and even a car occasionally. All cargo is loaded and unloaded manually. c) Nyamisati Pier Nyamisati cluster port is in front of a small village named Nyamisati in Rufiji district in the Coast region; it is about 150 km from Dar es Salaam, and the relevant pier at the port has a wooden structure made of mangrove trees and was constructed in 1997 to function as a pier for a fishing processing plant then run by a private company named African Fishing Company Limited. The pier handles coastal passenger services which are offered by using dhows and powered boats (with engines), and the average number of passengers is around 100 people per day. Dhows are privately owned and are also used for general cargo movement between Nyamisati and Mafia, and the cargo handled includes coconuts, cement and foodstuffs. All cargoes are loaded and unloaded manually and on average the amount of cargo handled at the pier is estimated at 199 tonnes per day. d) Kisiju Port Kisiju is a small port in Mkuranga district in the Coast region. There isn't any structure in Kisiju and as a result there are no private operators offering passenger services in Kisiju often due to the fact that it is closer to Dar es Salaam and residents have an option to travel by road. However, there is a significant domestic trade between Kisiju and Mafia, where privately owned dhows are mainly used for general cargo deliveries between Kisiju and Mafia, and on average it is estimated that the average cargo handled at Kisiju is estimated at 1,000 tonnes per week, which translates to 50 dhows of 20 tonnes each. Improved motorized vessels of 50 tons capacity can be advantageous to the operators if they can form groups aimed at Submitted by BICO III.1724 Monday, 28 February 2011

116 establishing Transport SACCOS at the port. All operations involve manual labour for both loading and unloading, and the types of cargo handled at the port include coconut, cement, foodstuffs and cars. e) Pangani Port Pangani port is a small local port about 40 km south of Tanga and is located on the north shore of the Pangani River. The depth in the river is 2 m to 4 m, and the only infrastructure which is available at the port is a former jetty structure which has only remained with the foundation to date. The port has no quay walls. There are two (2) ferries which are operated by TEMESA but one is on maintenance. The main product handled is coconut and other products include timber and livestock. All loading and unloading is done manually. 3.3 Available Plans This section summarises some of the available plans as documented in the TSIP Phase I, 2007/08 to 2011/12 (MoID, 2008) report and TPA Master Plan Final Report (TPA, 2009). The available plans in the coastal shipping include: Rehabilitation and replacement of the equipment at cargo terminal, grain terminal operational improvement and Kurasini oil jetty (KOJ) improvements at the Dar es Salaam port. Improvements on marine services at the Dar es Salaam port as well as on the establishment of a port community and the implementation of the ISPS code. The second priority on Phase 1 of the TSIP refers to activities that include the rehabilitation and replacement of the Single Point Mooring (SPM) and its pipeline, as well as on the conversion of two TPA berths at general cargo terminal to handle bulk carriers. The third priority of the TSIP involves dredging of the Dar es Salaam port entrance channel. Development of the water front area as proposed in ports master plan as well as complimenting efforts done by the EPZA on the establishment of an economic development zone in Bagamoyo EPZ/ EDZ where the proposed Mbegani port is geared towards the successful takeoff, on the multisectoral project. However, it should be noted that EPZs have been successful in certain locations worldwide, but are extremely demanding in terms of geographical position, infrastructural needs, in Submitted by BICO III.1824 Monday, 28 February 2011

117 particular energy, water and sanitation, low cost skilled and motivated labour force, governance and management capacity. EPZs operate at the cutting edge of cost efficiency, and investors can only be attracted and succeed with all these factors being in place beforehand. Successful EPZs like in Dubai and Singapore all offer top level technical infrastructure and management, highly skilled, relatively low cost labour force and adequate facilities to cater for the multiple needs of the EPZ industries. Modernization of TPA oil handling facilities i.e. jetties, pipelines, manifolds and respective marine pumps at the shoreline. Berths 5, 6 and 7 are planned to be upgraded to accommodate deeper drafted bulk berths, where TPA plans the development of oil spillage response measures in Dar es Salaam. Construction of two additional berths for container handling (berths 13 and 14) is considered as a solution to allow future growth of container handling in Dar es Salaam. The berths are planned on the south side of KOJ on the site of the present dockyard complex. Further, improvement and the development of the Tanga port operation, and an area of 92.8 hectares has been acquired at Mwambani for expansion of the port. Likewise, Mtwara port is planned for port operations improvement. Further, there are plans to construct a jetty on Mafia Island. 3.4 Identified potential development areas in Coastal Shipping Coastal shipping services may be provided to serve the coastal side of the city of Dar es salaam from Mbweni, Ununio (Ndege Beach), Kunduchi, Kawe, Msasani among other cluster stops to city centre (e.g., Magogoni) as well as nonurban shipping services from Dar es salaam to other locations such as Bagamoyo, Nyamisati, Kilwa, Mafia, Zanzibar, Lindi, Mtwara, and Tanga. Currently, the prime motivation for coastal shipping services in Dar es Salaam could be the building units that are being completed at the Bahari Beach plots by the Integrated Property Investments Limited (IPI Ltd). Some of the units being built at the plots once completed will offer apart from residential units, shopping mall, hotels, banks and other services which in turn would attract a number of customers from other parts of Dar es Salaam city. Introducing passenger coastal shipping services from Bahari Beach to the city centre will therefore not only serve customers to Bahari Beach, but also will relieve congestion from road transport Submitted by BICO III.1924 Monday, 28 February 2011

118 services between the two terminals, where the northern coastal stretch is highly becoming urbanized with new developments. Moreover, introducing passenger services from Bahari Beach to city centre will also provide a direct and a shortest route to Zanzibar from Bahari Beach terminal with less seaport manoeuvre time associated with the inner Dar es Salaam port navigation, as well as help in removing the congestion caused by ferry passengers at the Dar es Salaam city centre terminal, thus giving more room for the inner city traffic. Tourists visiting the Bahari Beach units will be able to connect from there to either Zanzibar, Bagamoyo or to the southern coastline of Dar es Salaam i.e. Rufiji which is closer to the famous Selous Game Reserve, as well as the touristic and historical Kilwa Township, the Mafia Island, Lindi, Mtwara, and Tanga as well. Such coastal services can be extended to cover Mbweni, Ununio (Ndege Beach), and other nodes such as Kunduchi, Kawe, Msasani among others, being the route cluster stops. The Consultant was able to identify the basic requirements posed by the interested investor who expressed the need for the government or any other investor thereof, to engage in the construction of subsequent ferry jetties at named cluster ports as well as between the designated terminals, to compliment on the proposed investment before any potential investor commits funding. One investor equally expressed the possibility of providing two ferries with a minimum carrying capacity of 500 passengers and about 110 motor vehicles costing each about 9 million USD or a ferry boat which can carry passengers only as it may deem suitable. The option of providing ferry boats and building a terminal/jetty at Bahari Beach and at the subsequent cluster ports, is therefore one of the potential investment areas worthy further consideration in this study. It was found that ferry services can be initiated to serve people living around Tegeta, Boko, Bunju, Mbweni Kunduchi Kawe, Mikocheni, Msasani and even Kijitonyama and Sinza respectively where recently going or coming from the city centre to these locations had often taken a longer transit time than it usually was. The ferry services that are now being proposed to operate between the above mentioned locations, are aimed at connecting to the city centre (CBD), of which will spur and offer a higher development in the near future to the north east Dar es Salaam coastline, as well as signalling a new marine Submitted by BICO III.2024 Monday, 28 February 2011

119 travel pattern between Mbweni/ Bahari Beach to either Zanzibar or Bagamoyo, where it would offer the shortest transit possible path. The proposed coastal ferry services will relieve the traffic congestion in Bagamoyo road, particularly during the two rush hours i.e. 5 a.m 9 a.m. and 4 p.m. 9 p.m. Until recently, traffic congestion and other transportation problems have become a part of the everyday life for people living along the Bagamoyo road, as urbanization have proceeded further to the outskirts. Table 3.4 shows the population, as per the 2002 population census and the projected growth of 4.3%, of potential areas to be served by the proposed coastal shipping services in Dar es Salaam city. In 2009, the National Bureau of Statistics reviewed the 2002 Census for the whole country, where Dar es Salaam region population was estimated at 3.04 million reflecting the highest concentration of 3,040 persons per square kilometre comparatively. Table 3.4: Population of Potential Areas Msasani 43,457 Kinondoni 21,489 Kawe 94,535 Kunduchi 72,927 Mbweni 3,475 Bunju 20,868 Mikocheni 27,283 Mbezi 32,641 Kijitonyama 47,096 Sinza 36,469 Makumbusho 55,702 In order to mitigate the existing transport problems in the listed areas, additional transport infrastructure and services have to be provided. Existing transport infrastructure and services for the most part of the city has proven to be inadequate and therefore the government should seek alternative modal approaches to the problem. The designated ferry stations should be developed in such a way that feeder bus routes can be provided between the proposed stations and traffic generators areas like Tegeta, Wazo and Salasala. The feeder routes can be designed taking into consideration the estimated ridership pattern on every link within the feeder area, and also the access and demand of each of the Submitted by BICO III.2124 Monday, 28 February 2011

120 ferry station. The integrated schedules can be developed by optimizing the combined objective function of ferry operator costs as against the transfer time, flexibility and comfort, experienced by the user of the ferry services. 3.5 Summary of Findings, Recommendations and Policy Implications The chapter has presented survey findings on the available coastal infrastructure, shipping services and plans in the coastal shipping. It has further, identified coastal shipping potential development areas. It was found that over the last 10 years import volumes have increased by 117% whereas exports increased by 69% on Dar es Salaam port, and on average 79% of the total cargo (import, export, transhipment and bunker services) handled by the port over the last ten years have been import cargo and the share for export cargo is 16%. Additionally, it was noted that on average a conservative capacity utilisation degrees for dry cargo, bulk liquid cargo, general cargo, and containerized cargo has been 0.2, 0.3, 0.3, and 2.1, respectively. Of particular interest is the fact that Tanga port has generally not handled liquid export cargo over the last 10 ten years, and each of the total import and export cargoes handled at the port over the same period accounted for 50% of grand total tonnages of the cargoes. Overall, the total volume of cargo handled at Tanga port has been around 0.24 to 0.64 of the available port capacity, and for import cargo it ranges from 0.11 to 0.38 and 0.17 to 0.29 for export cargo, which indicate very low usage of the available port capacity. This trend reflects the data available between 2000 to 2009, and the low usage can be associated to the collapse of traditional export commodities, mainly sisal, tea and coffee, after the nationalization and poor management of plantations, in particular of the sisal industry and poor infrastructure links to the port s hinterland. It was further found that Mtwara port also has not handled liquid export cargo over the last 10 ten years as well, and the total import and export cargoes handled at the port over the same period of time accounted for 44% and 56% of the grand total tonnages of the cargoes, respectively. Basing on the available data from 2000 to 2009, the total volume of cargo handled at Mtwara port has been around 0.12 to 0.24 of the available port capacity, and for Submitted by BICO III.2224 Monday, 28 February 2011

121 import cargo it ranges from 0.06 to 0.11 and 0.06 to 0.15 for export cargo, which indicate very low usage of the available port capacity as well. On nonmajor coastal ports, all cargo is loaded and unloaded manually and dhows are the primary marine vessels and are privately owned and mainly used for passenger and cargo movements. On the coastal shipping potential development areas, the study proposes two specific investments areas, that is, urban coastal shipping for the city of Dar es Salaam and coastal shipping across the Channel. Investment in these areas is supported by the stakeholders interviewed and available data and information. The following are the specific recommendations for the proposed investment areas. Dar es Salaam Urban Coastal Travel o Introduction of coastal passenger services between the city centre via several stops, that is, Ununio, Bahari Beach, Kunduchi, Kawe and Msasani. There are two options for operationalising the recommendation. First, encourage the Government to construct jets and private investors to acquire and operate either large passenger vessels with a carrying capacity of a minimum of 500 passengers and 110 cars or medium vessels with carrying capacity of 350 passengers without cars. o The second option is to construct floating docks together and to purchase shipping vessels. For the purposes of implementing the option, a further comprehensive study is required to establish suitable sites and type of docks to be used. Across the Channel o Introduction and/or expansion of scheduled sea ferry services between Dar es Salaam and Zanzibar, Pemba and Mafia. Formation of coastal shipping Transport SACCOS as one of the ways to improve coastal shipping services on nonmajor coastal ports. Several legislative, coordination and support measures can be designed and taken, which focuses on: Submitted by BICO III.2324 Monday, 28 February 2011

122 Creating favourable conditions for services and the development of infrastructures on nonmajor ports. This includes supporting scheduled services and facilitating access to capital for proposed transport SACCOS. Providing incentives for the manufacturing, modernisation and repair of coastal shipping vessels locally, e.g. by developing and promoting the use of innovative concepts and technologies for the construction of new vessels. 3.6 Selected Literature MoID (2008) 10 Year Transport Sector Investment Programme (TSIP) Phase 1 (2007/8 2011/12) National Bureau of Statistics (2009), 2009 Country Population Estimates TPA (2009) Tanzania Ports Master Plan, Final Report Submitted by BICO III.2424 Monday, 28 February 2011

123 CHAPTER FOUR INLAND WATERWAYS TRANSPORT INFRASTRUCTURE, SERVICES AND PLANS 4.1 Introduction Tanzania is endowed with navigable inland waterways, with the most three prominent being the Lake Victoria, Lake Tanganyika and Lake Nyasa. Lake Nyasa is in the South part of Tanzania and is relatively small compared to the two. If the inland waterways and their associated surface infrastructure are well developed, they could offer excellent intermodal connections between five neighbouring land locked countries of Uganda, Burundi, DRC, Zambia as well as Malawi, in connecting all these countries with the rest of the world, while at the same time offering services to Tanzania crossborder trade, as well as on domestic circles within and along the lake shores. Inland waterways transport is generally considered to be costeffective, relatively fuelefficient, and environmentally friendly. It also play a critical role in inland transportation both for passengers and cargo, while offering opportunities for conducting economic activities such as fishing and cruise tourism. The operation of nine major inland ports (Mwanza North and South, Bukoba, Kemondo Bay and Musoma on Lake Victoria, while on Lake Tanganyika it has the Kigoma and Kasanga Ports and Mbamba Bay Port (Ruvuma Region) and the New Kiwira Port in Mbeya Region on Lake Nyasa.) has been taken over by the Tanzania Ports Authority (TPA) from the former owner M/S Marine Services Company limited (MSCL), which currently continues to operate passengers and cargo ferries, on all the Tanzanian major Inland Waterways. TPA has concessioned M/S MUAPI Limited and M/S AGRO Investment Limited Kigoma port and Kasanga port, respectively, and is currently making further new developments to four Lake Tanganyika Cluster Ports situated in Rukwa Region, namely Kalya, Kirando, Kipili and Karema to be able to service both domestic and regional trade respectively. 4.2 Lake Victoria Ports and Shipping Services According to the 2006 World Lake Basin Management Initiative Project report in conjunction with the Global Environment Facility (GEF), Lake Victoria has an area of 68,800 sq. km. It is Submitted by BICO IV.155 Monday, 28 February 2011

124 the largest lake on African continent and also the largest tropical lake in the world, and the second largest fresh water lake in the world in terms of surface area. Lake Victoria ranks as the seventh largest freshwater lake by volume, containing 2,750 cubic kilometres (2.2 million acrefeet) of water. Its surface area is shared among Kenya (6%), Uganda (43%) and Tanzania (51%). The catchment area is 193,000 sq. km. which extends to Rwanda and Burundi. The lake and its basin are endowed with abundant natural resources, which support the livelihoods of the inhabitants found in the basin within the three East African countries. It lies within an elevated plateau in the western part of Africa's Great Rift Valley and is subject to territorial administration by Tanzania, Uganda, and Kenya. It has a shoreline of 3,440 km and has more than three thousand islands, many of which are inhabited. These include the Ssese Islands in Uganda, a large group of islands in the northwest area of the lake that are becoming a popular destination for tourists. It plays a vital role in supporting the millions of people living within and around its shores, in one of the most densely populated regions. As per the 2009 National Census Bureau estimates, the population for the three regions surrounding Lake Victoria, i.e. Mwanza, Kagera and Mara, stands at million, making a total percentage of over 18% from the national population estimate reading million people with a growth rate pegged at 2.9% annually. In recent years, the water level of the lake has also been dropping; a trend attributed to regional drought and increased outflows. On the Tanzanian territory, Lake Victoria has five main ports of Mwanza, Kemondo, Bukoba and Musoma, where Mwanza Port (being the biggest of them all), is functionally divided into two terminals Mwanza North and Mwanza South. The Lake has also a myriad of other various cluster ports located within and along the shore line of the lake basin, which offer links to a number of islands within it. The five main ports of Lake Victoria, administratively report to the Tanzania Ports Authority Branch manager who is based in Mwanza. Apart from Tanzanian ports along and within Lake Victoria, there are other three major regional ports (Kisumu port in Kenya, Bell and Jinja ports which are located in Uganda). Of the three listed ports, the most common are Jinja and Kisumu. The last 5 years has however Submitted by BICO IV.255 Monday, 28 February 2011

125 seen a tremendous decline in marine cargo and transport services across and along the lake, for reasons that are explained and forming part of this chapter MSCL Passenger Traffic Across Lake Victoria The MSCL is among the major transporters of cargo and passengers across Lake Victoria. Despite the increase in economic activities within and around the Lake, MSCL has not been able to record significant passenger and cargo transport services to the population in and around the lake. Table 4.1 shows the number of passengers handled by MSCL as monitored through the Mwanza North port, between 2003 and As the table shows, MSCL passenger services trend as recorded over time reflects a decline on the number of passengers using the vessels, with the exception of the Mwanza Nansio Route which MSCL shares with other private operators, though the route has a high frequency of passengers comparatively, across the two townships. Table 4.1: MSCL Passenger Movement across Lake Victoria Ports Year Mwanza Port Bukoba Port Musoma Port Kemondo Bay Port Nansio Port Source: MOID / MSCL Figure 4.1 also shows the total overall performance of the MSCL vessels in Lake Victoria. It shows a cross section of MSCL passenger volumes on all ports over a period between 2003 and 2009 by ports of call respectively. Submitted by BICO IV.355 Monday, 28 February 2011

126 Figure 4.1: MSCL Passenger Volume at Lake Victoria (Source: MOID / MSCL) Apart from the fact that MSCL vessels are facing a stiff competition from private vessel/boat operators in the market they had predominantly maintained transport services over the years. MSCL passenger decline trend is also occasioned by modal competition between the road and the inland waterways transport as well as poor performance of the TRL Dar es Salaam Mwanza passenger services. Additionally, the decline in the number of MSCL passengers has also been associated with frequent breakdown of MSCL vessels, which results into longer idle stay of vessels in port waiting for repair of which in most cases take a longer time to accomplish. Basically MSCL vessels frequent breakdowns are often associated with the aging of the fleet as indicated in Table 4.2. Table 4.2: Vessels Operated by Marine Service Company Limited on Lake Victoria Vessels Passenger Cargo Capacity Capacity (Tons) Year Built MV Victoria 1, MV Butiama MV Serengeti MV Clarias MV Nyangumi (Tanker) N/A MT Ukerewe (TUG) N/A ML Maindi N/A ML Wimbi N/A MV Umoja (rail wagons carrier) N/A MT Linda (TUG) N/A Source: MSCL Submitted by BICO IV.455 Monday, 28 February 2011

127 MSCL had to abandon the Mwanza Musoma passenger services in 2007, after it experienced passengers modal shift from the MSCL ferry to road transport service between the two townships, that are less than 5 hours drive apart. Further, by mid of 2010, TANROADS were finalising the construction of the Mwanza Bukoba Highway through Muleba and the Kemondo Bay Port, where these have traditionally been the breeding ground for passengers and cargo heading to or originating from Mwanza Mwanza North Port The Mwanza North port is strategically located within Mwanza City and is dedicated for passengers and parcel handling. The terminal handles an average of about 500,000 passengers and 65,000 DWT of cargo per annum. a) Infrastructure The port has a quay length of about 100 meters which have a capacity to berth two vessels and a ramp for landing crafts. Other existing facilities that are provided at the port include: One goods shed with capacity of 4000 cubic meters A building used for ticketing, cargo shed and facilitators (customs, health transactions) Passenger facility two waiting lounges for lower class and upper class with capacity to accommodate 1,300 passengers 4 fuel storage tanks with capacity of 54,000 litres each A three storey building formerly owned by MSCL is now under the TPA and is accommodating the office of the Mwanza TPA Branch Manager as well as the MSCL Headquarters. The port has a railway siding linking it with the Mwanza Central Railway Station as well as the South port and the Mwanza South TRL Terminal. b) Passenger Traffic Irrespective of the MSCL operational challenges and the fact that MSCL traditional market is now being shared by other Lake Victoria private boat operators, an overview of the overall passenger numbers, as recorded by Mwanza TPA office, was obtained to determine the MSCL market share. As Table 4.3 shows, there has been a decline in the MSCL passenger volumes handled at Mwanza north port since year TPA records from Mwanza Branch Submitted by BICO IV.555 Monday, 28 February 2011

128 Office do not show the passenger volumes for the year 2008/09. Additionally, it may be noted that MSCL market share in Lake Victoria for the year 2009 was about 51% of the entire movement of Lake Victoria passengers for the same reporting period. Table 4.3: Passengers Monitored by TPA at Mwanza North Port Year /7 2007/8 2008/9 2009/10 Passenger 270, , , , , , ,955 n/a Source: TPA Mwanza c) Operational Challenges facing Mwanza North Port The following features were noted and are considered to be challenges to the development of the Mwanza North port i.e. on safety as well as on efficient operations of the Mwanza North port. A small and limited Port Access road. The Mwanza north entrance gate and the port floor needs to be improved in terms of widening the entrance gate and paving the port floor. Improvement on port s navigational aids to vessels sailing in Lake Victoria The small section of TRL line that heads to Mwanza South Port needs to be rehabilitated. Improvement on the MSCL passenger terminal at Mwanza North Port Control movement of people in and around the port Establishment of a marine rescue team at Mwanza ports. With the emergence of the EAC, MSCL should consider establishing routes to Uganda and Kenya for both passengers and cargo transportation Mwanza South Port The port is located in the southern side of the Mwanza city and has specialized facilities for cargo handling and ship repairs. The port handles local and transit cargo to Port Kemondo Bay, Port Bokoba and Musoma (Domestic Trade) as well as to Jinja and Port Bell in Uganda, and Port Kisumu for Kenya traffic. Submitted by BICO IV.655 Monday, 28 February 2011

129 a) Infrastructure The port has a quay length of about 247 meters and an area of approximately 43,000 m 2. The quay can berth 3 vessels at a time and has one link span for ferry wagons. The port has a capacity to handle 500,000 tons annually. The port surface is all gravel and unpaved, where the following facilities are available in the port: One marinesurface railway link span for attending RoRo wagons ferries; 2 Floating docks o Dock No. 1 with dimension of 14 m x 60 m with a holding capacity of a 960 Mts o Dock No. II with dimension of 19 m x 110 m with a capacity to hold a 2,100 Mts Three (3) office buildings formerly owned by the MSCL now accommodating TPA Offices while shared by MSCL staffs. Shipyard workshop (electrical, welding, diesel shop, machine shop, electronics etc.) and one garage 10 railway sidings linking with the Central line via the Mwanza South TRL Terminal. 6 cranes including 2 portal cranes, (5 tons and 3 tons) and 2 forklifts Three good sheds with 24,000 cubic meters capacity. One of the shed has been converted into a marine workshop One godown (with a storage capacity of approximately 10,000 tons) One big warehouse (supplies shed) Motor ramp formerly TRC used to offload/load their cargo. The port is fenced by a chain link material b) Cargo Traffic Uganda had initially been the major user of Mwanza Port between the years of 2004 and 2006 when both the marine and the railway intermodal services were owned and managed smoothly by the former TRC. By then, prior to the year 2006, Uganda had a control over the intermodal connection with three wagon ferries at her disposal i.e. MV Pamba, MV Kabarega and MV Kahwa. Submitted by BICO IV.755 Monday, 28 February 2011

130 A number of incidences occurred during the period of , where all the three EAC member countries were busy looking at how they can improve their surface and marine transport services, where concessioning was considered to be the best option. Kenya Railways and the Uganda Railways were concessioned to a newly formed company called the Rift Valley Railways (RVR), where at the same time; the former TRC was concessioned to Rites of India forming a company named TRL. It was prior and during this transition period that spectacular events took place that went on to paralyze the Lake Victoria intermodal services, much to the disadvantage of both Tanzania and Uganda as well. The incidences resulted into a very low quality of intermodal services at Mwanza South Port, which went on to impact on the decline of total cargo (both local and transit cargo) transiting through the Mwanza terminals as shown in Figure 4.2, which has continued to record a downward trend. Figure 4.2: Grand Total Cargo Traffic through Mwanza Ports (Source: TPA Mwanza Branch) It can be seen that there has been a decline in the total cargo volume since year 2005, and this trend is a result of the lack of intermodal services at the Mwanza South as many clients from both the domestic and regional markets, had to opt for other modes which relatively are costly compared to marine services across the lake, but offer more reliable means of carriage as well as security to cargo whilst in transit to or from Kemondo Bay Port, Port Bukoba as well as Kampala, Jinja or Port Bell in Uganda, and Port Kisumu in Kenya respectively. Submitted by BICO IV.855 Monday, 28 February 2011

131 The Mwanza grand total cargo throughput as shown above has not been able to record a significant growth, due to a number of major factors, among which being; The persistence poor performance of the TRL services effective the year 2004 onwards, which ended with the option of privatizing the TRC railway services. The withdrawal of two Ugandan Wagon Ferries in May 2006, after they were involved in a marine accident (MV Kahwa and MV Kabarega). The grounding of the Ugandan Wagon Ferry named MV Pamba at Port Bell following mechanical problems in The grounding of MV Uhuru (Kenyan) at Port Kisumu for similar technical reason in the same year Lack of a political will through the EAC member countries, on solving this problem the simultaneous occurrence of which, calls for serious government intervention. Existing competition between the ports of Dare s Salaam and Mombasa, for cargo destined to or from Uganda and other central Africa land locked states. Uganda Cargo As noted in the previous subsection, Uganda had initially been the major user of Mwanza Port during the TRC era. Available data from both TPA and MSCL, as shown in Figures 4.3 to 4.5 and Tables 4.4 and 4.5, show the referred impact on the poor intermodal performance that resulted into a fall on the Uganda traffic volume transiting through Mwanza South Port. As shown in Figure 4.5, the impact is subsequently reflected on the fall of the Uganda volume, transiting through the Dar es Salaam port. Submitted by BICO IV.955 Monday, 28 February 2011

132 Figure 4.3: Uganda Import and Export through Mwanza South Port (Source: TPA Mwanza) Table 4.4: Uganda Cargo Traffic (in DWT) at Mwanza Port Year Import Export Total / / / / Source: TPA Mwanza Branch Figure 4.4: Uganda Traffic as Handled by MSCL at Mwanza Port (Source: MOID / MSCL) Submitted by BICO IV.1055 Monday, 28 February 2011

133 Table 4.5: MSCL Uganda Traffic (DWT) at Mwanza Port Year Import Export Source: MOID/MSCL Figure 4.5: Uganda Import and Export Cargo through the Dar es Salaam Port (Source: TPA) The data show that Uganda made a big shift between 2005 and 2006, for almost the large part of her imports and exports are now being channelled through Port Mombasa in Kenya. However, Uganda is still making efforts at establishing an alternative route through Tanzania, which will sustain the national supply chain particularly after the nation found itself vulnerable to political strife during the January, 2008 Kenyan postelection scuffle, that went on to paralyze the life line of Uganda (The Northern Corridor). Kenya Cargo Traffic Kenya a member state of the EAC is one of the major trading partners to Tanzania, where industrial goods and machineries are traded across the border as well as foodstuff and other consumables. Initially before the improvement of the Sirari Mwanza Highway, Mwanza Submitted by BICO IV.1155 Monday, 28 February 2011

134 South Port used to be a preferred alternative offering a gateway for goods shipped to or from Kisumu to Mwanza South Port. As Figure 4.6 and Table 4.6 shows, there has not been a significant growth in terms of an increased Mwanza throughput to or from Kenya. The figure shows a staggering record of import growth, which implies that incentives offered to member states aimed at stimulating export business among them, has continued to record a very low volume. One of the reasons behind a low volume could be highly attributed to an increase in road traffic competition, where both Tanzanian and Kenyan Businessmen are using the road mode as against the traditional marine services between Mwanza and Kisumu. Figure 4.6: Kenya Traffic Volume through the Mwanza South Port (Source: TPA Mwanza) Table 4.6: Kenya Cargo (in DWT) at Mwanza South Port Year Import Export Total / / / / Source: TPA Mwanza Branch Submitted by BICO IV.1255 Monday, 28 February 2011

135 Cross Trade between Uganda and Kenya Despite the fact that there is a significant traffic volume moving between Mombasa port and Kampala (transit) both ways, these have largely been shared between the RVR and the road mode making direct deliveries to either way. With the collapse of wagon ferries belonging to Kenya and Uganda, Jinja and Bell ports have not been servicing the Ugandan marine traffic through Kisumu port, and hence Kisumu is also not participating actively in the region apart from offering services to smaller private boats operating along and across the lake. Local Cargo Traffic As Figure 4.7 and Table 4.7 shows, there is a significant increase in the outward trend on domestic cargo moving through Mwanza South Port i.e. Bulk Oil, Sugar, Construction Materials, Coffee, Beer and Soft Drinks, Tobacco, Foodstuffs and other consumables to various locations within and along the shores of Lake Victoria. Figure 4.7: Mwanza Local Cargo Traffic (Source: TPA Mwanza) Submitted by BICO IV.1355 Monday, 28 February 2011

136 Table 4.7: Local Cargo Traffic (in DWT) at Mwanza Port Year Inward Outward Total / / / / Source: TPA Mwanza Branch c) Observed Challenges facing Mwanza South Port The need for an institutional and integrated infrastructure planning to effect appropriate intermodal connectivity within the country and among the EAC member states to match with today s level of technology i.e. containerization, RO RO vessel applicable today TRL should have its infrastructure in place, to be able to offer appropriate services in terms of passengers now abandoned, as well as increase the number of freight trains now reduced to an average of three trains per week Improving the draft at Mwanza South port so as to enable bigger vessel to operate The need for providing adequate equipments to cater for Lake Victoria regional safety, rescue and navigational of ships across Increased port security, as the same gate is used by shipyard personnel. Enhance the existing shipyard by providing modern equipments and a workshop to facilitate further ship construction and offer ship repair work Developing Mwanza South port to become a freight centre Rehabilitate the Mwanza South Railway Link Span to improve intermodal connectivity Provision of the necessary surface connectivity through TRL railway service Since Mwanza South Port is a hub to Intermodal Transport in Lake Victoria, there exist a need for SUMATRA to consider establishing MultiModal Transport Operations (MTO), that could as well hold a single carrier liable for any transit losses or irregularities thus improve on transit security, handling and safety at interchanges Submitted by BICO IV.1455 Monday, 28 February 2011

137 4.2.4 Mwaloni Port Mwaloni is a local domestic port that was established in 1950s to serve local fishermen. The site gradually grew up to become a famous fishtrading centre where a jetty has now been developed, where it now offers both passenger and cargo transportation to many cluster ports existing within and around the Lake Victoria. As the fish market grew bigger and bigger, the number of boats and passengers visiting the area has lately increased. Observed challenges at the Mwaloni Port (Figure 4.8) include. The port lacks a proper jetty to accommodate smaller vessel on domestic trade, to serve passengers and cargo. The port area has no security fencing to control security required of a port and consequently uncontrolled activities and influx of people are the characteristic of the place, which may compromise the level of various municipal and terminal revenue. Due to various activities i.e. cargo handling, passenger terminal, fishing and an adjacent market, the place is not clean enough. The place lacks adequate and conducive sanitary facilities required of a place like this (terminal requirements). Due to a bigger number of customers visiting the place, Mwaloni holds a big potential of establishing a regional fish market. There are no proper food stalls and consequently food vendors are scattered. Improved safety measures to passengers and cargo through the improvements of the boats that are used on the day to day services in terms of size, comfortability, propulsion as well as safety gears to both passengers and cargo. Figure 4.8: The Mwaloni Cluster Port in the foreground while the fish market on the rear. Submitted by BICO IV.1555 Monday, 28 February 2011

138 4.2.5 Bukoba Port The port is located about two kilometres from Bukoba town centre and is specialized for passengers and parcels. The port mainly serves passenger and cargo on the local market to and from Mwanza. a) Infrastructure The port is capable of holding one big vessel and two small or a total of five small vessels at ago, and has two big warehouse facilities with railway sidings, a link span and office buildings. It has a quay length of about 100 m, depth of 3 m, and a ramp for landing vessels. Other facilities at the port include: Three good sheds with a capacity of 12,000 cubit meters Office building including booking office Passenger waiting shelter A TPA owned oil jetty 11 residential buildings blocks for staffs b) Cargo Traffic Due to poor TRL and MSCL cargo and passenger services, more shippers and passengers are opting for better service, which is resulting into a modal shift lately to the road mode. It is now becoming common to shippers to use the road mode through Muleba or from Kemondo Bay to Mwanza or Dar es Salaam despite the costs involved. c) Observed Challenges at the Bukoba Port Creation of more space for the port Provision of navigational aids to the port The need for reopening of the fuel depot behind the port Lack of cargo handling equipment, at least a 5 ton crane is required to facilitate demand should there be one Kemondo Bay Port The port is located about 30 km from Bukoba Town and has a design of a most modern port in the whole lake. The port was built to serve the countries of Rwanda, Burundi and Uganda under East Africa Community initiatives in Submitted by BICO IV.1655 Monday, 28 February 2011

139 a) Infrastructure The depth of the bay is reasonably good offering a 5 meter depth sufficient to handle cargo vessels of medium size where the quay length of about 100 meters and a link span for wagon ferries are provided. Other facilities at the port include Six warehouse with a total capacity of 24,000 cubic meters One link span for wagon ferries Passenger terminal building with capacity of 1,200 passengers Ramp for RoRo vessels Two buildings offering accommodation for passengers and offices A security fence enclosing the port perimeter The Kemondo Bay terminal has a built capacity of handling an average of about 15,000 passengers and 35,000 tons of cargo per annum. Kemondo Bay is therefore grossly under utilized as elaborated in the subsequent subsections. b) Cargo Traffic There was a significant drop of cargo handled in 2007 mainly due to poor lakeintermodal linkage that is provided by TRL through the positioning of wagons for the Kagera coffee shippers at the Kemondo Bay railway sidings. Persistent failure of both the TRL to position wagons (CLBs) at the Kemondo Bay railway sidings and that of MSCL to position MV Umoja as and when the shippers require for the service, resulted into abandoning of the intermodal service which has been very useful in the past. A mere 603 tons of coffee bag shipment was recorded in the year 2007 while the year 2009 not a single bag was shipped through the Kemondo Bay port. During the visit at the Kemondo Bay facility in early August, 2010, there was no any trace or improvement made to revamp the port cargo handling activities. An interview with the Assistant Export Manager of the Kagera Cooperative Union revealed the fact that coffee exporters have already resolved to an expensive means of carriage relatively, after the failure to get a reliable intermodal connectivity across the lake. Figure 4.9 shows a truck fully loaded with coffee bags leaving a warehouse located behind the Kemondo Bay port destined to Dar es Salaam. Submitted by BICO IV.1755 Monday, 28 February 2011

140 Figure 4.9: A Semi truck fully loaded with coffee bags leaves a warehouse located behind the Kemondo Bay port destined to Dar es Salaam c) Coffee Shipment Kemondo Bay port has traditionally been a coffee catchment point from the Kagera and Karagwe Cooperative Unions. However, there have been no significant cargo operations at the port since 2009, where the port continues to service passengers embarking to or from Mwanza aboard MV Victoria which continues to make three times a week calls at the Kemondo Bay Port. Coffee shipment from port has since 2007 shown a decline trend as indicated in Table 4.8. While the annual cargo volume has significantly dropped to zero in 2009, and can be noted that year 2010 will not have any significant growth. Table 4.8: Freight Carried by MSCL through Kemondo Bay and Kigoma Ports Year /10 Kemondo Bay Coffee 10,287 10, , (Tons) Source: MSCL Submitted by BICO IV.1855 Monday, 28 February 2011

141 d) Observed Challenges at the Kemondo Bay Port The need for an institutional and integrated infrastructure planning to effect appropriate intermodal connectivity (TRL and MSCL). Kemondo Bay port depends largely on the performance of TRL and MSCL. Improvement of navigational aids. Need for passengers to be sensitized on safety and environmental issues. Rehabilitation of the existing railway link span. Potential for an industrial base, where container and fuel depots can be developed behind the port Musoma Port Musoma port is located within Musoma town and is a modern port specialized for passenger and cargo services. The port is currently grossly underutilized due to changes impacted on by the improvements made on the Mwanza Musoma highway. It used to handle both passengers and mainly cargo from Kisumu port but at the moment it remains an idle facility both on passengers and cargo. The depth of the bay is changing from the previous 5 meters to a moderate of slightly over 3 meters due to the decreasing water levels of Lake Victoria, as monitored by the Musoma port readings. The quay length of about 100 meters is provided with an aging and an underutilized marine / railway link span for wagon ferries. Other facilities at the port include: Goods shed with a capacity of 4,000 cubic meters Two shelters for passenger waiting and customs examination Office building and booking office. Observed challenges at the Musoma port include: The decreasing draft of the port due to receding water levels. Lack of navigational aids. The need for sensitizing the public on marine safety and environmental concern. The need for reopening the idle fuel depot banned in the year 2007 by TRA. Tourism potential for the port to be able to offer cruise ship services for people who may need to board vessels to tour around the lake as well as visit touristic attractions i.e. the Serengeti and Ngorongoro National Parks from Musoma. Submitted by BICO IV.1955 Monday, 28 February 2011

142 4.2.8 Lake Victoria Cluster Ports Lake victoria has a number of habited islands in all the regions bordering Lake Victoria, namely Mwanza, Kagera and Mara. These regions have cluster ports some of which are developed with jetties that offer frequent services to passengers and cargo on privately run boats other than the ones owned by MSCL which have daily and weekly schedules on specific routes between Mwanza, Kemondo, Bukoba three times a week, and on a daily operations between Mwanza and Nansio, Ukerewe. It was not possible to visit any of these islands to examine their infrastructure layout, other than interviewing passengers, boat and terminal operators at Mwanza, Mwaloni, Bukoba and at Musoma ports. The cluster ports constitute a bigger population that has warranted district and regional governments to make a provision of schools and hospitals to some of them, which create a demand for transport services to be essential. Hereunder, is a list of the Lake Victoria cluster ports arranged as per their administrative locations, with their position with respect to the availability of permanent jetties or the frequency of boat operators between and among them. a) Mara Region (all islands are frequented by boat operators) (i) Kinesi port (has a finger jetty) (ii) Shirati port (has a pier and a goods shed of 2,400 cubic meters) (iii) Nyamirembe port (has a concrete pier) (iv) Chato port (has a complete concrete pier) (v) Buchezi port (has one goods shed) (vi) Bukondo port (has a pier) (vii) Nungwe Bay port (has a pier) b) Mwanza Region (i) Lyankanyasi port (has neither scheduled transport operators nor a jetty) (ii) Juma port (has neither scheduled transport operators nor a jetty) (iii) Nyanzune port (has neither scheduled transport operators nor a jetty) (iv) Kome port (has a jetty and frequent boat operators) (v) Ito port (has neither scheduled transport operators nor a jetty) (vi) Ikulu port (has neither scheduled transport operators nor a jetty) (vii) Ziragula port (has a jetty and frequent boat operators) Submitted by BICO IV.2055 Monday, 28 February 2011

143 (viii) Yozu/ Kasarazi port (has a jetty and frequent boat operators) (ix) Gembale port (has neither scheduled transport operators nor a jetty) (x) Nyamango port (has regular boat visits but no jetty) (xi) Cjamagati port (has regular boat visits but no jetty) (xii) Soswa port (has neither scheduled transport operators nor a jetty) (xiii) Chembaya port (has neither scheduled transport operators nor a jetty) (xiv) Rubaragazi port (small and big) (has neither scheduled transport operators nor a jetty) (xv) Maisome port (has neither scheduled transport operators nor a jetty) (xvi) Rubondo port (has a jetty and frequent boat operators linking with Kome) (xvii) Kome Mchangani port (has a jetty and frequent boat operators) (xviii) Makobe port (has neither scheduled transport operators nor a jetty) (xix) Kunene port (has neither schedule transport operators nor a jetty) (xx) Bwiro port (has either scheduled transport operators nor a jetty) (xxi) Kiara /Iyala port (has neither scheduled transport operators nor jetty) (xxii) Malerema port / Lyamwenge port visited by a private boat operator MV Juliana (xxiii) Ghana port ( limited boat services and no jetty (xxiv) Siza port (has scheduled transport operators nor a jetty) (xxv) Izinga port(has neither scheduled transport operators neither a jetty) (xxvi) Burubi port (has neither scheduled transport operator nor a jetty) (xxvii) Galinzira port (has neither scheduled transport operators nor a Jetty) (xxviii) Ukara port (has neither scheduled transport operator / no jetty) (xxix) Sizu Port (has neither scheduled transport operators nor a jetty) (xxx) Kweru port Kubwa na Ndogo (has neither scheduled transport operator nor a jetty) (xxxi) Irugwa port (has neither scheduled transport operators nor a jetty) (xxxii) Buruza (has neither scheduled transport operator s nor a jetty) (xxxiii) Pordfft Port Lyegoba (has neither scheduled transport operators nor a jetty) (xxxiv) Karuzu port (has neither scheduled transport operators nor a jetty) c) Kagera Region (i) Goziba port (has neither scheduled transport operators nor a jetty) (ii) Kerebe port (has neither scheduled transport operators nor a jetty) Submitted by BICO IV.2155 Monday, 28 February 2011

144 (iii) Mashobya port (has neither scheduled transport operators nor a etty) (iv) Makibwa port (has neither scheduled transport operators nor a jetty) (v) Kinagi port (has neither scheduled transport operators nor a jetty) (vi) Nyabulo port (has neither scheduled transport operators nor a jetty) (vii) Kitua port (has neither scheduled transport operators nor a jetty) (viii) Katobofu port (has neither scheduled transport operators nor a jetty) (ix) Iroba port (has neither scheduled transport operators nor a jetty) (x) Mahaiga port (1) fishermen settlement only (has neither scheduled transport operators nor a jetty) (xi) Mahaiga port (2) (has neither scheduled transport operators nor a jetty) (xii) Kilo, Galanzila, Iramba, Mazinga, Mulumo, Nyarugusu, Chakazimbwe, Kasenye, Ikuza, Lwazi and Nyabesiga ports (have neither scheduled transport operators nor jetties) d) Observed Challenges at the Lake Victoria Cluster Ports The characteristics of these cluster ports in Lake Victoria, are more or less offering the same features and challenges which can be grouped them into four major categories as follows. Cluster ports that have no jetties as well as no scheduled or regular transport provider, but have inhabitants that call for transport services in their day to day socioeconomic activities nevertheless. Cluster ports that do not have a jetty but, due to their economic vibrancy and a big number of inhabitants, have regular demand for transport services to its inhabitants, which is provided by ordinary boats some of which are unregulated and therefore prone to accidents. Cluster ports that are developed with jetties but have a limited number of marine (boats) transport operators. Cluster ports that have road connectivity and are served by the MSCL (Ukerewe port). Despite the lack of jetties among the islands, poor and unsafe boats that are frequently used to transport passengers within the lake pose a high risk to life and properties of passengers. The marine accident that occurred in Mwanza on the early hours of the 5 th of August, 2010 involved 37 primary school children who had taken a ride on one of those unsafe boats to school, ending up with a fatal accident resulting into a loss of life to 18 students, following a Submitted by BICO IV.2255 Monday, 28 February 2011

145 boat capsize that was heavily caused by overloading under a severe August wind, where the boat skipper could not manage to control. There are restrictions on uncertified boats to engage in ferrying passengers and cargo across the cluster ports to minimize loss of life and properties in the event of marine accidents. Areas where TEMESA considers the fact that they may potentially be prone to accidents due to their long distances apart, the Agency restrict unsafe boats from engaging in ferrying passengers. An example of a cluster port that is attended by TEMESA with a single ferry, where no private operator is allowed to engage in ferrying passengers, is between the two known locations in Sengerema district, that of Kome Island and Nyakalilo Township on the shore, where the two locations are at a distance of about 6 km apart. In view of the above circumstances, the following were noted to be the common challenges facing Lake Victoria cluster ports: The need for a systematic survey on the demand for transport services, so as to enable the provision of jetties, where possible. The need for the general public and passengers in particular, to be sensitized on marine safety and on environmental issues. The need for improving the types of boats that are used along and within the lake, while offering transport service to cluster ports considering the safety parameters as well as their optimum economic sizes. The creation of economic groups that will facilitate the establishment of desirable communal Transport SACCOS to enable the group own and operate medium capacity boats through suitable financing mechanism. 4.3 Lake Tanganyika Ports and Shipping Services Lake Tanganyika is quoted by the World Lake Basin Management Initiative Report 2006 as being the third largest lake in the world by volume, exceeded only by the Caspian and Baikal. Lake Tanganyika is the second largest lake in Africa. It is less than half the size of Lake Victoria, and has a volume of 19,000 cubic kilometres and covers a surface area of 32,600 square kilometres. Much of the lake's coastline is high escarpment, falling directly into the lake. Submitted by BICO IV.2355 Monday, 28 February 2011

146 Lake Tanganyika borders Burundi in its north eastern tip, while the entire western length from the northern tip where the DRC border dissects going all along southwards to where the border shares a section with the Republic of Zambia. The border line that dissects between the DRC and the United Republic of Tanzania (URT) into two sovereign states starts from the Northern tip of Lake Tanganyika to the southern end section of the lake, where the border is shared between the Republic of Zambia, Tanzania and the DRC. Much of the lake's coastline is in Tanzania, where both the Kigoma, Rukwa and the new Katavi Region shares, offer a long shoreline that is of a high escarpment, falling directly into the lake. This topography renders some logistical challenges in creating viable alternative surface transport, the reason why Lake Tanganyika marine transport is essential to many of the residents living along the lake. As per the 2009 estimates made by the National Bureau of Statistics on the formerly two regions that offered a border to Lake Tanganyika and with the exception of the new Katavi Region, Kigoma was estimated to have a population of 1.74 million people while that of Rukwa Region estimated at 1.45 million and thus making a total population of 3.19 million, about 9% of the national population. Until September 2010, TANROADS which has the responsibility for the management, development and maintenance of the national trunk roads as well as on regional roads network, had managed to construct an unpaved road from Kigoma to Sigunga via Mayobozi, Ilagala and Malagarasi townships. Private bus operators have shown interest on the route, and already one bus operates on a daily basis between Kigoma and Sigunga. The new road offers another option to travellers between Sigunga and Kigoma, where the rest of the cluster ports residents are either left to wait for the MV Liemba twice per month scheduled sail, or opt to travel to Kigoma by road through Mpanda, Uvinza, Kanyani to Kigoma which is a very lengthy distance between the two points Kigoma Port The Kigoma port has both the cargo terminal owned by TPA and currently concessioned to an Agent named M/S Muapi Limited who undertakes cargo handling activities at the port. On the other hand, there is a dedicated terminal for passengers owned and operated by the MSCL adjacent to the cargo terminal. Submitted by BICO IV.2455 Monday, 28 February 2011

147 a) Kigoma Port (Cargo Terminal) The port is strategically located within Kigoma town and is specialized for both local and transit cargo for Congo, Burundi and to a lesser extent for Rwanda. A quay length of about 301 meters that has a capacity to berth 3 big vessels of the size of ships plying in Lake Tanganyika is provided. The terminal has a designed capacity to handle 500,000 tons of cargo per annum. Other facilities at the port include: The yard area that consists of container yard of 3,745 sq. m. and general cargo yard of 10,000 sq. m. A covered warehouse with a storage area having a capacity of 10,300 tons and an additional temporary storage offered by the World Food Programme (WFP) rubb halls totalling 4,200 tons An open space with capacity of 15,000 tons that can be made available for any storage of nonperishable goods such as iron bars and steel rolls. During the study visit at Kigoma port, it was found that the port still had various types of equipments that were being used in their day to day cargo handling work at the port. These were as follows: 3 forklifts of 3 tons capacity each and 1 forklift of 5 tons 6 trailers of 40 feet each and 4 trailers of 20 feet 2 portal cranes of 5 tons, however the 5 tons capacity has been reduced to 3 tons due to old age of the cranes 2 terminal tractors 1 gantry crane of 35 tons capacity b) Cargo Traffic Table 4.9 depicts local and transit cargo handled by the Kigoma port between 2004 and 2009/10. As shown in Figure 4.10, Kigoma port has continued to record lower levels of total cargo throughput comparatively over the years, and this has largely been the result of a poor intermodal connectivity, that is caused by the lack of adequate wagons and locomotive engines by the TRL at both ends (Kigoma and Dar es Salaam), that would have facilitated a proper transit. The trend is a reflection of a combination of a total throughput for Kigoma port, which covers import/export/local/transit for the period of /10. Submitted by BICO IV.2555 Monday, 28 February 2011

148 Table 4.9: Regional Cargo Traffic at Kigoma Port, 2004 to 2009/2010 DRC /7 2007/8 2008/9 2009/10 Import 69,529 86,259 52,861 51,388 67,575 30,073 Export 11,107 10,610 11,117 4,176 10,441 14,904 Sub total 80,636 96,869 63,978 55,564 78,016 44,977 BURUNDI Import 17,382 21,564 20,751 14,868 32,272 13,745 Export 2,221 2, Sub total 19,603 24,216 20,751 14,868 32,272 14,249 LOCAL TRAFFIC Inward 5,789 6,385 6,536 6,366 4,613 5,461 Outward 1,769 1,897 4,140 2,233 1,849 1,107 Sub total 7,558 8,282 10,676 8,599 6,462 6,568 Import 86, ,823 73,612 66,256 99,847 43,818 Export 13,328 13,262 11,117 4,176 10,441 15,408 Inward 5,789 6,385 6,536 6,366 4,613 5,461 Outward 1,769 1,897 4,140 2,233 1,849 1,107 GRAND TOTAL 107, ,367 95,405 79, ,750 65,794 Source: TPA Kigoma Office For example, Burundi coffee which used to be a traditional transit cargo at the Kigoma port enroute to Dar es Salaam port, for the last 20 years when the rail was perfectly functioning, has now moved to Mombasa port. Figure 4.10: Total Cargo Throughput at Kigoma Port (Source: TPA Kigoma Branch) DRC and Burundi Imports through Dar es Salaam Port Figure 4.11 shows that the DRC import traffic volume as monitored through the Dar es Salaam port, started to decrease in year 2008 whereas Burundi imports, though they were Submitted by BICO IV.2655 Monday, 28 February 2011

149 lower than the DRC volumes, registered a relatively growth during the same reporting period. On the other hand, Figures 4.12 and 4.13 and Tables 10 and 11 show that since 2004, there has been a decline in the DRC and Burundi cargo traffic at Kigoma port despite the corresponding relatively growth in imports through Dar es Salaam port. This suggests that cargo destined to Burundi and the DRC from Dar es Salaam port have been shipped to these countries through other means of transport, and more particularly by the road transport. The prevailing inefficiency of the Kigoma port necessitated the former DRC and Burundi customers whom have traditionally been using the Kigoma port both for their imports and export shipments, to opt for other alternatives either by road through Tunduma across Zambia to Lubumbashi, or by TAZARA to Kapiri Mposhi onwards for the DRC, while Burundi uses a road network from Dar es Salaam to Bujumbura via Kahama and Kabanga border into Burundi. Similarly, the TRL intermodal connectivity at Isaka faces problems. Figure 4.11: Burundi and DRC imports through Dar es Salaam Port (Source of data: TPA Planning Department) Submitted by BICO IV.2755 Monday, 28 February 2011

150 Figure 4.12: DRC Transit Traffic at Kigoma Port (Source: TPA Kigoma Branch) Table 4.10: DRC Transit Traffic (in DWT) at Kigoma Port Year Import Export Total / / / / Source: TPA Kigoma Branch Figure 4.13: Burundi Transit Traffic at Kigoma Port (Source: TPA Kigoma Branch) Submitted by BICO IV.2855 Monday, 28 February 2011

151 Table 4.11: Burundi Transit Traffic (in DWT) at Kigoma Port Year Import Export Total / / / / Source: TPA Kigoma Branch. With the vast existing opportunities offered by the DRC and Burundi traffic volume, that is potentially suitable for Kigoma port, the need for improvements on intermodal connectivity can not be over emphasized. Local Cargo Traffic On the other hand, Figure 4.14 shows the domestic trade volume handled by the port through the years under consideration. The shipments that are involved on a domestic trade include foodstuffs, construction materials, agriculture inputs and other industrial consumer goods. On the other hand, Figure 4.15 illustrates the throughput trend as a combination of a total throughput at Kigoma port i.e. import/export/local/transit from /10. It can be noted that there has been a gradual decline with effect from the year 2006 when the railways had shown some critical operational problems that resulted into a reduction of services between Kigoma and Dar es Salaam on cargo freight trains, while passengers under the TRL were scheduled to operate three times a week from a daily passenger train services which was later on reduced to a single trip per week currently. The deterioration in the quality of service offered by the then TRC, combined with the poor condition of road, means that Kigoma is not benefiting from the large increase in DRC and Burundi traffic handled through the Dar es Salaam port. This has a tremendous effect in terms of the socioeconomic needs of the regional population, who have limited access to other affordable means of transport, due to the fact that Lake Tanganyika shoreline topography is just too unfavourable for road construction. Submitted by BICO IV.2955 Monday, 28 February 2011

152 Figure 4.14: Kigoma Port Local Inward/Outward Cargo Traffic Figure 4.15: Grand Total Throughput at Kigoma Port (Source: TPA Kigoma Branch) MSCL Cargo Operations MSCL efficient operations for both passengers and cargo are directly dependent on the efficient running of the railway network. From the Consultant s observations, on the national railway services as well as from Kigoma port operational perspective, the situation does not differ with respect to the experiences being faced by the Mwanza South port, where the railway infrastructure has an important role in the entire supply chain, as far as intermodal services are concerned. Submitted by BICO IV.3055 Monday, 28 February 2011

153 The railway subsector has been performing very badly over the last 10 years, much as it is reflected on the MSCL traffic volume shown in Figure 4.16, where the decline apart from the internal MSCL challenges, is greatly attributed to a poor and dilapidated railway infrastructure which renders services that are quite below standard due to outdated equipments and the prone shortages of locomotives and wagons. Figure 4.16: MSCL Traffic Volume at Kigoma Port (Source of data: MOID / MSCL) The downward trend is further sustained by the withdrawal of MV Mwongozo from servicing Lake Tanganyika freight and passengers due to identified technical problems related to its stability. MV Mwongozo has since November, 2008 remained idle at the MSCL passenger terminal. From Table 4.12, it can be seen that none of the MSCL vessels is involved in the handling of Burundi transit traffic since the year 2007, despite the fact that Burundi and the DRC are recording a positive growth of transit cargo through the Dar es Salaam port. Table 4.12: Transit Traffic Carried by MSCL Vessels through Mwanza Port (Tons) Country Burundi Imports Exports Source: MSCL (2010) Submitted by BICO IV.3155 Monday, 28 February 2011

154 c) Passenger Traffic The terminal that is adjacent to Kigoma port is managed by MSCL and has a quay length of 100 m and a draft of 2.85 m, from the original draft of 6 m some years ago. The receding water level and the siltation problem facing the port offers a big challenge as it is also hindering safe navigation of the MSCL vessels. The terminal has a capacity of handling 150,000 tons of cargo, and 300,000 passengers annually. As Figure 4.17 shows, the MSCL steady passenger growth between 2006 to mid of the year 2008 is accrued to the fact that both MV Liemba and MV Mwongozo were operational. The withdrawal from service of MV Mwongozo, reflects a continued decline in services rendered, thus affecting the socioeconomic wellbeing of the population along the shore of Lake Tanganyika, all along to the Rukwa Region. Figure 4.17: MSCL Passenger Traffic at Kigoma Port (Source of data: MSCL Kigoma) Most of the cluster ports that are south of Sigunga along the lake, do not have access to any of the surface modes (road or rail), other than depending on the inland water transport. MSCL services are linked with the TRL passenger services that often one becomes the feeder of the other. The irregular sailing schedule of MV Liemba on a twice per month, as against a single passenger train service once in a weeks time for the Kigoma residents creates an overwhelming demand for transport services, given the circumstance that TANROADS are yet to finalize the construction of a road linking Kigoma and Tabora over the Malagarasi River, where the construction of a bridge is underway. Submitted by BICO IV.3255 Monday, 28 February 2011

155 d) Observed Challenges facing Kigoma Port The need to address the importance of having an integrated infrastructure planning that would facilitate appropriate intermodal connectivity. Call for improvements on TRL services essential for optimum utilization of intermodal connectivity as far as the market potential for the Kigoma port is concerned. The provision of appropriate and adequate navigational aids. Dropping of water level (draft) and the continuing siltation caused by human activities and haphazard settlements around the hilly area adjacent to the Port. Establishing an appropriate and a fully fledged container terminal within the port. Encourage investments in developing a modern shipyard at Kibirizi (adjacent to the Fisheries Institute) area that will cater for the construction of modern boats and vessels of different sizes. Encourage the establishment of investments on stand alone EPZ / EDZ factories along the shoreline that may also attract investments on shipbuilding to cater for foreign orders. The need for the government to provide incentives to potential investors by offering a stretch of land with access to the port, with the aim of developing transit freight villages Kibirizi oil Terminal The terminal has a quay length of m with capacity of 30,000 tons per annum. The terminal services a number of oil marketing companies in Kigoma that also offers transit services to the land locked countries. It is currently working under its capacity, though the market potential for the neighbouring countries is high. The long standing inadequacy of TRL to provide railway services i.e. locomotive and tanker wagon dedicated to the supply of fuel to both the region and the land locked nations, has necessitated the depots to work under their built capacity. Kibirizi Port (Boat Terminal) North The draft of the Kibirizi port is reasonably good for boat services (Figure 4.18). In addition the location provides a natural harbour due to the favourable physical features that allows tranquil water essential for safe loading and unloading of cargo as well as passengers. Submitted by BICO IV.3355 Monday, 28 February 2011

156 The port is currently operated by an association of private boat operators named UWAMAKI Umoja wa Wenye Maboti Kigoma who were registered in 1992 with members who are over 200 boat operators. In the longer term however, TPA has plans to develop the Kibirizi port to become a modern port able to offer regional services, where the operation of it upon completion is earmarked to be concessioned to a private operator. Figure 4.18: A Dhow at Port Kibirizi Interviewing the operators at the Kibirizi Port, the Consultant was informed that UWAMAKI have expressed their interest to run the port, which was originally developed by local boat operators. It is therefore proposed that UWAMAKI should be used as a pilot project group in the establishment of a community based Transport SACCOS that could be assisted in securing funds so that typical examples could be emulated elsewhere in the three lakes, to demonstrate community approaches towards solving their own transport demand problems. It is further suggested that since the cluster ports along the lake shores are many, it will therefore only call for a local approach between and among them, the approach could give a relief to many, and hence improve the level of transport service in terms of the size of the Submitted by BICO IV.3455 Monday, 28 February 2011

157 boats, safety parameters, skilful skippers and the fact that all these boats would be easily controlled and registered at regional authority level Ujiji Port Ujiji port is an old port where the fact that it has a limited draft and is not having a natural wave or wind breakers (in the open), and it now remains to serve small boats mostly heading towards the north coastline on domestic movements. Initially the topography of the northern part of Kigoma allowed settlements of fishing villages of which have now developed into small townships. Mwamgongo and Kagunga (all cluster ports) are not connected by any other mode, except for the marine waterways where Ujiji is the embarking and disembarking of passengers going or coming from those areas. The above mentioned Ujiji port physical prevailing factors warranted a shift of big boat operators under the UWAMAKI (Association of Boat Owners in Kigoma) to opt for the new port at Kibirizi. Ujiji port therefore continues to serve passengers on small boats carrying average parcels heading to nearby locations, along the Lake Tanganyika. There are no facilities and offices at the port other than a SUMATRA representation and a police marine officer on duty during the day time, who is tasked to control security and order while keeping record of all sailing or arrival boats on any particular day. TPA does not have any future development plans for the port Lake Tanganyika Cluster Ports Lake Tanganyika has a number of cluster ports along the shoreline from the north of Kigoma port to the southern tip of the Lake Tanganyika at the Kasanga port. Passengers at the north portion of Lake Tanganyika are serviced by private boat operators, where the southern part of Kigoma, MSCL vessel(s) offer cargo and passenger services with the exception of a few ports that are again serviced by private boat operators, being not among the list of MV Liemba port of calls. With the exception of the Kasanga port in Rukwa region, all other cluster ports have no jetties, where cargo and passengers are serviced while the ship remains upstream, and small boats are therefore used to bring or pick passengers to or from the shore. MSCL ship(s) offer services to these cluster ports essential in their socioeconomic day to day activities. Due to Submitted by BICO IV.3555 Monday, 28 February 2011

158 topographic features, a number of these cluster ports do not have a road connection thus rendering them to be highly dependant on marine transport services. North ports that are serviced by private boat Operators (UWAMAKI) include: (i) Mtanga port (has no jetty but frequent of local boat service) (ii) Mwamgongo port (has no jetty but frequent local boat service) (iii) Kagunga port (has no jetty but frequent local boat service) South ports serviced by MSCL include: (i) Kirando port Ujiji (has no jetty and is serviced twice a month by MV Liemba) (ii) Sigunga port (has no jetty and is serviced twice a month by MV Liemba) (iii) Rukoma port (has no jetty and is serviced twice a month by MV Liemba) (iv) Lagosa port (has no jetty and is serviced twice a month by MV Liemba) (v) Sibwesa port (has no jetty and is serviced twice a month by MV Liemba) (vi) Kalya port (has no jetty and is serviced twice a month by MV Liemba) (vii) Ikola port (has no jetty and is serviced twice a month by MV Liemba) (viii) Karema port (has no jetty and is serviced twice a month by MV Liemba) (ix) Kabwe port (has no jetty and is serviced twice a month by MV Liemba) (x) Korongwe port (has no jetty and is serviced twice a month by MV Liemba) (xi) Kirando port Rukwa (has no jetty and is serviced twice a month by MV Liemba) (xii) Kipili port (has no jetty and is serviced twice a month by MV Liemba) (xiii) Ninde port (has no jetty and is serviced twice a month by MV Liemba) (xiv) Nampembe port (has no jetty and is serviced twice a month by MV Liemba) (xv) Kala port (has no jetty and is serviced twice a month by MV Liemba) (xvi) Kasanga port (has a jetty and is serviced twice a month by MV Liemba) Observed Challenges on Lake Tanganyika Cluster Ports Similar characteristics appear on Lake Tanganyika cluster ports like the ones in Lake Victoria, although most of Lake Victoria Cluster ports are on habited islands, while the ones in Lake Tanganyika are basically on the shoreline, due to the fact that, Lake Tanganyika s depth limits the availability of islands. Submitted by BICO IV.3655 Monday, 28 February 2011

159 Lake Tanganyika cluster ports can be grouped into four major categories as follows. Cluster ports that have no jetties as well as no scheduled or regular marine transport services, no road connectivity but have inhabitants that call for transport services in their day to day socioeconomic activities nevertheless. Cluster ports which do not have a jetty but, due to their economic vibrancy and a big number of inhabitants, have regular demand for transport services that is provided by ordinary boats despite their higher risks in terms of their safety parameters. Cluster ports which have no jetties, no regular boat service, but have alternative road connectivity to other towns in their hinterland. Cluster ports that have no jetties but are served by the MSCL vessels Despite the lack of jetties along the Lake Tanganyika shoreline, poor and unsafe boats that are frequently used to transport passengers and cargo (Figure 4.19) within and along the lake, other observed challenges on cluster ports include. The need for investment on bigger vessels carrying both passengers and cargo between ports of Kigoma and Kasanga as well as offering transit business to and from other neighbouring countries. MSCL should explore technical options that could revive the services of MV Mwongozo, currently grounded at the Kigoma port for two years now, apart from the fact that MSCL in its corporate plan, have planned to acquire new vessels each, to all the three lakes. TPA/ SUMATRA should look into a feasible way that can be used to bring about marine safety awareness and environmental concern, to many of the passengers travelling along and across the lake. Development of a railway section from Mpanda to Karema port where a terminal at Karema will be able to offer container services to the DRC across to ports of Moba, Muliro and Kalemie. The need for encouraging the use of bigger boats through communal owning and operation to solve local transport problems to many of the cluster ports that are not served by the MSCL, which has a twice a month sailing schedule. Submitted by BICO IV.3755 Monday, 28 February 2011

160 Figure 4.20: Passenger boarding MV Liemba on one of the cluster ports along Lake Tanganyika (no jetty facilities) Kasanga Port in Rukwa Region The port is strategically located on the south eastern side of Lake Tanganyika, and is specialized for transhipment cargo to Burundi, Rwanda, and the DRC and to Mpulungu port in Zambia. The port has an estimated draft of 4.5 m, and increases up to 9.0 m during rainy season. All vessels plying in the lake can have access and berth at Kasanga port. With the development of the surface connectivity with the Kasanga Port, it would be able to link the land locked countries in the south i.e. Malawi, Zambia to the north as well as offer a multimodal linkage to anticipated trade i.e. coal delivery to Uganda via Port Kasanga and Kigoma, export of salts from Kigoma and Malawi, export of agricultural produce i.e. maize, rice and beans to Bujumbura and the DRC. All vessels plying Lake Tanganyika can berth at Kasanga port. Available information shows that Kassanga is the deepest port in the entire lake. Waves are reported to be small with a Submitted by BICO IV.3855 Monday, 28 February 2011

161 maximum of 1 m. The water level was constant during the past decade with water level increasing during the rain season. To date Kasanga port has regular visits from the following vessels: MV Teza, Burundi, 1,500 tons (biggest on lake) MV Tora, Burundi, 1,150 tons MV Rugura, Burundi, 500 tons MV Mwongozo, Tanzania, 100 tons passengers MV Liemba, Tanzania, 200 tons passengers MV Raya, DRC, 150 tons MV Kasenga, DRC, 150 tons Kasanga port has the following buildings/facilities: A pier under further TPA construction (development) that has a current capacity to berth one ship. A godown for nonfood cargo (mostly cement) with a capacity of 700 tons, 2 godowns under construction by TPA on the jetty floor, with a capacity each 1,500 tons. One of which will be dedicated for food items, while the other will be for nonfood cargo making a total capacity of 2,200 tons. A fork lift 5 tons capacity, is available but currently out of order for technical reasons. There are no power generators where operation depends on the ship s light. One port office building. A new TRA office has just been built within the port vicinity and is solar powered being the only facility having the same in the location. In October, 2010, TPA floated a bid looking for a Consultant whom upon appointment will prepare design for the Kasanga new port layout, as well as suggest on the appropriate methodology that will enable TPA identify an appropriate agent to manage Kasanga port upon a successful competitive bidding that will enable the agent to operate the terminal, under a concession where TPA will assume a landlord status. As shown in Figure 4.20 and Table 4.13, Kasanga port has recorded a rather constant export volume of cargo over the last five years, with no significant record on imports from the Submitted by BICO IV.3955 Monday, 28 February 2011

162 neighbouring countries, as per records from the TPA Kigoma branch office, monitored from 2004 to 2009/10 respectively. Nevertheless, the report indicated that there were no import data through Kasanga port over the period. Figure 4.20: Kasanga Import/Export in DWT Table 4.13: Export/Import at Kasanga Port Year Import (DWT) Export (DWT) / / / / Source: TPA Kigoma Office Observed Challenges at Kasanga Port include: TPA are currently extending the present jetty, but at the same time inviting a Consultant who is going to redesign the port to be able to offer transit services to neighbouring countries. The need for paved road and a railway connection from Tunduma cannot be overemphasized. The need for the government to provide incentives to neighbouring potential clients by offering stretches of land behind the port to be accessed from the port i.e. by road Submitted by BICO IV.4055 Monday, 28 February 2011

163 or rail, that will function as their threshold (freight villages) to facilitate smooth transit operations across. 4.4 Lake Nyasa Ports and Shipping Services Lake Nyasa is on the south west part of Tanzania and borders with Malawi, and has a size of 30,040 sq. km. and stretched with a length of 580 km long and a width of about km, and is considered to be the third largest lake in Africa. On the Tanzanian mainland, Lake Nyasa borders with three regions i.e. Mbeya in the north, Iringa (Ludewa district in the northeast) and Ruvuma for the most part of the southeastern shoreline up to the border with Malawi and Mozambique. The total population as per the 2009 estimates made by the National Bureau of Statistics reads million (Mbeya), million (Iringa) and million (Ruvuma) thus making a total population total of 5.63 million, making a percentage of about 14% of the national population figure. Its inland waterways has an infrastructure system that comprises of 13 ports of which two of them at the end points appear to be the major ports, where the rest being in between forming a list of Lake Nyasa cluster ports. Tanzanian communities living along the northeast shore (some without road access due to the steep terrain) are linked by ferry services between Kiwira and Mbamba Bay ports, where the MSCL serves a number of cluster ports in between the way (Figure 4.21 and Table 4.14). Figure 4.21: Lake Nyasa Passenger Volume Submitted by BICO IV.4155 Monday, 28 February 2011

164 Table 4.14: Mbamba Bay and Itungi Port Volumes Year Mbamba Bay Port Itungi Port Total , , , , , , ,037 Source: MOID/MSCL Lake Nyasa Cluster ports Lake Nyasa cluster ports runs from the Northern tip of Lake Nyasa, to the Mozambique / Tanzania boarder in the south. The following is a list of the cluster ports on the Tanzanian shoreline of Lake Nyasa. (i) Itungi port (old)/ Kiwira port (new) with a Malawian jetty used. (ii) Matema port (connected by road from Kyela/ Tukuyu but with no jetty) (iii) Lumbila port (no jetty and no road connectivity) (iv) Ifunga port (no jetty and no road connectivity) (v) Nsisi port (no jetty and no road connectivity) (vi) Lapingu port (no jetty as well as road connectivity) (vii) Manda port (no jetty but connected by road from Ludewa District Iringa) (viii) Ndumbi port (no jetty and no road connectivity the port has a rich hinterland with unlimited resource of coal now being exploited and transported by a 50 tons tug boat to Kiwira port, at an average of two trips per week, for onward delivery to Tanga cement) (ix) Lundu port (no jetty and no road connectivity) (x) Mkili port (no jetty and no road connectivity) (xi) Njambe port (no jetty and no road connectivity) (xii) Liuli port (no jetty and no road connectivity) (xiii) Mbamba Bay port (have an old jetty and connected by unpaved road to Songea now being reconstructed to a highway under the Mtwara Corridor) Observed Challenges on Lake Nyasa Cluster Ports Since the characteristics and the formation of Lake Nyasa are similar to Lake Tanganyika as they are all related to the Great Rift Valley, cluster ports that appear on Lake Nyasa are also Submitted by BICO IV.4255 Monday, 28 February 2011

165 similar to those along Lake Tanganyika which are on most part feature a background of a very steep escarpment for the most part of the northeastern coastline, to make the construction of roads unfeasible. Most of these shore cluster ports lack other surface connectivity, save for the MSCL marine services together with other private boat operators in the lake. The cluster ports can be grouped into four major categories as follows. Cluster ports that have no jetties as well as no scheduled or regular marine transport provider, no road connectivity but have inhabitants that call for transport services in their day to day socioeconomic activities nevertheless. Cluster ports that do not have a jetty but, due to their economic vibrancy and a big number of inhabitants, have regular demand for transport services that are often provided by ordinary boats despite a higher safety risk to users. Cluster ports that have no jetties but have road connectivity to other towns in their hinterland. Cluster ports that have no jetties but are serviced by the MSCL vessels. Despite the lack of jetties along the Lake Nyasa shore line, poor and unsafe boats that are frequently used to transport passengers and cargo within and along the lake continue to pose a higher risk to life and properties of passengers. By enabling the boat operators acquire desirable bigger boats of a medium capacity (100 tons GRT or so) through a suitable communal financing mechanism where the government is urged to offer guarantee, preferably under the proposed community based Transport SACCOS, that could offer solution to cluster ports mobility problems with respect to gender and demographic parameters, while taking into consideration on their limited purchasing power Itungi Port (Old)/ Kiwira Port (New) The Itungi port has been deliberately abandoned because of siltation of its harbour. The Itungi Bay draft has decreased so much that it threatened safe navigation of vessels alongside, where a decision was made after it was considered economical to shift the port to Kiwira Bay, than to engage in the dredging exercise. The cost involved in shifting the port was the Submitted by BICO IV.4355 Monday, 28 February 2011

166 construction of a 6.5 km gravel road from Kajunjumele to Kiwira Bay where the new port is located by branching out from the Kyela Itungi tarmac road. The old port at Itungi was located about 250 km from Mbeya municipality and 14 km from the Kyela Township. Malawi uses her own vessels to handle her imports which comprises of cement from Mbeya, maize and small quantities of tobacco. The port also handled fertilizers destined to Malawi. Malawi s export is mainly sugar, though in most cases it is directly shipped by road. Vessels Plying Lake Nyasa There are 8 major Tanzanian registered vessels plying the Lake Nyasa waters: 1) Two vessels owned by the MSCL namely MV Songea (180 passengers, 50 tons) currently grounded on minor technical grounds. MV Songea operates between Kiwira port and Mbaba Bay port, and calling at only 7 cluster ports due to nonavailability of jetty which creates a hindrance for the vessel s safe navigation. MV Iringa owned by MSCL (130 passengers, 5 tons) operates only between Kiwira and Manda ports. The vessel offers a 3rd class passenger services only. The two vessels operate along Malawian shore occasionally on hire basis. 2) Six motor boats that are privately owned These boats operate across the Lake Nyasa from Mbaba Bay to Nkata Bay in Malawi on demand basis. There is also one 50 tons tug boat named MV Viphya which hauls coal from Ndumbi coal mine in Ludewa district to Kiwira port for further haulage by road to Tanga Cement factory. There are unlimited resources of coal reserves at Ndumbi mine owned by TAN Coal Energy Company. Malawi operates a vessel named MV Katundu (750 tons) and operates between Kiwira and Nkata Bay in Malawi. Observed Challenges at the New Kiwira Port include: Since the new port at Kiwira is not threatened by siltation and has a good draft, and it has attracted Malawi to use it, the need to develop it into a modern port suffices. A Container terminal facility with a jetty would be appropriate for Submitted by BICO IV.4455 Monday, 28 February 2011

167 intermodal on cargo transiting through the port of Dar es Salaam destined to Malawi. Construction of a paved road, on the section that leads to the port from Kajunjumele junction. Provision of electricity and important navigational aids facilities. Private sector participation in establishing the necessary shipyards and repair docks elsewhere nearby. As per MSCL corporate plan, the need for a new and bigger vessel to provide cargo and passenger service. Encourage private boat operators in Lake Nyasa should be encouraged to join into community based Transport SACCOS that will help them to chart a way on acquiring financial resources, that will enable them to buy better boats capable of carrying a larger number of passengers and cargo along and across the lake Mbamba Bay Port Mbaba Bay port has an old jetty that is used to service passengers and cargo vessels that call at the port. There is no electricity as well as navigational aids to lead the vessels into or from the port. Mbamba Bay port is in southwestern Tanzania and it offers a big potential for development in the future where the National Development Corporation (NDC) of Tanzania, coordinate and implement infrastructural and economic projects, that are earmarked for the Mtwara Corridor which comprises Malawi, Mozambique, Zambia and Tanzania. Observed challenges at the Mbamba Bay Port Mbamba Bay port is at the centre of the developments plans now underway among the three nations of Mozambique, Malawi and Tanzania, spearheaded by the NDC. Mbamba Bay port is planned to have a dual connectivity of the road mode, now on its final stages aimed at linking it with Mtwara port, as well as the proposed railway link between the two ports. The subject line is also envisaged to have sections that will address the mineral reserves at Liganga (iron ore) and the Mchuchuma rich coal fields. Submitted by BICO IV.4555 Monday, 28 February 2011

168 The Mtwara to Mbamba Bay line has a possibility of linking with TAZARA at Mbeya according to NDC Plans. 4.5 Lake Marine Services Companies The Marine Services Company Limited (MSCL) The MSCL provides transportation services to passengers and cargo in three markets namely Lakes Victoria, Tanganyika and Nyasa as covered in the preceding sections. Other than the primary essence of passenger and cargo transportation services it offers, MSCL also crucially catalyses social and economic activities amongst communities living alongside the lakes. It own a fleet of 16 vessels on all the major lakes as shown in Table 4.16, which offer passenger and cargo transport services to date, despite the fact that there is a stiff competition particularly in Lake Victoria from a number of private operators now plying the inland waterways. S/N Table 4.16: Vessels Operated by Marine Service Company Limited VESSELS PASSENGER CAPACITY CARGO CAPACITY (TONS) YEAR BUILT 1. ON LAKE VICTORIA MV Victoria 1, MV Butiama MV Serengeti MV Clarias MV Nyangumi (Tanker) N/A MT Ukerewe (Tug) N/A ML Maindi N/A ML Wimbi N/A MV Umoja (rail wagons carrier) N/A MT Linda (Tug) N/A ON LAKE TANGANYIKA MV Liemba MV Mwongozo MT Sangara (tanker) N/A Sea Worrior (for tourism) N/A 3. ON LAKE NYASA MV Iringa MV Songea Source: MSCL (2010) As per Table 4.16, ten of the vessels are on Lake Victoria, four on Lake Tanganyika and two on Lake Nyasa. There have been frequent vessels breakdowns that result into idle stay in the port e.g. MV Serengeti was idle for 364 days in 2007, MV Butiama in 2008 for 365 days and MV Mwongozo from November 2008 to date. Submitted by BICO IV.4655 Monday, 28 February 2011

169 4.5.2 Kamanga Ferry Limited Within the radius of the port area there is a number of domestic privately owned ports. These ports include the Kamanga jetty which is owned and managed by a private company named Kamanga Ferry Limited, that is involved in both cargo and passenger ferry services as well as on ship building and maintenance works, steelworks, services on heavylift cranes and handling equipments, as well as on dredging and marine consultancy. Kamanga Ferry Limited has a dedicated Lloyd s certified team of crew and shipbuilders as well as technicians who constructs a wide variety of ships to internationally accepted standards. The Kamanga Ferry Limited is among the leading privately run enterprises that has the following fleet; MV Thor a general cargo cum container and vehicle carrier with a payload of 270 Mts. MV Nansio a Passenger cum general cargo and vehicle carrier with a payload of 280 Mts. MV Orion a Passenger cum general cargo and vehicle carrier with a payload of 500 Mts. MV Orion II a Passenger cum general cargo and vehicle carrier with a payload of 500 Mts. The ferry service that is run by the company between Mwanza and Kamanga attracts over 6,000 passengers and about 300 vehicles across in a day. Kamanga ferry operates a regular scheduled service where it makes 26 crossings everyday for 365 days a year. The Kamanga Ferry Limited also owns a well equipped shipyard at Kamanga which consist of two fully equipped slipways and overhead mechanical cranes. The Company also engages on dredging and piling work facility on Lake Victoria which was commissioned in A floating Dredger named NALA is a perfect vessel for enhancing the ports draft, piling of dam plates as well as constructing piers, jetties and quay walls to many a ports within and around the lake with emphasis on well established islands in lake Victoria that has a high traffic movements. Submitted by BICO IV.4755 Monday, 28 February 2011

170 4.5.3 Songoro Marine Transport Limited The Songoro Marine Transport is a limited liability company that was incorporated in November 1993 under the Ordinance Cap The initial objective of the Company was transportation of passengers and cargo by boats between Mwanza Gulf and villages surrounding the southeast of Lake Victoria but it ended up with the engagement of boat and vessel construction, as well as on steel fabrication that could be used as jetties to most of the cluster ports in Lake Victoria. The Company owns various production equipment and machinery acquired from Pansiasi Boat Yard Limited (PBY) and those purchased after the acquisition. These assets are capable of constructing steel structures, fuel tanks and vessels of up to 60.0 m long and 12 m wide with the carrying capacity of up to 400 passengers and 300 tons of cargo. Amongst its facilities is a slipway, overhead crane used for construction, launching of new vessels and slip in/out of vessels repair. The yard also has modern facilities for designing and drafting new vessels/boats. Regarding the manpower, the company has engaged several experienced staff in boats, steel structures, fuel tanker and tanks constructions, most of them being former PBY employees. The Company's scope of the boat building programs is: Steel structure Marine structure Fuel tanks Landing crafts Passenger/car ferry (high speed) Fish Transfer Floating platform Cargo Boats Research boats Patrol boats Trawlers The company s major plan for the future of its products is to develop high speed passenger boats. It is registered by the Contractors Registration Board (CRB) as Specialist Contactor in Class One (marine structure, steel structure, steel fuel tanks & boat building). Submitted by BICO IV.4855 Monday, 28 February 2011

171 4.6 Available Plans in the Inland Waterways Transport The TSIP Phase I, 2007/08 to 2011/12 (MoID, 2008) Report and TPA Master Plan Final Report (TPA, 2009), the MSCL Project proposal Document (MSCL, 2010), the East African Railway Master plan study (EAC, 2009), the EAC Development Strategy as per the EAC Secretariat Brief Report (EAC, 2010) are some of existing reports which have documented a number of plans in the surface and marine transport subsectors. A summary of available plans in the inland waterways transport include: Provision of navigational aids, dredging works and construction of cargo/passenger facilities at Mwanza North and South ports. Provision of navigational aids and modification of existing piers at Bukoba, Nansio and Kigoma ports. Construction of a simple jetty for dhows and small vessels at Musoma port. Construction of jetties at Lake Victoria, Tanganyika and Nyasa cluster ports. Port desilting and dredging, training on maritime affairs, developing of ship repairs and yards, marine search and rescue coordination centre for lake Victoria, weather forecasting system for inland lakes, improvement of quality management system for ports and undertaking capacity building of Lake Victoria Transport Commission to enable it manage transport services in the Lake Victoria through the implementation of the EAC Inland Waterways Transport Agreement. The need for navigational aids, adequate access road and expansion of quays and terminals to all cluster ports in inland water bodies. Rehabilitating of 5 MSCL vessels i.e. Victoria, Umoja, Serengeti, Liemba and Mwongozo and building 3 new ships one in Lake Victoria to serve between Mwanza and Uganda, one in Lake Tanganyika to serve between Kigoma Tanzania and Mpulungu in Zambia and one in Lake Nyasa to supplement MV Songea and Iringa which are aged and thus do not match the current and future demand, as part of the efforts to compliment on the existing intermodal connectivity demand. Development of the Musoma port to offer intermodal linkage on the Tanga (Mwambani) Arusha Kampala proposed railway link. 4.7 Identified Inland Waterways Transport Potential Development Areas Basing on the stakeholders views and the results of the survey on the available infrastructure, services and plans in the inland waterways transport, as presented in the Submitted by BICO IV.4955 Monday, 28 February 2011

172 foregoing sections, the identified inland waterways investment areas are focused on Lake Victoria, Lake Tanganyika and Lake Nyasa. These lakes have exhibited very high investment potential to obvious existing gaps in the transportation of both passenger and cargo across these lakes. Thus, inland waterways transport potential development areas include. Reintroduction of regional scheduled services on Lake Victoria to Jinja and Kisumu, and more particularly on cargo shipping, while developing and improving passenger and cargo services in Lake Tanganyika and Nyasa. Developments of jetties on some of the cluster ports which exhibits broader socioeconomic importance to the locals and the region as a whole. Provision of electricity to cluster ports. With the exception of a few cluster ports i.e. Ukerewe, in Lake Victoria, all other cluster ports along Lake Nyasa and Tanganyika have no electricity, of which together with accessibility problems, remains to be a hindrance to investors on various economic opportunities i.e. industrial fishing, mining, tourism and agriculture. The availability of electricity would stimulate economic activities and hence demand for transport services. Introduce as the case is with Lake Tanganyika, ships to ply between Kigoma and Bujumbura to take advantage of Burundi export and import trade that is recording a positive trend at the Dar es Salaam port. The development of Kasanga port that is potentially viable to offer as a suitable transit Port for cargo destined to or from the DRC through port Moba or Muliro. Investment on a railway section to Kasanga port along Lake Tanganyika from Sumbawanga, which lies on the proposed Tunduma Sumbawanga Kigoma railway line. Further development of another railway section to Karema port along Lake Tanganyika, from Mpanda where the proposed Tunduma Sumbawanga Kigoma railway line traverses. Revival of the Kigoma Kalemie intermodal connectivity in Lake Tanganyika, where the port of Kalemie is connected to the DRC railway network. Investment on multipurpose vessels i.e. RoRo that are to operate on regional routes enjoying the cabotage trade, under the Tanzanian registry, that are capable of carrying Submitted by BICO IV.5055 Monday, 28 February 2011

173 between 500 Mts to 1,500 Mts GRT respectively, with sufficient capacities to offer both local and regional services across the terminals. Introduction of communal boats where individual investors may prove difficulty to locate, therefore introduce community groups under transport SACCOS which can be formed and deliberately assisted to acquire boats with capacities between 50 tons and 100 tons GRT, that are capable of carrying 30 to 100 persons each respectively, and offer services to the underprivileged modal captive masses, at affordable prices within and alongside the lakes, where MSCL do not operate. Particular importance is to be given to cluster ports which have no connectivity to any other mode of transport other than marine services that are often offered by poor boats, and to ports on lakes in regions with sharp escarpments, the topography of which would not facilitate the construction of roads. 4.8 Summary of Findings, Recommendations and Policy Implications Summary The MSCL is among the major transporters of cargo and passengers across Lake Victoria. Despite the increase in economic activities and population within and around the Lake, MSCL has not been able to record significant growth in passenger and cargo services. MSCL passenger services trend as recorded over time reflects a decline on the number of passengers using the vessels, with the exception of the Mwanza Nansio route which is recording a significant growth. Apart from the fact that MSCL vessels are facing stiff competition from private vessel/boat operators in the market they had predominantly maintained over the years, the Consultant identified other parameters that has resulted to the MSCL passenger decline in recent years: A modal competition between the road and the inland waterways transport. Poor performance of the TRL services. A modal shift for the Muleba, Bukoba and Kemondo pasengers to and from Dar es Salaam, who are now opting for a road mode via Singida, Kahama and Biharamulo to Bukoba. Frequent breakdowns of MSCL vessels, which results into longer idle stay of vessels in port pending repair of which in most cases take a longer time to accomplish. These breakdowns are often associated with the aging of the fleet. Submitted by BICO IV.5155 Monday, 28 February 2011

174 MSCL need to carefully look into how they can improve both their cargo and passenger services, so as to retain and attract more business, or else face an involuntary withdrawal of passenger services, like what happened to the Mwanza Musoma route. The provision of transport services have to go handinhand with relevant policies which encourage an efficient transport system, that comprise of economical modal splits where necessary by engaging in a variety of multimodal and intermodal services in ensuring the most optimum route and modal selection is used. On the other hand, a number of features and operational challenges at inland ports have been pointed out, and it has also been noted that there are plans to address these challenges so as to improve the inland waterways transport services Recommendations Investments in inland waterways were identified based on the survey on the available waterways across Tanzania, literature reading as well as from various stakeholders who were interviewed along, and further on the basis of available market as they are reflected by the survey results. In consideration of these factors the Consultant makes the following recommendations. Local transport perspective Since a bigger population concentration is within and around the inland water bodies, the Consultant recommends that the government should offer support on the required infrastructure as well as helping community groups within and around the inland water bodies acquire funds to purchase modern boats preferably those manufactured locally, at affordable prices. As a pilot project, the Consultant has taken time to study the establishment, management and operational movement of the UWAMAKI group at Kigoma Kibirizi, where he was impressed of the fact that UWAMAKI was a formal organized group of Kigoma boat owners, very experienced with both local and regional trade, where the Consultant suggest that this group could shade some light on the mechanism of how the Transport SACCOS could be introduced in the country, so as to enable the provision of safer and affordable services across all the cluster ports in the inland water ways. The program and the subsequent services will simplify SUMATRA regulatory work, while promoting safe navigation across the inland water Submitted by BICO IV.5255 Monday, 28 February 2011

175 bodies. UWAMAKI therefore is to be used as a pilot project group in the establishment of a community based Transport SACCOS, where through appropriate publicity and training, could warrant the establishment of many others after being emulated elsewhere in the three lakes, to demonstrate community approaches towards solving local transport problems. The proposed project is expected to give a relief to many users of lake transport, and hence improve the level of transport services offered in terms of the size of the boats used, safety parameters and the level of appropriate technology used. It can also include training of skilful employed skippers to handle the vessels of which will be fully licensed, registered and attending scheduled inspections to determine their worthiness to remain afloat, and engage in the business of ferrying passengers and their goods. Mwanza has three established ship builders i.e. a private company named Songoro Marine Transport limited, formerly a public organization then named Pansiasi Boat Builders Limited, the Kamanga Ferry Limited and the one operating at Mwanza South port using TPA facilities. Given the vast water bodies of the inland lakes that Tanzania is privileged with, deliberate measures should be undertaken to attract investors in ship / boat building both along Lake Nyasa and Tanganyika accordingly, where there are no fully fledged established boat builders nor ship repair facilities, to promote marine transport. The private sector should be encouraged to be involved actively in ownership and operations of vessels for cargo and passenger movement, construction and operations of inland ports and terminals, provision of mechanized handling systems, maintenance of navigational facilities as well as on port miscellaneous services. Regional transport perspective The Consultant is of the view that in promoting trade across inland waterways through regional routes, the demand for introducing bigger vessels with appropriate capacities and the applicable level of technology, should be looked into. In the advent of the potential growth in transit freight volumes across the region through our coastal ports, and the development plans that are aimed on revamping the national railway services, it is proposed that investments on modern multipurpose vessels with minimum capacities of 500 passengers and 350 tons be introduced. For the case of Submitted by BICO IV.5355 Monday, 28 February 2011

176 wagon ferries they should be able to effect train loads of between wagons respectively. The Government should provide conducive environment that can attract investors on shipyard and repair shops to construct facilities along the inland lakes, under the TIC or EPZ /EDZ modalities where incentives offered under the two could be equally extended to the EPZ /EDZ manufacturers. Beside the local market, the shipyards in inland lakes could attract foreign orders from neighbouring countries sharing the borders with Tanzania i.e. Mozambique, Malawi, Zambia, The DRC, Burundi, Uganda as well as Kenya respectively. Lake Victoria ferry services should be offered between Mwanza ports and Bell and Jinja ports in Uganda, as well as Kisumu port for cargo and Passengers. In the case of Lake Tanganyika, ships should ply between Kigoma and Bujumbura to take advantage of Burundi export and import trade that is recording a positive trend at the Dar es Salaam port. Similar approach is required for the connectivity between the Kalemie port (DRC) and Kigoma which currently the route has lost traffic due to poor railway services between Kigoma and Dar es Salaam. The Kasanga port is potentially feasible for development to enable it assume a central hub for cargo destined to or from the DRC through Moba or Muliro ports, Rwanda and Burundi Policy Implications Numerous legislative, coordination and support measures through regional protocols can be designed and taken, of which are aimed at stimulating investments in inland water transport such as on: Creating favourable conditions for the provision of transport services and the development of infrastructures. This includes facilitation of community groups to access the required capital for owning and operating inland water vessels through their own transport SACCOS. Incentives for the manufacturing and modernisation of the marine vessels locally, e.g. by developing and promoting the use of innovative concepts and technologies for the construction appropriate vessels that are affordable and capable of revolutionalizing the inland water transport. Training of skippers as well as sensitizing on safety and environmental concerns. Submitted by BICO IV.5455 Monday, 28 February 2011

177 Promotion of inland navigation as a successful partner in business, e.g. through more intensive publicity work; A regional coordination (EAC) or bilateral/ multilateral agreements/ arrangements between governments for the provision of appropriate technical oriented infrastructure through which the improvement and maintenance of the inland waterway network, could facilitate the movement and handling of modern cargo and passenger vessels, move across the regional ports in all the inland water bodies. 4.9 Selected Literature Lake Victoria Port Facility TPA Mwanza Branch (Aug. 2010) Soft Copy Traffic Performance Mwanza Port TPA Mwanza Branch (from the year 2000 to 2009/10) Soft Copy Kigoma Port Operational Capacity TPA Kigoma Branch ( /10) Soft Copy MSCL Vessels, Passenger & Cargo Movement MSCL HQ ( ) Soft Copy MOID (June 2008) Transport, Construction and Meteorology Sector Statistics and Information NBS (2003) 2002 Population and Housing Census General Report National Bureau of Statistics (2009), 2009 Country Population Estimates MoID (2008) 10 Year Transport Sector Investment Programme (TSIP) Phase 1 (2007/8 2011/12) MSCL (2010) Project Proposal Document EAC Secretariat (July 2010) Brief Notes on Maritime Transport and Port Development in the EAC TPA Grand Throughput for the Year The East African Railway Master Plan (January 2009) Submitted by BICO IV.5555 Monday, 28 February 2011

178 CHAPTER FIVE URBAN RAIL TRANSPORT INFRASTRUCTURE, SERVICES AND PLANS 5.1 Introduction This chapter presents the results of the survey on the available urban railway infrastructure, services and plans. It also covers identified urban rail transport potential development areas. In carrying out the survey, physical surveys were carried out on key railway lines and terminals and relevant key stakeholders and officials were interviewed. The survey covered both the TRL and TAZARA railway systems. Railway terminals visited include Dar es Salaam, Morogoro, Kigoma, mwanza, Kemendo Bay (link span), Musoma (link span), Tanga, Pongwe, Moshi, Arusha, Mbeya and Kilombero (TAZARA TRL link yard). 5.2 Tanzania Railway Network The Tanzania railway network is comprised of two subsystems with a total length 3,552 km. The two systems are managed by the Tanzania railway Limited (TRL) with 1.0 m gauge and 2,532 km track and the Tanzania Zambia (TAZARA) with a m gauge and 990 km track (up to Tunduma).The subsystems are connected (by transhipment platform) at Kidatu. The TRL and TAZARA system lines were built by Germany colonial administration prior to World War I and the Chinese Government ( ), respectively TRL System a) The Central Railway Line The line extends from Dar es Salaam westward via Morogoro, Dodoma and Tabora to Kigoma on Lake Tanganyika was completed in 1914 and is 1,255 km long. This is by far the heaviest traffic line. There are four branches. Tabora Mwanza, on Lake Victoria 379 km, started in , completed in 1928, also a heavy volume route. Kaliua Mpanda, 213 km, built in Kilosa Mikumi (1958) and on to Kidatu (1965) where it almost touches TAZARA, 108 km. Manyoni Singida, 115 km (recently completed) Submitted by BICO V.115 Monday, 28 February 2011

179 b) The Tanga Railway Line The line is of 437 km length, begun in 1895 (thus the oldest in the country), reaching Moshi in 1911 and extended to Arusha in These are connected by a 188 km link line, Ruvu to Mnyusi, built in Before that time the lines were not connected. There is an unused segment, 31 km, between the Tanga line and the Kenya border. This line, if operating, would allow through services from Nairobi to Dar es Salaam. Management of the TRL system (former TRC) was united with the KenyaUganda lines in 1948, to form East African Railways, but this was dissolved in 1977 following the breakup of the East African Community Tanzania Zambia Railway (TAZARA) TAZARA line consists of one line extending 1,885 km (1,158 miles) from a connection with Zambia Railways at Kapiri Mposhi to the harbour, at Dar es Salaam, with m gauge. It serves Mbeya as one of the major towns in Tanzania not previously served by rail, but not Iringa, much of the area served is relatively undeveloped. Todate the line has handled primarily Zambia traffic, copper outbound, fertilizer, grain, and manufactured goods inbound. The line, built by China and completed in 1975, was one of the major rail construction projects in the last century and freed Zambia of dependence on the southern route. But in terms of performance it has been a disappointment. It has handled a substantial volume of traffic more cheaply than road transport, but not to the extent anticipated. It is difficult to get adequate scientific explanations of the problems; some parts of the track are experiencing water runoff. The basic trouble appears to be inadequate trained personnel, particularly for management and equipment maintenance. It has been constantly short of locomotives, which have not been maintained well and are diesel hydraulic, rather than diesel electric. Train delays have been serious, with a very slow turnaround time, tying up its own and Zambia Railways freight cars. Part of the trouble has arisen from congestion at the port of Dar es Salaam and the delays in clearing Zambiabound traffic. The line has been so short of personnel and equipment that at times it has suspended passenger services entirely or sometimes running this service only once a week. The line has great potential and will be of growing importance for Southern Africa, but currently it has a long way to go, before being an efficient operation. Submitted by BICO V.215 Monday, 28 February 2011

180 5.3 Urban Rail Transport There is growing interest in using rail transit, trams, metros, light rail to solve urban transportation problems, particularly road congestion and air pollution. In developing urban rail projects, a range of major cities around the world have turned to publicprivate partnership models, to leverage both public and private resources and expertise. New urban rail systems are complex, capital intensive, and typically customized to a particular city or transportation corridor. Managing such complexity and the associated risks can be a daunting challenge for even the most experienced and sophisticated public authorities. Also, there has been growing interest in urban rail publicprivate partnerships (PPPs) over the past 10 years. Cities around the world from Dublin to Jakarta, from Jerusalem to Lagos, from Mumbai to St. Petersburg have recently embarked on such ventures. The record of urban rail PPPs underscores the importance of effectively allocating risk between the public and private partners. When an urban rail system is developed by a publicprivate partnership (PPP), a key factor in determining the success of the scheme is how risk is allocated between the parties. Achieving the right allocation of demand risk between the public and private sectors is critical. So is ensuring adequate physical infrastructure and integration with other modes of public transportation, both of which have a direct effect on demand. Despite the aforementioned trend worldwide, there is no city or town in Tanzania, which is operating urban rail transport. Even the situation of long distance rail transport has been worsening ever since the privatisation of the former TRC. 5.4 Competitive Advantage of Urban Rail Competitive advantages of urbanrail transport sterm from the general modal advantages i.e.: The mode is economic and efficient for high density traffic haulage e.g. urban commuter population. It enjoy privacy of the way, thus can have very reliable services. It is environmental friendly vis a vis pollution. It is the cheapest surface mode, i.e., lowest cost per unitkm. Once well developed it is the safest land transport mode. Submitted by BICO V.315 Monday, 28 February 2011

181 5.5 Available Plans Despite the fact that there have been a lot of discussion about the possibility and the need for starting Dar es Salaam urban rail transport, the study found that way back in between 1998 and 2002 there was a plan initiated by the then Ministry of Communication to establish commuter trains in Dar es Salaam. The plan was to establish a two routes commuter system, one from the current central TRL Station to Ubungo, and the other one to Pugu. There were also plans to construct a new track line from Ubungo to Wazo Hill in Kunduchi. The project was to be implemented in three phases: Phase 1 (Route 1: TRL central station Ubungo). This involved: o Rehabilitation of the track from Buguruni to Ubungo; and o Acquisition of rolling stoke for the route. Phase 2 (Route 2: to Pugu). The implementation involved: o Minor rehabilitation of the track from Buguruni to Pugu Station; and o Acquisition of rolling stoke for the route. Phase 3 (Extension of Route 1 to Wazo Hill) o Construction of new track from Ubungo to Wazo Hill. o Acquisition of additional rolling stock for route 1. The project had reached implementation stage in that TRC had used TATA bus bodies to convert a few wagons into coaches ready for leasing them to potential private operator. Seven (7) wagons/coaches in total were modified. A tender was floated to operate the City Centre Ubungo route to a private operator to which 12 bidders responded. A winner was selected and awarded the tender; this was Ms Leo Motors Company Ltd, who had even travelled to Japan, China and Germany to source for suitable rolling stock. However, towards the end of 2002 the project was unceremoniously dropped down irrespective of the sourcing expenses incurred by all parties that were involved in the project. The main reason for dropping the project was said to be the future (by then) concession of TRC to a private investor, which came to be so in Furthermore, this study found that an integral part of the Phase 3 Dar es Salaam BRT implementation proposal envisages the use of the existing railway corridor that runs from the city centre rail station, crosses Nyerere road and runs parallel to the Dodoma line before Submitted by BICO V.415 Monday, 28 February 2011

182 veering north at TAZARA/Buguruni to Tabata and Ubungo. However, the consultant is of the opinion that instead of uprooting the sidelines to pave the way for the BRT the same can be used to revive the commuter railway transport within the city since the commuter railway services from the city railway station can be extended beyond Banana (referred to as route 2 in the following section) to areas such as Pugu and Morogoro. 5.6 Identified Urban Rail Transport Potential Development Areas The current urban rail system was constructed as part of intercity railways system with same limited urban network that was made to act as side lines to various industrial areas. As such, therefore, there are no commuter rail systems in the country. The consultant noted concerns among stakeholders of the TRL on the deteriorating passenger services even on the long distance routes e.g. Mwanza Dar es Salaam. It was noted that they would prefer rail transport, for both urban and interurban, to road transport because of the comparative accident records as railway transport is safer than road transport. Generally, there were stronger needs for railway transport within and between the following cities: Dar es Salaam City Dar es Salaam Morogoro Moshi Arusha Dar es Salaam Urban Rail Transport Some sidelines in Dar es Salaam are extensive enough to form commuter rail infrastructure. The City centre to Ubungo side line that was made to serve the Ubungo industrial area is long enough and strategically positioned to serve as commuter railway services. Similarly, the other part of the central line track from the city centre to Banana area (Ukonga) can also be used to operate commuter services. The consultant proposes an urban rail system in Dar es Salaam to alleviate the current congestion in the city. As a pioneering project, the system routes will make use of part of the existing rail network that will have to be maintained and improved to meet the commuter rail standards. The improvements will include (see Figure 5.1): Construction of at least two extra track lines at each identified terminal to facilitate shunting and possible crossing of two opposing trains. The terminal Submitted by BICO V.515 Monday, 28 February 2011

183 tracks are to be 150 m long, i.e. 150 m x 2 = 300 m or 0.3 m of track at each terminal. Fencing each terminal with a gate or gates to facilitate pretrip ticket purchases and minimize stoppage time at each terminal. Number of gates per terminal will be determined by the commuter approach ways configurations. Construction of a boarding/disembarking platform at each terminal with simple overhead shelter to protect commuters from sun and rain. Construction of small ticket sale offices/booths at each gate for temporary cash custody. Installation of lighting system for both security and normal operation purposes. Based on the information on roadrail crossings, characteristics of the crossing environment and users, the physical and operational improvements can be made at roadrail grade crossings to enhance the safety and operation of both road and rail traffic over crossing intersections. Long term improvements may include: Construction of standard gauge (1.435 m). Construction of double track infrastructure to facilitate frequent operations. Construction of fly over roads at all railroad crossings to minimize interference with the road commuter system. Introduction of electric powered engines for more efficient motive power performance. Submitted by BICO V.615 Monday, 28 February 2011

184 Figure 5.1 Typical intermediate proposed terminal The two possible routes can have Ubungo and Banana areas to serve as stations serving the outskirts of Dar es Salaam city as follows. Ubungo station as hub for Mwenge, Sinza, Ubungo, Bonyokwa, Kimara etc. Banana station as hurb for Ukonga, Pugu, Kitunda, Kinyerezi, Chanika, Chamagamazi etc. a) Proposed Project Routes TRL Line The proposed routes are as follows: Route 1 (Figure 5.2): Kamata Ubungo vial Buguruni (15 km). The total track length of this route is 15 + (0.3 km x 6 terminals) = 16.8 km, and it will have the following stations: Kamata Ilala Buguruni Tabata Mabibo Relini Ubungo Submitted by BICO V.715 Monday, 28 February 2011

185 Figure 5.2: Route 1 Route 2 (Figure 5.3): Kamata Banana (Ukonga) via Buguruni (14 km). The total track length of this route is: 14 + (0.3 km x 6 terminals) = 15.8 km, and it will have the following stations: Kamata Ilala Buguruni Vingunguti Kipawa/Airport Banana On the other hand, one of the challenges facing the proposed route is the possible interference with current interregional rail operator. One way to avoid any unnecessary interference will be through the observance of train schedules which are properly drawn in response to the demands. Submitted by BICO V.815 Monday, 28 February 2011

186 Figure 5.3: Route 2 Rolling Stock Fleet Size and Price For effective implementation of the proposed routes, the Consultant proposes 30 minutes train interval operations per route which calls for three trains per route i.e. six (6) trains in total. Thus, total running stock required: 6 small locomotives 6 x 4 coaches i.e. 24 coaches (4 per train) Rolling stock prices (Source: TAZARA Directorate of Planning) 1 small locomotive = USD 2,400,000 1 commuter coach = USD 40,000 50,000 The average maintenance costs for TRL are estimated at USD 1716 per km (source: MoID, 2008). Submitted by BICO V.915 Monday, 28 February 2011

187 c) Proposed Route on TAZARA Line There has been a strong feeling among some key stakeholders that the above proposed Dar es Salaam Urban Rail system should be expanded to include the TAZARA Central Station to the Mwakanga Station in Pugu area. If made to operate, the stakeholders pointed out that the stretch will take care of the population areas of Kiwalani, Kitunda, Jiungeni, Pugu and the expanding areas of Chanika and beyond. It was also noted that this route provides an alternative option as a solution to the challenge that may be poised by operating Route 2 on TRL line, as noted above. The two railway tracks (TAZARA and TRL) do run parallel to each other with a good double lane road between them (Pugu road) all the way from Buguruni to Pugu, however, the TAZARA line is short of reaching the city centre by a good 4 km. The distance between the two lines is hardly more than 1.5 km and the two tracks are of two different gauges. Thus, the TAZARA line from Buguruni to Pugu Mwakanga, with Mwakanga as the satellite hub, can also be used for urban rail transport with the following stations: Buguruni (TAZARA) Yombo Kitunda Jiungeni Mwakanga All trips to the city centre, but terminating at Buguruni TAZARA main station, will need a transfer at the TAZARA main station. The operator will have to involve dedicated bus services, preferably from BRT to operate this route. For smooth operations that shall not interfere with the TAZARA intercity operations at the TAZARA central station, the consultant proposes two alternatives as modifications to the central station. Extension of the current timber terminal sideline to reach the open space besides the Pugu road. The new terminal can be paved and fenced to function as a special coordination terminal with the BRT/bus system. The TAZARA central workshop side line can be branched out to give a line to extend to the open space between the workshop and the residential houses besides the Pugu road to be treated as above. Submitted by BICO V.1015 Monday, 28 February 2011

188 The rolling stock fleet size and unit costs are as estimated for the TRL route. Additionally, if a private operator other than the TAZARA will have to operate the proposed route because of convenience in procurement and maintenance of the rolling stock whose bogie/axle length shall have to match the exclusive gauge (1.067m), then and concession arrangements will have to undertaken. However, alternatively, concession arrangements may not be necessary if the operator shall be a special section/department within the TAZARA Management itself. d) Passenger Demand and Attraction According to the Dar es Salaam Transport Policy and System Development Master Plan Study (JICA, 2008), Route 1 carries 4, passengers per hour, which is a very high demand for mass transit services. It cuts through an area west of Nelson Mandela road that is densely populated with very poor public transport services. Generally, the greater the number of passenger trips a mass transit system carries, the better it serves citizens and a city s needs. The more personkm a transit network/line carries, the more economically it operates (its unit costs decrease). Consequently, the dominant goal in designing most transit systems is to attaract as many passengers as possible. The following features are considered to affect the design of the mass transit system and hence service quality and thereby influence passenger demand and attraction. Area coverage, defined as percent of the total urban are that is within 5minute (primary) and 10minute (secondary) walking distance of transit stations, represent the basic element of the system availability. It can be considered that most potential users within 5minute (400 m) walking distance will use the system. Between this distance and a 10minute (800 m) walking distance the potential ridership gradually decreases. Willingness of potential passengers to walk or use feeder modes, from bicycle and buses to private cars, depend greatly on the quality of rail service, trip lengths, and conditions of travel by alternative modes. Operating speed is a function of right of way and station spacing Travel desire lines: rail lines should be designed to follow as closely as possible major origindestination (OD) patterns of travel in order to attract and serve efficiently the maximum number of passengers Submitted by BICO V.1115 Monday, 28 February 2011

189 Directness of travel, measured as the ratio of passengerkm travelled on the network to passengerkm along straight OD lines, expresses an efficiency of the network design Simplicity, connectivity and easy transfers must be considered in design because they are important for passenger convenience and attraction. e) Integrating Urban Rail with other Transport Solutions Planning in advance the urban rail links with other modes of transport such as the proposed BRT and its feeder bus services, taxis, and private vehicles as well as other modes, is also critical in designing a new urban rail system. Customers for the new system need convenient links to start and complete journeys. In this case there is a need to consider how passengers will get from their homes to the new rail stations and from the stations to their ultimate destinations (such as workplaces, shopping centers, and schools and colleges), and similarly for their return trips. Park and ride facilities, for example, will attract private car commuters. Urban rail schemes have managed this intermodal integration risk in a range of ways, including the following examples: Bangkok s Skytrain introduced new dedicated feeder bus services in its bid to increase ridership from the unexpectedly low levels at the start of operations. During the development of Skytrain, several public institutions including the Ministry of Transport, the Bangkok Metropolitan Authority, and the State Railway of Thailand were implementing transportation solutions. Coordination among these entities was deficient, and little consideration was given to integrating the systems. This oversight contributed to disappointing ridership levels when Skytrain opened: 150,000 riders a day rather than the 600, ,000 that had been forecast. Revenues were so low that the concession company eventually became unable to meet its financial obligations. Skytrain s services offered clear value to customers by enabling them to avoid Bangkok s extreme traffic at a reasonable cost. But without supporting modes of transport, many of the city s residents lacked easy access to the system. Later improvements in the integration of services, including the addition of feeder buses and new aerial walkways, helped to increase ridership to some 460,000 passengers per weekday (Menzies and MandriPerrott, 2010). Submitted by BICO V.1215 Monday, 28 February 2011

190 The Nottingham Express Transit tram system had introduced parkandride sites with more than 3,000 parking spaces as well as tram stops linked to national and commuter railway stations. Physical integration with other transport systems, such as BRT and/or buses, also requires an integrated approach to ticketing. Many cities are adopting transit smart cards to pay for multimodal and multitrip journeys, recognizing that a typical commute or journey might involve, for example, catching a bus from home to the train or metro, and then riding the urban rail system to an office in the centre of town. Increasing passenger convenience in this way helps to both increase ridership and meet other policy objectives, such as reducing the number of private vehicles in urban centres. Further, the distance between parallel lines serving a given corridor area depend on the tradeoff between the walking access distances to the lines, and their frequency of service. On the other hand, it is important to note that fares not only reflect customers ability and willingness to pay but also are aligned with policy goals (such as promoting a switch to public transport, managing traffic congestion, or improving urban air quality). As such, in some instances public authorities have decided to be responsible for fare setting. However, great care needs to be taken in exercising this authority, especially where the private operator s sole or principal source of revenue is the farebox. In other cases, operators have had the freedom to set the fare structure so as to shape demand or take advantage of highervalue or discretionary routes, such as airport connections, and to effectively crosssubsidize other parts of the network. Higher fares can also be a source of public outcry and premature frustration of projects. Generally, it is noted that there is no single best way to structure an urban rail PPP. Instead, an appropriate PPP must be based on the city s unique history, politics, finances and geography (Menzies and MandriPerrott, 2010) Urban Rail Transport for other Cities Other cities/towns which are potential for the development of urban rail transport are Dar es Salaam Morogoro and Moshi Arusha. The need for such services stems from the fact that it is not uncommon to experience road congestion between Mlandizi and City Centre (DSM) Submitted by BICO V.1315 Monday, 28 February 2011

191 (especially for Morogoro Dar es Salaam route) during rush hours as well as between Usa River and Arusha city centre. The services, however, may be effective if they will operate on express basis i.e. with few intermediate terminals. 5.7 Summary, Recommendation and Policy Implication Summary The chapter has presented survey findings on the available infrastructure, services and plans in intercity and urban rail transport. It has further, identified urban rail transport potential development areas. Urban rail investment contemplates the rehabilitation and improvement of the existing rail network in Dar es Salaam to meet urban railway passenger standards. It will also require the construction of extra track lines in the stop centres to facilitate shutting and train crossing each other in opposing directions. More importantly, it calls for the purchase of rolling stocks. The investment is therefore capital intensive. Other cities/towns which are potential for the development of urban rail transport are Dar es Salaam Morogoro and Moshi Arusha. The services, however, may be effective and efficient if they will operate on express basis i.e. with few intermediate terminals Recommendations This section draws the specific recommendations based on the survey findings presented in the previous sections as follows. It is possible to establish urban rail transport in the city of Dar es Salaam due to its high population and the current pressing challenges on the public transport system especially traffic congestion. Two routes are proposed which will make use of part of the existing railway lines. The two routes are Kamata to Ubungo via Buguruni, and Buguruni Mwakanga (TAZARA line). The operation of the other route from Kamata to Banana via Buguruni (TRL line) will depend on the effectiveness of mitigation measures taken to avoid the interference with the existing TRL operator. Submitted by BICO V.1415 Monday, 28 February 2011

192 Rehabilitation and improvement of the existing rail network should entail construction of two extra track lines on each side of the existing network at identified stop centres to facilitate shunting and crossing. The project should acquire 6 locomotives each pulling 4 couches. A separate body to operate and manage the commuter rail system with a wider, vision to match with the rapid expansion of the Dar es Salaam City. The vision may include the development and expansion of its own infrastructure or have a concession relationship with RAHCO or TAZARA, which will have to modify the RAHCO Act to include urban rail infrastructure development. In order to implement this proposal properly, it is recommended that a dedicated study should be carried out to identify specific areas for development of the proposed stations and appropriate ways of integrating urban rail with other passenger transport modes and more importantly on promoting a switch from private car to public transport Policy Implications It is assumed that the proposed routes shall make use of the current RAHCO and TAZARA railway infrastructure. RAHCO will have to modify the RAHCO Act to include urban rail infrastructure development or concession its infrastructure to a separate body which will operate and manage the commuter rail system with a wider vision to match with the rapid expansion of cities including the development and expansion of its own infrastructure. 5.8 Selected Literature MoID (2008) 10 Year Transport Sector Investment Programme (TSIP) Phase 1 (2007/8 2011/12) Mensies and MandriPerrott (2010). Private Sector Participation in Urban Rail: Getting the Structure Right. Note No. 54, PPIF. TPA (2009) Tanzania Ports Master Plan, Final Report Submitted by BICO V.1515 Monday, 28 February 2011

193 CHAPTER SIX SURFACE AND MARINE INTERMODAL TRANSPORT INFRASTRUCTURE, SERVICES AND PLANS 6.1 Introduction Intermodal transport involves the use of at least two different modes in a trip from origin to destination in the entire transport supply chain. Intermodality enhances the economic performance of a transport chain by using modes in their most productive manner. Generally, intermodal transport involves: A logistically linked system using two or more transport modes (e.g., ship, rail, and truck) with a single transport document (rate) Modes having common handling characteristics, permitting freight (or people) to be transferred between modes during a movement between an origin and a destination Cargo which do not need to be handled, just the load unit such as a pallet or a container Under such circumstances, the efficiency of intermodal transport network mainly resides in the transhipment capabilities of transport terminals. This is where most time is lost and cost is incurred. There are three major types of intermodal terminals each having its own location and equipment requirements: port, rail and inland intermodal terminals. For the inland intermodal terminals, it is mainly a facility located at a peripheral and less congested site that often performs activities that have become too expensive or space consuming for the maritime terminal. For maritime ports, the weakest link in their transportation chain is their back door, where congested roads or inadequate rail connections cause delays and raise transport costs. The strategic decision would therefore be the implementation of rail or improved inland intermodal terminals serving marine terminals. Inland intermodal terminals are of major importance for the efficiency of the intermodal transport as well as for efficient access to or from the ports. Transport modes are never independent of each other. Different modes are often in competition among themselves, while they may also complement each other in many instances. Since Submitted by BICO VI.136 Monday, 28 February 2011

194 Tanzania is endowed with a coastline of 804 km and navigable inland waterways, surface transport modes would be expected to connect transport nodes at these water bodies. This chapter therefore presents the results of the survey on the available surface and marine intermodal transport infrastructure, services and plans. It also outlines identified transport potential development areas. 6.2 Tanzania Transit Corridors Routing transit traffic through Tanzania has been seen as an integral part of the national and regional socioeconomic development and integration efforts. Tanzania serves as a transit country for import and export of Malawi, Zambia, DR Congo, Burundi, Rwanda and Uganda, using the port of Dar es Salaam. The main road connections in Tanzania are in eastwest direction linking the ports with the hinterland in those neighbouring countries. As noted in Chapter 2, the Government of Tanzania is dedicated to provide an adequate level of physical infrastructure that will ensure a macroeconomic stability aimed at enabling the country achieve a competitive edge in the regional and world markets, with the capacity to articulate and promote national interests, and where possible to adjust quickly to regional and global market shifts, that is essential in optimizing the predetermined strategies. Therefore the country is paying attention to the development of transport corridors concept, where concentration efforts are made on the Dar es Salaam Corridor, the Central Corridor, the Tanga Corridor and the Mtwara Corridor. The Dar es Salaam corridor, which is also referred to as the TAZARA corridor, connects the Dar es Salaam port with the southern and eastern highland through the TAZARA railway and the Dar es Salaam Tunduma Highway. The corridor offers the shortest distance between the port of Dar es Salaam, Zambia, Malawi and the southern parts of Tanzania. Major constraints facing the corridor include deterioration in the performance of TAZARA railway (MoID, 2008). The Central Corridor originates from the Dar es Salaam port and takes the central line route extending to eastern DR Congo, Burundi via Kigoma on Lake Tanganyika, to Rwanda via Isaka Dry Port and to Uganda via Mwanza on Lake Victoria. The corridor offers the shortest Submitted by BICO VI.236 Monday, 28 February 2011

195 distances between the Dar es Salaam port and the land locked countries through a variety of intermodalism as mentioned hereunder (MoID, 2008): Dar Kigoma Bujumbura (1,436 km) Road/rail and inland waterway transport Dar Kigoma Kalemie (1,374 km) Road/rail and inland waterway transport Dar Isaka Kigali (1,463 km) Rail and road Dar Mwanza Portbell (1,581 km) Rail and inland waterway transport The major constraints facing the corridor are (MOID, 2008): Poor condition of the infrastructure for both rail and road Delays to cargo off take especially at the Dar es Salaam port due to shortage of wagons as well as their low availability Lack of navigational aids on the Lakes of Tanganyika and Victoria resulting in unsafe operations Silting of Lake Victoria at Mwanza and Tanganyika at Kigoma and Kalemie The Tanga Corridor has great potential to serve the Lake Victoria regions as well as Uganda, Burundi and Rwanda using the Tanga port. The 10 year TSIP identifies projects which need to be implemented to remove critical bottlenecks along this corridor as follows: The development of a deep water port at Tanga (Mwambani) The Construction of Tanga Arusha Musoma railway The constraints which need to be addressed include (MOID, 2008): Environmental concerns for the possible railway alignment between Arusha and Musoma Absence of funds for conducting a study to determine socioeconomic and environmental viability Mtwara development corridor is one of the corridors identified to serve SADC countries, namely northern Malawi, Mozambique and northeastern Zambia. Port development, road and rail construction are critical components for the corridor potential exploitation. Specific constraints along this corridor include (MOID, 2008): Limited Mtwara port capacity Absence of both rail and road network linking the port to the hinterland Submitted by BICO VI.336 Monday, 28 February 2011

196 Development of Mbamba Bay port to accommodate transit traffic from Nkata Bay in Malawi to overseas through the Mtwara Port. 6.3 Water and Road Transport Interface Coastal Ports and Road Transport Table 6.1 presents a summary of results of the survey conducted by the Consultant on the available coastal ports and road transport interface. The table indicates the condition and availability of the road transport infrastructure. It can be noted that Dar es Salaam port is connected by a paved ring road, Mandela road, which is in the final rehabilitation stage. The road connects to the hinterland through the trunk road network comprised of four main arterial roads (Bagamoyo Road, Morogoro Road, Nyerere Road and Kilwa Road). The connections to Coast, Morogoro, Dodoma, Tanga, Moshi, Arusha, and Mbeya regions spur from the Morogoro road whereas connection from Dar es Salaam to southern regions is through the Kilwa road and Morogoro road as well. On the other hand, Bagamoyo road also offers connection to Coast region whereas the TANZAM highway is linking Zambia to the Dar es Salaam port through the connecting point at Morogoro, where it joins the Morogoro road. Malawi through Kyela connects the TANZAM highway at Mbeya leading to or from the Dar es Salaam port. Port Dar es Salaam port Tanga port Mtwara port Lindi port Mafia port Mikindani port Pangani port Table 6.1: Coastal Ports and Road Transport Connectivity Road connection Is connected by good surfaced roads to Coast, Morogoro, Tanga, Arusha, Dodoma, and Mwanza regions as well as to Zambia, Malawi and the DRC through Zambia. Is connected to Dar es salaam by a 400 km surfaced road, which is in good condition. A surfaced road to Arusha and on to Nairobi is also in good condition. The connection from Arusha to Mwanza is passable but not (yet) surfaced. Is connected to Dar es Salaam by surface road except for 50 km stretch between Kilwa and Dar es Salaam the road to Masasi is also surfaced. There is also a bridge crossing Ruvuma river to Mozambique. Is connected to Dar es Salaam and Mtwara by paved roads All roads within the island are unpaved and as a result during the rainy season they are impassable. Is connected to Mtwara and Lindi by tarmac roads. Is connected to Tanga by unpaved road. Submitted by BICO VI.436 Monday, 28 February 2011

197 Tanga is connected to Dar es Salaam by surfaced road, which is in good condition. A surfaced road to Arusha and on to Nairobi is also in good condition whereas the connection from Arusha to Mwanza is passable but not yet surfaced. Mtwara is connected to Masasi, Mbamba Bay and Dar es Salaam with surfaced roads; however, a stretch of 50 km between Kilwa and Dar es Salaam is not paved yet. The road to Mozambique crosses the Ruvuma River through a new bridge and there is a ferry service across. Lindi is connected to Mtwara and Dar es Salaam by surfaced roads. On the other hand, Pangani is connected to Tanga by unpaved road whereas all roads within the Mafia Island are unpaved. It can be noted from Table 6.1 that small coastal ports are connected by unpaved roads which are impassable during rainy seasons Inland Ports and Road Transport Table 6.2 presents a summary of results of the survey conducted by the Consultant on available road transport infrastructure connecting existing inland ports. The table indicates the condition and availability of the road transport infrastructure. Mwanza North port is located near the centre of Mwanza city and therefore is connected by the city urban road. The road connections from Mwanza to Dar es Salaam are good for the most part, except a little stretch along the Singida Manyoni now under final completion stage. The roads from Mwanza to Musoma as well as the one to Bukoba now on the final construction phase, are in good condition where this provides yet another modal challenge for passengers who have traditionally opted to make their travels aboard MV Victoria (a passenger cum cargo ship). As the case is with the Musoma Mwanza route where marine passenger services were later terminated by MSCL, there is a growing modal shift of passengers opting for the road transport between Mwanza Bukoba route, as reflected on the increase of passenger coach plying between the two destinations, or even between Bukoba and Musoma via Bunda bus services. Simultaneously, there is another shift of passengers travelling from Dar es Salaam to Bukoba or vice versa, via Mwanza where they had initially boarded MV Victoria at Mwanza port on their final leg to or from Bukoba, now opting for a direct road transport through Muleba, Biharamulo, Kahama to Dar es Salaam and vice versa. Submitted by BICO VI.536 Monday, 28 February 2011

198 The road from Dar es Salaam to Kigoma via Dodoma and Singida takes a north westerly turn at Tinde to Kahama township, where it proceeds to Nyekanazi junction (all paved), and further southward to Kigoma through Kibondo (unpaved), a section heads west to the Tanzania/ Burundi border. There is a seasonal unpaved road along the railway line from Dodoma to Tabora which is impassable during the rainy season but offers a shorter route between the two destinations. The Kasanga port on the southern tip of Lake Tanganyika is connected by a gravel road to Sumbawanga where the unpaved road connects the TANZAM Highway and the TAZARA border station, at Tunduma. A limited number of Lake Tanganyika cluster ports are connected by unpaved roads to either Mpanda or Sumbawanga as indicated in Table No Port Lake Victoria Ports Mwanza North port Mwanza South port Mwaloni port Bukoba port Kemondo Bay port Table 6.2: Inland Ports and Road Transport Connectivity Road connection Mwanza North port is connected by a tarmac road linking it with the Mwanza city. Likewise, good roads connect the port to Musoma, Bukoba and Dar es Salaam The port is connected to the Shinyanga Musoma road at Mwanza South Is connected by a tarmac road within the Mwanza city Is connected by the new Mwanza Bukoba Highway, and a tarmac road to Uganda via Kyaka Is connected by the new Mwanza Bukoba road, and a tarmac road to Uganda via Kyaka Musoma port Is connected by the Sirari Mwanza road Lake Victoria cluster ports Only Ukerewe, is connected by a TEMESA pantoon / highway link to the Sirari Mwanza Highway via Bunda. Lake Tanganyika Ports Kigoma port (Cargo Terminal) Is connected by unpaved roads from Manyovu, Kasulu / Uvinza and Sigunga Kigoma port (Passenger Terminal) Kibirizi oil terminal Kibirizi dhow port Ujiji port Kasanga Port Lake Tanganyika cluster ports from Kigoma port: (Major) Is connected by unpaved roads from Manyovu, Kasulu / Uvinza and Sigunga Is connected by unpaved municipal road linking to Kigoma Town Is connected by unpaved municipal road linking with kigoma Town Is connected partly by paved municipal road to Ujiji Port from Kigoma Is connected by unpaved road to Sumbawanga and another unpaved to Kasesya Zambia border point. North Bound: (Kigoma) No road connection to Kagunga port No road connection to Mwamgongo port South Bound: Submitted by BICO VI.636 Monday, 28 February 2011

199 Lake Nyasa Ports Kiwira port (formerly known as Itungi port) Unpaved road to Kirando port (Kigoma) and Sigunga through Mayobozi, Ilagala and Malagarasi. Under TANROADS construction of unpaved roads from Port Sigunga to Kalya port (Kigoma Border). Unpaved road from Karema port (Katavi) to Kagwila / Mpanda. Unpaved road from Ikola port to Mpanda / Sumbawanga Unpaved road from Kabwe port to Lyazumbi on to Mpanda / Sumbawanga Unpaved road from Kirando port to Mpanda / Sumbawanga. Unpaved road from Kipili port to Mpanda / Sumbawanga. Tarmac road from Mbeya, Kyela to old Itungi port but between, a Junction named Kajunjumele an unpaved road turns right to the new Kiwira port 6.5 km. Lake Nyasa cluster ports Matema is connected by unpaved road from Kyela / Mbamba Bay port Tukuyu. No road connection to Lumbila No road connection to Ifunga No road connection to Nsisi No road connection to Lapingu Manda is accessed by road from Ludewa District in Iringa region. No road connection to Ndumbi No road connection to Lundu No road connection to Mkili No road connection to Njambe No road connection to Liuli Is connected by road which is currently being rehabilitated under the Mtwara corridor development. The Lake Nyasa surface connectivity is by the paved road from Mbeya to Itungi/Kiwira ports and is in good condition, while the southern Lake Nyasa port of Mbamba Bay is connected with the Mtwara Mbamba Bay road of which TANROADS are in the final construction phase where a part is paved between Mtwara and Masasi. Most of the inland waterways cluster ports on Lakes Tanganyika and Nyasa have no road connectivity where in most cases it was observed that this is due to the poor topography (sharp escarpment) as noted in Chapter 4. Such topography makes the provision of even a simple unpaved surface road to difficult and costly, thus necessitating the dependence of the marine transport along the bigger section of the respective shoreline particularly of the two lakes. With the exception of the Kigoma port, all other named cluster ports along Lake Submitted by BICO VI.736 Monday, 28 February 2011

200 Tanganyika with surface connectivity, have unpaved roads. This implies that ports operations often come to a complete standstill during rainy season because of the roads which are impassable during rainy season. As a modal complement and highway linkage, the government established its agency namely TEMESA to operate ferries among other engineering and electrical services, to facilitate linkage by providing reliable and safer marine short transport services, to support both social and economic activities in Tanzania. TEMESA has developed a broad base of infrastructure since its inception in 1997 as a result of the transformation of the Electrical and Mechanical Division of the Ministry of Works, to facilitate intermodal linkages where there was a need for ferry services across. TEMESA operates twelve (12) ferries countrywide as well as regional workshops in twentyone (21) regions. Table 6.3 presents some of the ferries under TEMESA, and the connection they offer to other ports. Ferry/ pantoon operational challenges facing TEMESA as stipulated in the five year strategic plan (Feb 2005) include. Improving reliability and passenger comfort Strengthening existing offshore ferry services and facilities Comply with related marine standards and regulations Rehabilitation of exiting pantoons and ferries Purchase of new ferries Enter into a joint venture with other pantoon and marine transport operators Some of the ferries are outdated creating obstacles for attracting partnerships and Joint Ventures Kigongo Busisi terminal (TEMESA ferry) Kisorya Rugezi terminals (TEMESA ferry) Nyakaliro Kome terminals (TEMESA ferry) Chato Bukondo / Chato Mwaramba Nkome (TEMESA ferry) Table 6.3: A Sample of TEMESA Ferries Is connected by the Mwanza Bukoba road Connect Bunda Ukerewe Island Connect Nyakaliro and Kome Island Connects Cluster ports of: Chato Bukondo / Chato Mwaramba Nkome (TEMESA ferry) Submitted by BICO VI.836 Monday, 28 February 2011

201 6.4 Water and Rail Transport Interface Coastal Ports and Rail Transport Table 6.4 presents a summary of results of the survey conducted by the Consultant on the available coastal ports and railway transport interface. The table indicates that Dar es Salaam and Tanga ports are the only coastal ports with railway connection. The railway system, however, looks like abandoned in some parts, calling for major maintenance works. Port Dar es Salaam port Tanga port Mtwara port Lindi port Mafia port Mikindani port Pangani port Table 6.4: Coastal Ports and Rail Transport Connectivity Rail connection The TRL line enters Dar es salaam from the north west of Dar es Salaam port while the TAZARA line enters Dar es Salaam a few km to the south end of the Dar es Salaam port Is connected to the TRL railway onward to both Arusha and Dar es Salaam port via Ruvu station There is no rail connection There is no rail connection There is no rail connection There is no rail connection There is no rail connection The TAZARA line enters Dar es Salaam port a few kilometres from the TRL line through the southern end of the port. Its main marshalling yard is at Yombo and there is a secondary marshalling yard for port traffic at Kurasini industrial area. The TRL rail line enters the port at Gate Number 14 and near Gate Number 16, and has only one line that runs directly underneath the rail mounted gantry crane (RMG). Equally, the TAZARA line enters the port near Gate Number 8, and has two lines directly leading to the underneath of the rail mounted gantry crane). Tanga port is connected to the TRL railway onward to Arusha through Moshi as well as Ruvu station from the Mnyusi junction. As shown in Table 6.3, there is no railway connection to Mtwara, Lindi, and Mikindani ports. a) Rail/Road Mode Split at Dar es Salaam Port The share of cargo cleared by road has been rising while that by rail has been falling. As per the TPA report (TPA, 2010), the share by road was 3.75 million tons or 94.5% while 200,000 tons or 5% was cleared by railways as of June The main reasons behind the decline in Submitted by BICO VI.936 Monday, 28 February 2011

202 rail utilisation have been associated with the continued deterioration in railway infrastructure and services. b) Tanga Railway Line The Tanga railway originating from Ruvu station extends to Arusha via Korogwe and Moshi stations, and subsequently in between, a section leading to Tanga port branches at the Mnyusi station. The section between Mnyusi and Tanga port is partly operational between Pongwe station and the Mnyusi junction a distance of about 50 km primarily because of hauling cement from the Tanga factory, located at Pongwe (13 km from Tanga port) to the Ruvu station, where it joins the Dar es Salaam Mwanza line effecting cement haulage to the north western part of Tanzania. The Pongwewestern zone operations are exclusively hauled by the East African Railway Haulier (EARH) on a private wagons ownership scheme (PWOS) the company of which its main business is cement haulage from the Tanga Cement Co. Ltd. Demand for this business is so high that currently there is a steady monthly demand for transporting 10,000 tons of cement to Burundi via Kigoma and another 10,000 tons to Rwanda via Isaka, the order of which the company is overwhelmed. Most unfortunate, is the fact that the idle section consisting of a stretch of about 372 km from Mnyusi junction to Arusha via Moshi, as well as the one from Pongwe to the Tanga port remains dormant to date, despite the vibrant traffic that could have been generated as per the study findings related to various stakeholders interviewed in Moshi, Tanga and Arusha who had initially volunteered to run the train commercially, during the TRC preconcession period. However, there no effort is made to revive the services of which could have stimulated more economic undertakings within the region and along the railway line. Figure 6.1 illustrates an example of overgrown grass on the abandoned permanent way. According to some stakeholders, the TRL neglect of the infrastructure tempts scrap metal dealers to uproot the rusting sleepers and rails. It further reflects the Tanga port railway yard which also goes unattended, despite the ongoing project of expanding the port s container yard. This means that the Tanga railway line is no longer serving the port, or, in other words, it is a reflection of the fact that there are no intermodal connectivity consideration between Submitted by BICO VI.1036 Monday, 28 February 2011

203 the two most economical giant modes of transport (maritime and railway transport). All deliveries of cargo to or from the Tanga port by rail had come to an end, where the recent most outshining example was in the early 2000, involving the P&O Lines in association with the Trans Africa Railways Limited, now changed to the EARH, on haulage of containers stuffed with copper concentrates in block trains from Bulyanhulu mines to Tanga port, and on return leg the same flat wagons were taken back to Tanga Cement factory, to be loaded with containers stuffed with cement and subsequently hauled back to the Bulyanhulu mine. To date Kahama mining have abandoned the earlier intermodal arrangement and resorted to the road haulage, where copper concentrate and bulky cement is shipped from the Dar es Salaam, obviously resulting into higher transport costs relatively. Figure 6.1: Neglected Tanga Port rail Yard Under the existing arrangement between TRL and EARH on the PWOS, TRL offers the motive power and the permanent way, where the EARH provides wagons and are therefore charged for using the TRL infrastructure as well as locomotives. TRL encourages the PWOS arrangement due to the fact that it has a short supply of rolling stock to boost up railway operations to the required level, though there is a huge demand for railway services than TRL could accommodate due to the fact that it suffers on the low availability of locomotives for hire. Currently EARH owns about 102 wagons that are offering services between Pongwe station and the western part of the country through the central corridor. Submitted by BICO VI.1136 Monday, 28 February 2011

204 Based on the interview results of some TRL officials and customers, there are two main reasons for the poor performance of TRL along the Tanga railway line (RuvuMnyusi Arusha and that of Tanga via Mnyusi), being: Lack of adequate demand Inadequate rolling stock However, the second reason holds more water than the first one i.e. inadequate rolling stock (locomotive and wagons) as substantiated by the following facts: Pop Vriend Seeds (T) Limited of Arusha have a 1 km railway siding to their factory just before the advent of TRL failure to serve them. They produce more than 600 container loads (24,000 tons) per year. They have had no container loss for the last 20 years of rail operations, but are now loosing up to 4 containers per year by road operations in terms of road accidents and transit pilferage. Three cement dealers had once gone to the extent of hiring 2 locomotives and 20 wagons (paid in advance) to transport cement from Tanga to Arusha/Moshi. These dealers used to finance some basic maintenance of the rolling stock and provide motivation to operatives. The arrangement was stopped soon as TRL assumed concession of the railway company, where it is said to have out of there operational interests, and thus the pioneers from the private sector, were left deeply frustrated. There is several other bulky goods production/importation or export in Arusha and Moshi, whose economical operations require an appropriate mode of transport, preferably the railway mode. These include among others: o Sugar from TPC (Moshi) o Steel rolls from Arusha o Petroleum and associated oil products from Tanga/Dar es Salaam to Moshi o Gas tanks from Tanga/Dar es Salaam to Moshi o Textile chemicals from Tanga to Arusha (A to Z factory) The overall picture reflecting TRL (former TRC) railway operations countrywide, has over time seen underperforming particularly on the fact that TRL continued to discard several of their operations arguing that they are not running profitably, hence the need to shut them Submitted by BICO VI.1236 Monday, 28 February 2011

205 down. When TRL were taking over from the TRC in 2007, there were a total of 74 locomotives and 1,500 wagons under the 51:49 government and Rites partnership respectively. The rolling stock, however, has depleted over time to nearly 50% for the locomotives which now remains 38 engines only, while TRL operates a mere 560 wagons down to less than 40% comparatively. The depletion has gone down so much that the organisation can hardly supply 30% of the rail cargo demand. The Dar es Salaam port statistics on modal performance over the recent years reflect this scenario. Due to this serious shortage of wagons, TRL has continued the engagement of private operators like the East African Railway Hauliers formerly Transafrica Railways who were initially contracted by the former TRC, the Primefuel Limited who operates tanker fuel wagons similarly under the (POWS) scheme, to the Western zone i.e. Kigoma, Tabora, Shinyanga and Mwanza. c) TAZARA Survey on TAZARA railway line revealed the following problems: There is inadequate rolling stock (wagons) The line infrastructure (permanent way and buildings) is deteriorating and there are inadequate funds for maintenance. The motive power communication system (wires) has been vandalized. The line is currently dependent on mobile phones. This puts the organization's operations at risk (communication between stations). Training of operatives i.e., in service training and refresher courses at Mpika Training Institute is inadequate because of lack of funds and limited teachers, most of whom have left for greener pastures Inland Ports and Rail Transport Table 6.5 presents a summary of results of the survey conducted by the Consultant on the available inland ports and railway transport interface. The table indicates the availability of the rail transport infrastructure. It was observed that a number of inland waterways ports have no rail connection, and more particularly on Lake Nyasa ports. Submitted by BICO VI.1336 Monday, 28 February 2011

206 Port Lake Victoria Ports Mwanza North port Mwanza South port Mwaloni port Bukoba port Kemondo Bay port Musoma port Lake Victoria cluster ports Lake Tanganyika Ports Kigoma port (cargo terminal) Kigoma port (passenger terminal) Kibirizi oil terminal Kibirizi dhow port Ujiji port Kasanga port Lake Tanganyika cluster ports from Kigoma port (Major) Lake Nyasa Ports Kiwira port (formerly known as Itungi port) Lake Nyasa cluster ports Mbamba Bay port Table 6.5 Inland Ports and Rail Transport Connectivity Rail connection Is connected to Mwanza railway station by a section. Is connected to the Mwanza South railway yard There is no rail connection There is no rail connection Is connected via the marine railway link span Is connected via the marine railway link span There are no rail connection Is connected by the central railway line Is connected to the central railway line Is connected to the central railway line There is no rail connection There is no rail connection There is no rail connection There are no rail connection to all other cluster ports There is no rail connection There is no rail connection There is no rail connection A dilapidated rail section for delivering parcels to the Mwanza North passenger terminal appears not to have been used for a long time. The Mwanza South port is directly connected to the TRL rail through the Mwanza South marshalling station onward to Dar es Salaam via Shinyanga. The Consultant witnessed yet another abandoned rail section inside the Kemondo Bay port that had initially served for positioning CLB types of wagons alongside the now idle coffee godowns at the port, before they are hauled back aboard the wagon ferry to Mwanza South port. The wagons were later linked to the central line at the Mwanza South marshalling yard. There is no further rail connection to inland destinations from the Kemondo Bay port. On Lake Tanganyika railway connectivity, the Kigoma port is the end terminal station of the TRL line within the central corridor from Dar es Salaam. During the physical survey on inland waterways transport infrastructures, services and plans the following issues were noted: TRL cargo train services into and from Mwanza have diminished to about three services per week, where until recently, TRL had further suspended passenger services Submitted by BICO VI.1436 Monday, 28 February 2011

207 between Mwanza and Dar es Salaam. Interviewed stakeholders were of the opinion that the diminishing number of service or rather frequency, is because of the limited number of locomotives and the general TRL rolling stock. The short distance passenger services between Mwanza and Tabora via Shinyanga and between Tabora and Kigoma that used to operate on a daily basis during the mid seventies, while the population level were relatively lower than todate, have long been stopped, while they reflect a typical inter city trains of the day. Inadequate infrastructure that would have facilitated technical compatibility to effect a smooth interchange handovers that will spearhead competitive intermodal linkage i.e. equipments, wagons, locomotives, cranes, forklifts as well as secured cargo spaces. Lack of appropriate cargo liability on the part of the railway operator (TRL) as evidenced by the case of Kagera Cooperative Union transit pilferages at the Mwanza South station during intermodal handovers. Goods are shipped at owners risk contrary to the common carrier s liability to cargo in custody. Lower supply of appropriate vessels to offer intermodal connectivity. Lake Victoria has currently a single wagon ferry operated by the MSCL (MV Umoja), where Uganda had 3 wagon ferries namely MV Kahwa, MV Kabarega and MV Pamba while Kenya had MV Uhuru, all of which are now nonoperational since the year 2007 because of various reasons related to accidents and technical backgrounds. MV Umoja wagon ferry remains operational to date, out of the 5 wagon ferries which were in place to serve Lake Victoria intermodal services prior to the year Three of these wagon ferries belonged to Uganda and two of which (MV Kahwa and Kabarega) were involved in a marine accident in May, 2005 where MV Kabarega sunk, while MV Kahwa was towed to Port Bell and she has remained there idle since. The third ferry is MV Pamba similarly owned by Uganda, is equally docked at Port Bell due to technical reasons since. The 5 th ferry belongs to Kenya (MV Uhuru) of which unfortunately has remained grounded at Kisumu port since 2006 alleged for technical reasons respectively. It is considered that the EAC Partner States through their East African Cooperation Secretariat will revive the intermodal spirit among its members and generate the desirable political will on attracting investments both on vessels and on the construction of modern Submitted by BICO VI.1536 Monday, 28 February 2011

208 ports along the shores of Lake Victoria. This should go along with training the workforce while liberalizing areas that will aim to promote regional trade among member states. The SSB Intermodal Experience The intermodal inadequacy or a mismatch experienced at the modal interface, affected one of Tanzanian major industrialist namely M/S Said Salim Bakhresa (SSB) who operates a milling plant in Kampala, Uganda that consumes a total of 360,000 Mts of wheat per annum, making an average of one block train per day (1,000 Mts) respectively for the period of about 360 days a year. SSB had initially engaged TRC and the MSCL on a special arrangement to haul wheat in bags of 80 kg stuffed in private shippers containers, loaded on top of TRC flat bed wagons to Mwanza from Dar es Salaam, and henceforth transferred to MV Umoja (capacity 19 wagons) at Mwanza South port to Jinja port, where the last leg were to be undertaken by the Uganda RVR onward to the Kampala based SSB factory. A quick review established the fact that the M/S SSB shipments of wheat volume to their Kampala milling factory done through the port of Mombasa amounts to a daily average block train of about 22 wagons each, carrying an average of 40 tons capacity each, though considered higher than the current axle load, but is hereby used for computation purposes. This means if TRL would have been contracted successfully to deliver the shipment to Mwanza South port, this would have been translated into gross revenue of Tshs billion from a single customer, reached at as follows: Railway tariff between Dar es Salaam Mwanza per wagon load (4 million TZS/wagon) Wagons per train about (22 wagons) Wagons per year (22 x 360 days) The KCU Experience Another victim of the poor intermodal services offered by TRL and the MSCL is the Kagera Cooperative Union (KCU), who since the year 2007 had been a captive customer to truck operators, regardless of the cheaper defunct intermodal service, from the Kemondo Bay port to Dar es Salaam using the railway link span through MV Umoja and at Mwanza South port connecting railway to Dar es Salaam. KCU are now shipping their products by road through Muleba, Biharamulo, Kahama, Singida to Dar es Salaam, where as per Table 6.6 KCU export Submitted by BICO VI.1636 Monday, 28 February 2011

209 volumes from 2007 to 2009 illustrate the corresponding expense incurred as against intermodal charges. Table 6.6: KCU Coffee Export, 2007 to 2009 Year Coffee Bags in Tons Road Freight Charges Tshs. Railway / MSCL Charges Tshs. Loss in Tshs , m m m , m 114 m m , m 46.5 m m Totals 9, b m b Source: Kagera Cooperative Union Export Department The KCU spent a total of Tshs billion between 2007 and 2009 seasons, while an effective intermodal through the Kemondo Bay port, would have attracted a mere million shillings. This could have been translated into savings of about 83% out of the money paid to road transporters. By using the road mode, the KCU lost part of its revenue to pay for the road freight transport costs. Further, the KCU are bitter on the losses experienced between the Mwanza south port and the TRL Mwanza South station where no intermediary operator accepts liability to losses incurred while the goods are / were in transit. The Kemondo Bay port has completely remained idle for the last three years as shown in Figure 6.2 below, due to failure of MSCL to position wagon at Kemondo Bay, for onward loading to Dar es Salaam via Mwanza South port. These are deliberate moves to undermine the capacity of intermodal services as against the flourishing road transport that ultimately ends to render the provided intermodal infrastructure out of place. Submitted by BICO VI.1736 Monday, 28 February 2011

210 Figure 6.2: The Dormant Kemondo Bay Link Span and the Extending Section to the Yard Inland Intermodal Terminals The developments of inland container deports (ICDs) has emerged in the year 2007, after it was found necessary to extend Dar es Salaam port services outside the port perimeters as one of the measures that were considered to mitigate congestion problem that was gradually being experienced from the 2 nd quarter of the year 2006, after the container terminal managed by TICTS had surpassed its built annual throughput capacity then estimated at 250,000 TEUs per annum. Following the then Prime Minister s visit to Dare s Salaam port, the Government decided to issue license to private operators in late 2007, in anticipation that the licensed ICDs will decongest the over stretched container terminal the container stacking of which had reached an alarming proportion in the third quarter of The first to be licensed were the existing container freight stations which had established facility to handle containers, but were mainly limited for transit facilitation of cargo/containers after they were through with their custom clearance for imports as well as being used as container freight stations (CFS) facilities for consolidating purposes. The first to be licensed were therefore the following CFS facilities: Submitted by BICO VI.1836 Monday, 28 February 2011

211 M/S TICTS Ltd (Ubungo Depot); 2,500 TEUs holding capacity M/S DICD (Kurasini off Bandari road); 450 TEUs holding capacity MCC ICD (Kurasini off Bandari road); 600 to 750 TEUs holding capacity MOFED Ltd (Kurasini off Bandari road); 2,000 to 2,500 TEUs holding capacity TRH Ltd (Kurasini off Kilwa road); +3,500 TEUs holding capacity M/S AMI Ltd (Tabata along the Mandela road); 2,500 TEUs holding capacity The registration of these came later on between : THE EAST COAST ICD (Kurasini off Bandari road); 500 TEUs capacity TANZANIA LIQUID STORAGE Ltd (Kurasini off Bandari road); unknown THE AZAM ICD (Chan gombe off Mandela road); 2,000 to 2,500 TEUs capacity Recently, the Tanzania Revenue Authority (TRA) has issued provisional ICD licenses to the following (non operational to date): MAS HOLDING & CONTAINER DEPOT Ltd (Keko off Taifa road) VOT (T) Ltd (Kurasini) FARION TRADING Ltd (Chang ombe along the Mandela road) TRANS AFRICAN LOGISTICS (TALL) Ltd Freight Centres Some user land locked countries have their own cargo centres located near the port to facilitate cargo consolidation. Notable ones are the MOFED Depot and Malawi Cargo Center (MCCL). MOFED facility is a Zambian owned clearing and forwarding company which is specialised in clearing cargoes to or from Zambia. The company has its own yard near the port for both export and import consolidation and it owns a number of fleets including tractors, trailers, reach stackers and empty container handlers that are used for handling containers at the yard as well as on transferring of cargo to and from the port. The yard has a TAZARA railway siding. A similar facility exists for Malawi adjacent to the MOFED that has an interchange facility at Mbeya, to cater for intermodal services. The Malawi Government has established dedicated Submitted by BICO VI.1936 Monday, 28 February 2011

212 cargo facilities in Dar es Salaam and Mbeya (some 750 km from the port) to speed up transit traffic to and from Malawi. Facilities available at the Dar es Salaam MCCL depot include: a warehouse, container handling yard with a 35 tonnes gantry crane, TAZARA railway sidings, a 12,000 cubic metre diesel tank, and a 7,700 cubic metre petrol tank within the yard to facilitate liquid bulk transfers to Malawi. There are 22 tank wagons which move fuel between Dar es Salaam and Mbeya on the TAZARA line. At Mbeya, Malawi Cargo Centre is provided with the following terminal facilities: A 35 tonnes gantry crane, a warehouse, 2,500 cubic metres tank farm all connected to the TAZARA railway line. ICDs Challenges The private sector involvement in the creation of ICDs around the port of Dar es Salaam was initially hailed as a panacea towards the decongesting process of the port ( ), but however, most of these important facilities continue to perform under their built capacities, due to irregularities in the allocation of containers to respective ICDs, that would have enabled the port remain with its traditional role of attending to the loading and offloading of vessels, while remaining a terminal facility offering transit services to the port, and not otherwise (storage facility). M/S MOFED Limited a Zambian Government Logistics Company, was among the first container depot that were licensed by the Commissioner of Customs to engage in the ICD (local) business. MOFED has since withdrawn (March 2009) from offering services, due to poor and cumbersome procedures that relate to container allocation from TICTS. MOFED ICD is strategically located at the southern tip behind the proposed berth No. 13 / 14 of the TPA, where the closeness to the port was considered an ideal parameter for ICD s efficiencies on container deliveries. So far the Ubungo ICD (TICTS) is equally underutilized given the need for maximizing the port slot capacities that would have an impact in reducing the ship s turnaround due to efficient port services due to availability of ample space to warrant smooth manoeuvrability within the port. Further, TPA is planning to construct a large ICD to offer transit services at Kisarawe that is about 25 km west of the Dar es Salaam port, where the TRL and TAZARA lines are a mere 3 km apart. Containers are to be shuttled by rail using a private railway Operator. The TPA Master Plan suggests that due to higher development costs for this project based on the Submitted by BICO VI.2036 Monday, 28 February 2011

213 minimal transit traffic currently being experienced at the port of Dar es Salaam, construction should wait until volumes justify the need for additional capacity. It is however suggested that until such time, volumes that are destined through the central corridor or for local deliveries could be cleared through the now idle Ubungo ICD under TICTS, with its fully fledged facilities and a railway sidings, that could offer such services through a private railway operator who will shuttle between the port and the Ubungo facility by spending a minimal investment that will revive and keep the rail in full operational envisaged to be used jointly in the proposed urban rail transport (Chapter 5). Kenya has attempted successfully an active approach towards capturing the market for transit traffic to the neighbouring landlocked countries by use of ICD facilities around Mombasa, Nairobi and at Kisumu. Over the last decade, these have developed as hubs to facilitate traffic, particularly from Uganda and Rwanda. 6.5 Coordination between Rail and Road Transport Networks The ideal scenario of a well coordinated and integrated transport system where rail and road transport modes are part of the system is when the two modes are planned in such a way that they complements one another instead of competing. Rail transport is suitable and economical for long distance haulage and bulky freight traffic whereas road transport in suitable for small lot and short distance traffic. Haulages along TAZARA line, for instance, should be complimented by consolidation operation by road from Iringa, Mafinga, Njombe, Songea, up to Makambako station and distribution operation in the opposite direction from Makambako. Unfortunately, however, the consultant established through interviewing both TAZARA and TRL officials that there are no operational agreements between rail and road operation. Apart from the normal contribution of hauling bulky agricultural inputs and produce along the railway lines, it was noted that railway wagons can be made to have horticulture, fishery and dairy products along some stretches. It was observed that the refrigerated wagons that are used to transport dairy products from Kitulo (Mbeya Dar es Salaam) can be revived and expanded to have horticulture products as well between Mbeya and Dar es Salaam. Submitted by BICO VI.2136 Monday, 28 February 2011

214 Among the advantages of coordinated intermodal transport between the two modes include: One fully loaded train is equivalent to 40 up to 50 truck loads 40 to 50 documents and respective processes are reduced to a single document and process for a train trip with no enroute checks such as weighbridge and security/ police blocks Chances for train drivers to stop a train enroute so as to temper with goods or pilferage are almost zero as compared to the 40 to 50 track drivers who must drive their individual trucks through isolated road stretches, sometimes during odd hours. Turn round times for both rail and road transports become shorter enhancing more trips per year with better returns Minimum maintenance costs on the part of trucks which lead to longer life time of the same Higher reliability for each mode, especially with respect to service frequency 6.6 Available Plans A survey on the available plans in the surface and marine transport subsectors revealed the following on major (national and regional) projects that are being planned or are currently being implemented on unilateral/ multilateral agreements. National Plans Also, as per the TSIP (MOID, 2008), there are proposals to remove the critical bottlenecks along the Tanga corridor. This includes the construction of Tanga (Mwambani) Musoma railway. However, the challenges facing this proposal, which need to be addressed, include environmental concerns. This study noted an ongoing study that is anticipated to give answers on the pressing ecologically sensitive issues, with reference to the specific route, that the railway will traverse between Arusha to Musoma port. The proposed Musoma rail will call for the development and expansion of the Musoma port envisaged to offer a strategic interface link proportionally, to be able to compete with the northern corridor in attracting the envisaged Uganda traffic. TPA Master Plan (TPA, 2009) proposed the construction of a railway section to link with TAZARA at Tunduma to Kigoma with a junction leading to Kasanga port, where intermodal services to the DRC Ports of Kalemie, Moba and Muliro as well as Bujumbura in the north, could be effected. The Consultant proposes another link that Submitted by BICO VI.2236 Monday, 28 February 2011

215 will connect the TRL end point of Mpanda to a cluster port of Karema along Lake Tanganyika, to facilitate intermodal linkage with the DRC. Progress are being made by TPA in the construction of two modern berths number 12 and 13 at the Dare s Salaam port, which will be able to cater for vessels with capacities of up to 4,800 TEUs. TPA plans to develop a fully fledged container terminal at the Mwanza South port to cater for the potential transit cargo demand. RAHCO/ TRL are equally planning to transform the Mwanza South railway station into a container terminal, to cater for the anticipated growth in throughput. RAHCO are finalizing the construction of a container depot at the Shinyanga railway station, while planning one at Kigoma as well. The Shinyanga container depot viability could not be explained in the event that RAHCO are also planning another depot at the Mwanza South railway station. This is equally true for RAHCO planned development of a container depot at Korogwe. TPA plans the development of the cluster port infrastructure to four ports namely; Kalya, Kirando, Kipili and Karema in Lake Tanganyika, on the construction of relevant jetties respectively. The TPA through its Port Master Plan (TPA, 2009) report observed that the future network of ICDs will develop further away from the ports on major transport corridors near major production and consumption areas. It is envisaged that transit countries should have dedicated ICD either near the boarder in Tanzania or in the transit country itself. It is further planned to develop ICDs near EDZs and on major transport corridors, such as near Isaka, Mbamba Bay, Mbeya, Kasanga, Mwanza, Musoma and Kigoma. Maintenance dredging for Mwanza and Kigoma and Tanga ports by TPA Improved Navigational Aids and security system IPS code for sea ports. The government of Tanzania have unleashed another highway development plan connecting Arusha and Musoma, construction of which is expected to takeoff in The project has to date attracted criticisms from environmentalists around. The road is also expected to offer yet another surface connectivity of the Musoma port to the Indian Ocean across the Serengeti. Submitted by BICO VI.2336 Monday, 28 February 2011

216 Regional Plans Mtwara Corridor o As per the Mtwara Corridor Development Plans, which involve three countries of Mozambique, Malawi and Tanzania, there are plans to construct a railway line linking the Mtwara and Mbamba Bay ports, where Malawi will reciprocate by developing a port at the Nkhata Bay correspondingly, to create another transit route for Malawi foreign trade. A section will be developed on the Tanzanian side to cater for the mineral rich areas along the shores of Lake Nyasa i.e. Mchuchuma Coal Deposits and the Liganga Iron Ore. Further, the proposed route to Mbamba Bay on Lake Nyasa should target other major ports which also require modernization to be capable of handling container trade i.e. Port Kiwira and Manda. o The Consultant has reliably learnt during the course of this study, on a gigantic project currently being undertaken by Malawi, involving Mozambique, Zambia and Zimbabwe, of which is expected to free Malawi from being among the landlocked countries in Africa. Malawi is being connected to the Indian Ocean through the Zambezi Waterways linking with the Shire River (an outlet of Lake Nyasa), along which Malawi are finalizing the construction of an inland prt named Nsanje World Inland Port. The distance between Nsanje port to Chinde port on the Mozambican coast is about 238 km making the route to be one of the most economical for Malawi, Zambia and Zimbabwe when operational. o Construction of the Nsanje port began in June 2009 and was expected to be completed in November, The Shire Zambezi waterway transport is expected to save Malawi by 30% of the total import bill, through costs incurred in transporting its imports as well as exports to overseas markets through Tanzania, Mozambique and as well as South African ports, said to be growing at between 7% to 8% annually. o While the Mtwara Corridor plans were aimed at connecting Malawi to the ocean, it appears that new perspectives call for a redefinition of the Mtwara corridor strategies, in the event of the unveiling facts. The development and construction of the Dar Isaka Kigali/ Msongati via Keza railway which will ultimately be a multinational venture involving Rwanda, Tanzania, Submitted by BICO VI.2436 Monday, 28 February 2011

217 Burundi, the DRC and Uganda. The Consultant is of the view that Isaka be developed to offer connectivity facilities to the proposed railway linking the existing railway lines. The Consultant has learnt through the Uganda and Tanzania MoU signed on the 3 rd of March, 2010 particularly on Article (3) which refers to a joint bilateral cooperation between the two countries, agreeing to undertake the construction of a railway line between Tanga (Mwambani) and Kampala via Arusha and Musoma. Likewise, Rwanda, Burundi and Tanzania are working on the construction of a new section from Isaka to Kigali / Msongati in Burundi via Keza. The envisaged multinational arrangement could enable the joint proposed railway line attract a higher traffic volume to/ or from Uganda, Burundi, Rwanda, the eastern parts of DRC as well as the western parts of Tanzania. Higher traffic volumes are a prerequisite for the construction of the proposed European Gauge mm for the Isaka Kigali section, which could be extended to the proposed Mwambani port (Tanga). Uganda has just signed yet another MoU with the government of Kenya on developing a new standard gauge railway line between Kampala and Mombasa doubling the existing one (1 meter gauge) formerly owned by the East African Railways. As per the Kenyan development vision 2030, Kenya plans to overhaul the old (1 meter gauge) between Mombasa and Kampala to a standard gauge, where as per the EA Railways Master plan, it is expected to connect to the central African states of Rwanda and the DRC, where it is also aimed to offer economical loading of up to a 4,000 tons haulage at high speed when the project is on the completion phase. o It is estimated that Uganda had in the years from , consecutively maintained an average of about 75% of the transit market share on Kenya ports. KPA estimates Uganda to have attained a transit throughput of over 5 million tons i.e. 4.4 m (2007); 4.87m (2008) respectively. The Consultant is of the view that out of the estimated 5 million tons of Uganda throughput across Mombasa port, 30% may be allocated to the southern alternative route, should the Tanzanian transit facilities be provided to meet the expected demand. o KPA operates two fully fledged ICDs located off the Nairobi Mombasa highway in Nairobi (Embakasi) with a designed annual throughput of over 180,000 TEUs, and another one at Kisumu. These ICDs are linked by rail and highway from/ to the port of Mombasa. They were built to bring the Mombasa Submitted by BICO VI.2536 Monday, 28 February 2011

218 port services closer to shippers/ consignees as well as decongesting the port of Mombasa. KPA is also planning to develop a new commercial port at Lamu for the envisaged corridor covering northern Uganda, southern Sudan, Central African Republic as well as the Northern part of the DRC. The port also is expected to serve as an alternative maritime facility for the country, after the port of Mombasa has reached a total of 19 million tons of cargo (2009), against its built capacity of 20 million tons respectively. Due to its deep natural channel, the proposed port at Lamu will be developed to be one of the largest ports in the continent, capable of accommodating larger vessels with drafts of 15 or more meters. The project is expected to start in A standard gauge railway will run from Lamu port to Southern Sudan, the DRC, Chad, and Cameroon where it is expected in future, to link the East (Indian Ocean) and the West (Atlantic Ocean) across Africa, when the project shall be finally completed in The projected railway has already been incorporated in the East African Railway Master Plan. 6.7 Identified Transport Potential Development Areas Connection by Railway Transport As pointed out in the TSIP (MOID, 2008), a number of projects can be implemented to remove the critical bottlenecks along the Tanga corridor. The projects include the construction of Tanga Musoma railway. There are high agricultural potentials, tourist attractions, mineral deposits which make investment in railway line economically very viable. The challenges facing this proposal, which need to be addressed, include environmental concerns about the possible railway alignment. The development and construction of the Dar Isaka Kigali/ Msongati via Keza railway which will ultimately be a multinational venture involving Rwanda, Tanzania, Burundi, the DRC and Uganda. The Consultant is of the view that Isaka be developed as a freight depot to link the proposed railway lines, i.e. DarIsakaKigali and Tanga Musoma. Such a link can be attained by developing three new sections; a new section from Arusha to Makuyuni extending through the Minjingu Mines (with a projected output volume of 300,000 Mts per annum) and another one heading north to Lake Natron Soda Ash Deposits (projected at 200,000 Mts yearly output) can be developed as well. The proposed Arusha Minjingu Submitted by BICO VI.2636 Monday, 28 February 2011

219 section can be extended to Kiomboi westward where it is proposed that another new section links with Singida to Manyoni. Kiomboi Township will be a railway junction, where the section will connect at Isaka Railway Station to make a loop that leads to the Mwanza South Port. In addition, the TPMP 2008 report proposes a railway link from Tunduma to Kigoma via Sumbawanga and Mpanda, while the Consultant has reviewed the need for transit connectivity via the proposed section from Sumbawanga to Port Kasanga (TPA, 2009) and suggests an extension of the Mpanda section to a cluster port of Karema along the Lake Tanganyika. The construction of a railway line to Kasanga port will facilitate intermodal services at Kasanga port to the DRC Ports of Kalemie, Moba and Muliro as well as Bujumbura port in the North. The route via Kasanga Port would relieve the DRC traffic going through Zambia as a middle transit country, thus save time on multiple border custom s clearance transactions and the distance covered across Lake Victoria As noted from the previous sections, intermodal transport on Lake Victoria is challenged by the poor rail system operations, of which have of late resulted into a diversion of Uganda freight traffic through the Mombasa port and those coming through the Dar es Salaam port to be hauled by road. TRL should therefore invest in areas which will revamp its services on daily deliveries, while investors should be encouraged to invest in either ships capable of carrying a minimum of 500 passengers and 350 tons of cargoes, RoRo vessels with a similar carrying capacity, towing tug, and with barges with a similar carrying capacity. On the passenger transport services, the marine services are expected to be complemented by railway passenger services through offering marine link between the regional towns of Bukoba, Jinja, Entebbe, Musoma and Kisumu. Despite the lack of detailed statistics for cargo deliveries (mostly local) from smaller cluster ports, there is a significant amount of informal trade crossing the cluster ports within and along the lakes. Submitted by BICO VI.2736 Monday, 28 February 2011

220 6.7.3 Lake Tanganyika Lake Tanganyika investments call for cargoship services to and from Kassanga, Kigoma, Bujumbura and Kalemie/Moba/Muliro (in the DRC) where this is expected to stimulate trade and thereby attract more shipments destined to or from Rwanda, Burundi, and the DRC. As noted in Chapter 4, there has been a decline in the DRC and Burundi cargo traffic across Lake Tanganyika ports through Kigoma despite the corresponding relatively growth on imports through the Dar es Salaam port. This suggests that cargo destined to Burundi and the DRC from the Dar es Salaam port have significantly declined transiting through the traditional port of Kigoma along the Lake Tanganyika ports, reflecting the fact that these landlocked countries are using other means of transport, and more particularly by the road mode through Tunduma destined to the DRC as well as via Isaka, Kahama for those consigned to or from Rwanda and Burundi, respectively. There is a great need to revamp the railway transport between Dar es Salaam and Kigoma, as well as installing modern cargo equipment at the port that will facilitate container trade to the catchment areas. On the other hand, private investors should be encouraged to invest in either ships capable of carrying a minimum of 500 passengers and 350 tons of cargoes, RoRo vessels with a similar carrying capacity, towing tug, and with barges with a similar carrying capacity. Similar to the expected intermodal practice at Mwanza, the Lake Tanganyika passengers coming as well as those travelling to the cluster ports along the elongated shore line with a very sharp escarpment that do not allow any surface connectivity, the need for railway and marine modal complimenting is of higher importance. The existing infrastructure gap calls for investments from the government to provide the necessary infrastructure as a basic social need Lake Nyasa Cargo traffic across and along Lake Nyasa is more of a passenger influx rather than on cargo. There are few vessels that provide cargo services across the lake most of which are Malawi flag carriers and shuttle between Kiwira port and Nkata Bay in Malawi. MSCL, as explained in Chapter 4 of this report, has two cargocumpassenger vessels that have a limited capacity for cargo. Submitted by BICO VI.2836 Monday, 28 February 2011

221 6.7.5 Inland Intermodal Terminals The Consultant observed that statistics (Table 6.7) obtained from Tanzania Ports Authority reflecting a period between 1999 to 2009 indicate a relatively stagnant growth for all countries i.e. Zambia, Malawi, Burundi, Rwanda and Uganda with the exception of the DRC that had significantly shown a remarkable growth between the years 2004 to 2008 respectively. The poor railway services as well as the inadequacy of the intermodal transport facilities over the years might have contributed to the poor export traffic volume recorded over the period under consideration. Likewise, Table 6.7 shows a significant growth for Zambian imports transiting through the port of Dar es Salaam over the period between the years 200 to The DRC has relatively recorded a significant growth between 2005 and 2008 respectively, where due to the world economic recession; there was a decline in imports as recorded in the year between 2008 and 2009 respectively. Where in the case of Malawi, Burundi, Rwanda and Uganda, only Burundi and Rwanda have persistently recorded a positive trend over the last three years ( ), where Uganda and Malawi have since the year 2008 recorded a decline trend in transiting their imports through the port of Dar es Salaam. The poor railway services as well as the inadequacy of intermodal transport facilities over the years, particularly for Uganda, have posed a big challenge to shippers in using Tanzania ports across the hinterland. Despite the moderate growth, the Rwanda and Burundi s transit import traffic volumes through the port of Dar es Salaam were mainly hauled by road to their respective destinations. Furthermore, as shown in Figure 6.3, the overall throughput drawn from Tanzania Ports Authority for the Dar es Salaam port hinterland reflects the transit pattern as recorded between the year 2000 and 2008 by country. The Consultant observed that Zambia and the DRC are the major player in the Tanzanian transit market relatively, while statistics reflecting the rest of the countries using the port of Dar es Salaam i.e. Burundi, Rwanda, Malawi and Uganda have over the period recorded a relatively stagnant growth, save for the little growth as monitored specifically for Rwanda which have since continued using Isaka via the railway and road intermodal. Submitted by BICO VI.2936 Monday, 28 February 2011

222 Table 6.7: Dar es Salaam Port Transit Traffic (in DWT), Year Zambia Imports 209,880 40, , , , , , , , , ,995 Exports 149, , , , , , , , , , ,171 Total 359, , , , , , , , ,026 1,018,988 1,100,166 DR Congo Imports 58,816 65,566 83,385 99, , , , , , , ,240 Exports 3,116 5,392 18,419 1,387 4,376 18,987 47,557 86,895 97,610 96,225 76,070 Total 61,932 70, , , , , , , , , ,310 Burundi Imports 54,735 78,197 71,677 50,899 47,540 80, ,268 85,869 89, , ,377 Exports 21,538 29,239 17,445 13,953 25,362 12,571 18,660 10,023 25,116 9,152 18,766 Total 76, ,436 89,122 64,852 72,902 92, ,928 95, , , ,143 Rwanda Imports 107,643 76,997 64,338 40,209 44,287 55,871 79,575 72,998 79, , ,780 Exports 8,868 9,189 6,640 8,075 6,374 7,521 3,931 4,920 8,821 10,162 8,046 Total 116,511 86,186 70,978 48,284 50,661 63,392 83,506 77,918 88, , ,826 Malawi Imports 4,145 5,089 5,661 66,211 28,756 22,004 26,697 75,057 45, , ,099 Exports ,555 1,833 2,300 5,960 2,479 1,002 Total 4,491 5,177 5,661 66,534 28,963 24,559 28,530 77,357 51, , ,101 Uganda Imports 146, ,735 87,055 23,971 53,069 91,284 68,377 46,009 33,998 64,084 27,222 Exports 36,426 22,108 24,805 16,461 16,678 20,527 15, ,454 3,218 2,533 Total 182, , ,860 40,432 69, ,811 83,592 46,855 37,452 67,302 29,755 Total Imports 581, , , , ,098 1,008,813 1,005,771 1,114,730 1,364,435 1,872,027 1,966,713 Exports 219, , , , , , , , , , ,588 Total 801, , , , ,838 1,239,477 1,238,829 1,378,506 1,674,905 2,190,684 2,246,301 Submitted by BICO III.3036 Monday, 28 February 2011

223 Figure 6.3: Dry Cargo Throughput for Landlocked Neighbouring Countries (Source: TPA) On interviewing officials of Mwanza TPA Branch, the Consultant was shown the area earmarked for developing a container terminal at the Mwanza South Port with a dimension of 33,000 square meters that will be able to accommodate about 4,000 TEUs at 3 high. This would facilitate a maximum utilization of the intermodal connectivity between Uganda and Tanzania immediately after investments in the railway infrastructure and new wagon ferries are done to handle the anticipated Ugandan traffic that is envisaged to transit through Tanzanian coastal ports, as an alternative route to Mombasa. The infrastructure development at the Mwanza South port is expected to takeoff soon irrespective of the minimal transit traffic to Uganda, whereas TPA harbours the concept of creating capacity ahead of the anticipated demand. Improvements on the railways, as well as revamping the MSCL services would go on to attract more traffic away from the Northern Corridor, where Uganda holds 75% of the Mombasa transit traffic market share. On the other hand, Isaka should allocate additional land with a stacking area of about 12,000 square meters that can enable the terminal handle traffic destined to Rwanda, Burundi and Uganda estimated at 550,000 DWT as per the total 2009 Dar es Salaam cargo throughput. Isaka ICD therefore will serve as an important transit point for onward movement of cargo to the Submitted by BICO VI.3136 Monday, 28 February 2011

224 Great Lakes Region and hinterland countries, as well as economies that lie on the Central Corridor. The Isaka Terminal will require additional equipments to cater for the envisaged growth in traffic such as one rail mounted gantry crane (RMG), two rubber tyred gantry crane (RTG), reach stackers (RS), MT container handler, two 5 tons fork lifts, two 3 tons fork lifts, and a generator. In view of the above, the consultant proposes two potential investment areas, namely Isaka ICD and a container terminal at Mwanza South Port. The Mwanza South Port will have a Container Terminal while the Isaka Station will act as a custom controlled Interchange Terminal undertaking railway marshalling work, where an Inland Container Depot is proposed thereof. These two container depots are earmarked to function as points for transit cargo, that are capable of handling consolidation or deconsolidation services, servicing the Central Corridor route where Isaka is currently serving as an intermodal terminal for goods delivered to or from Rwanda and Burundi via road (before the new rail is constructed) or rail to the Dar es Salaam port or the proposed one at Mwambani (Tanga). The proposed railway from Isaka Terminal to Kigali/ Msongati is also going to make use of this proposed expansion of the Isaka Inland Container Depot. The Mwanza South proposed Container Terminal as a facility along the central corridor is still at its conception stage, where no allocation of resources has yet been determined. 6.8 Summary of Findings, Recommendations and Policy Implications Summary This chapter presented the results of the survey on the available surface and marine intermodal transport infrastructure, services and plans. It also outlined identified transport potential development areas. A summary of the results of the survey conducted on the available ports and road transport interfaces, show that all major coastal ports are connected by roads which are still in good condition whereas most of the inland waterways cluster ports have no road connectivity particularly on some sections of Lake Tanganyika and Nyasa. Where there is surface connectivity, all of the Lake Tanganyika ports are connected by unpaved roads. This implies that ports operations often come to a complete standstill during rainy season because of the poor condition of the roads which become impassable during the rainy season. The survey also revealed that the Dar es Salaam and Tanga ports are the only coastal ports that have railway connection, whereas a number of inland waterways ports have no railway Submitted by BICO VI.3236 Monday, 28 February 2011

225 connectivity with the exception of Mwanza and Kigoma. Kemondo and Musoma ports have railway marine facilities (link span) that facilitate the handling of wagon ferries attended at the port compound only. None of Lake Nyasa ports are connected by rail. As a general remark with respect to the country s intermodal linkage, (surface and marine) heavy investments on infrastructure requirements are expected before the country can realize the envisaged vision 2025 goals ushering economic and social prosperity. The intermodal connectivity as far as surface and marine transport system countrywide is concerned, looks abandoned where as per the Consultant s view, there is a need for a deliberate and immediate remedial measures to revamp the entire intermodal transport network that will act as a catalyst for traffic growth. It was also noted that an active approach towards capturing the market for transit traffic to the neighbouring landlocked countries involve the use of ICD facilities around strategic port cities/towns and terminals. Statistics from the TPA indicate that there is a growing trend in throughput for cargo destined to or from the neighbouring countries of DRC and Zambia, where Rwanda is also registering a positive growth through the Isaka station. The increased cargo, however, has posed a challenge to the limited facilities currently available to connect surface and marine transport services particularly on the traditional route via the Kigoma port for the DRC and Burundi. Further, a survey on the available plans in the surface and marine interface revealed major (national and regional) projects that are being planned or are currently being implemented on unilateral/ multilateral agreements Recommendations and Policy Implications This section draws the specific recommendations based on the survey findings presented in the previous sections as follows. Rehabilitate the national railway networks and the major inland ports. Establish ICDs at strategically located hub centres i.e Isaka and Katosho (Kigoma), which will facilitate the attraction of traffic to or from the coastal ports. The proposed ICD at Isaka with a stacking area of about 12,000 sq. m. will enable the railway to optimize the potential by consolidating cargo to or from Rwanda by either way road or through the proposed railway line linking Burundi (Isaka Kigali/ Msongati via Keza). Submitted by BICO VI.3336 Monday, 28 February 2011

226 The TPA proposed Container Terminal at the Mwanza South port should be designed to offer intermodal terminal services for transit traffic destined to or from Uganda transiting through Mwanza. The terminal is expected to be complemented by marine and railway services offered. The final report on the agreed route for the Tanga Musoma railway is yet to be issued by the authorities, where in the event all the suggested mitigation measures may fail to satisfy environmental requirements, the Consultant suggests that the Tanga Mwanza route via Isaka to Mwanza South Port should be considered. As mentioned earlier, the connection at Isaka will open a gateway for Rwanda and Burundi, as well as Eastern DRC attain access to the Indian Ocean through both the Mwambani and the Dar es Salaam port. In this aspect, the Consultant suggests the need for incorporating Rwanda and Burundi in the MoU, so that they may also participate in the entire infrastructure layout and on the project investment, as partner states. The government through the NDC should make a review on the emerging regional developments with respect to the Mtwara Corridor Development Programs, as earlier mentioned on the impact of the Nsanje Project, which is likely to attract much of Malawi and the Zambia s traffic through the Zambezi waterways. Zambia has consecutively registered higher traffic volumes over the last 7 years, therefore leading the transit market share for the port of Dar es Salaam. Zambia has recorded a transit throughput of over 20% in 2009 against the total Dar es Salaam annual throughput (excluding liquid bulk volumes), in terms of deadweight tonnage. The Consultant is of the view that, with improved surface transport, as well as the inland intermodal facilities, appropriate measures should start to take ground particularly on legal implications that the government may be willing to license Multimodal Transport Operators (MTO), to operate competitively in the market, where MTO participation will assist the country in opening up the hinterland for the generation of traffic. Some of the advantages of MTO services refer to economies of scale (on freight chargeable), the extensive liabilities that MTO s assume in the course of delivering consignments up to final destinations, will subsequently extend or raise credibility to our ports for handling big transit volumes without any logistics incidences. Rwanda and Burundi are signatory of the UNCTAD Multimodal protocol, while Tanzania as a potential transit nation has not ratified the treaty to date. Submitted by BICO VI.3436 Monday, 28 February 2011

227 The government should review the modality affecting the operations of ICDs in the country, to bring about a meaningful capacity of our coastal ports with reference to the prevailing demand and supply of our shipping services in and around the region. As a local leverage, the government should consider linking together the two organizations of the MSCL on one part, and TEMESA on the other, prior to their identification of interested investors, whom could be deterred by their current status, particularly the MSCL aged fleet. The unified unit could establish a sustainable vibrant organization. Since the inland waterways are best served by the railway mode, the Consultant advises SUMATRA to work on establishing policies that will guide stakeholders giving a threshold of about 10 years, pending the reconstruction of the National Railway Network for which laws are to be enacted, prohibiting Shippers or Transporters on delivering goods weighing more than 20 tons to destinations which exceed 500 km by road. Railway where possible should be the only permitted option. This would stimulate and sustain railway services while serving the country from excessive repetitive road and highway maintenance costs that have become extremely exorbitant. SUMATRA Act 2001 limits intermodal operations, where a carrier would have subcontracted a local transporter to facilitate an overland intermodal delivery to destination through a Multimodal Transport Document. It does not permit such an arrangement, where the Consultant considers the negative implications on creating a more competitive environment to national coastal ports, where this would have guaranteed a linear supply chain handled with professionalism through the entire customs clearance and the overall delivery processes. The government should consider exercising flexibility to shippers and/or carriers in deciding the delivery modality with particular essence on large consignments that could largely offer convenience to the consignees in terms of discounts freight bargains, etc. However, the applicability of this approach would call for the maximum efficiency to our ports, as well as adequate availability of indigenous intermediary organizations that will be contracted by the MTO on hiring Clearing Agents as well as providers of overland transport services, and their immediate interchange service providers elsewhere around. Submitted by BICO VI.3536 Monday, 28 February 2011

228 For MSCL to improve its services along the three lakes, appropriate rates should be charged for services rendered, of which are to be based on commercial principles. This will enable MSCL realize financial sustainability and consequently ensure a high quality of service to its clients. 6.9 Selected Literature MoID (2008) 10 Year Transport Sector Investment Programme (TSIP) Phase 1 (2007/8 2011/12) TPA (2009) Tanzania Ports Master Plan, Final Report Submitted by BICO VI.3636 Monday, 28 February 2011

229 CHAPTER SEVEN COST BENEFIT ANALYSIS OF POTENTIAL TRANSPORT DEVELOPMENT AREAS 7.1 Introduction The preceding chapters have been primarily concerned with the survey on the available transportation infrastructure, services, and plans in the surface and marine subsectors. They also presented identified potential transport development areas. This chapter presents the cost benefit analysis of some of the identified transport potential development areas in coastal shipping, inland waterways transport, urban rail transport and surface marine intermodal transport. Cost benefit Analysis (CBA) is a tool used either to prioritise projects or to choose the most appropriate option. The ranking or decision is based on expected economic costs and benefits. 7.2 Coastal shipping The coastal shipping services analysed in this chapter cover the Dar es Salaam coastal shipping and across the channel to Zanzibar. These areas have been identified as potential areas of investment with measurable economic and social returns. The investment in this area involves the operation of a sea ferry with capabilities to carry passengers, cargo and vehicles. The following routes were identified, as elaborated in Chapter 3. Urban Dar es Salaam: This route will ply between Mbweni and City Centre with several pick and drop centres in between. The investments in this category will also call for either construction of a permanent jetty (400 m) or use of floating docks. Floating docks are selflevelling, which means they can adjust to waterdepth fluctuations and therefore making them perfect for both coastline and openwater settings. They are also suitable for waters deeper than 2.44 m and soft river bottoms that cannot hold permanent structures in place, since floating docks offer many choices for anchoring including cables, ramps, and mobile pipes, and can be tailored to the environmental conditions of the area. Floating docks, however, have some limitations in the sense that motor vehicles may not be able to access the boat. They can also bounce around and become unstable on strongmoving waters, so they are not recommended in areas where high waves are common. They also need Submitted by BICO VII.128 Monday, 28 February 2011

230 a minimum of one metre water depth in order to have sufficient draft to actually float. It is therefore undesirable to use floating docks on an open coastline that may often have changing shoreline, due to coastal tidal behaviour. Investment in this category is capital intensive due to the fact that currently there are no jetties or docking infrastructure available to facilitate this operation. The fact that there are no rivers entering the ocean on the coastal line between Mbweni, Bahari Beach and Kawe, for example, would call for the constructions of jetties extending to the ocean from the shoreline at a distance of not less than 500 m to attain a regular draft that may create docking facilities to coastal ferries relative to the tides. An extended concrete jetty of this magnitude is estimated to cost about TZS 4 billion, while a vessel with a capacity to carry a minimum of 500 passengers and about 110 cars is estimated to cost about TZS 7.8 billion. Further, detailed study is required to identify specific areas that will offer suitable places for the construction of respective jetties, the type and modality of which may offer economy, particularly on the design that may call for the establishment of navigational channels through dredging, as a measure to mitigate on the tidal challenges. The construction of these costly infrastructure may be undertaken through the newly PPP arrangements that can be worked out to provide a shared cost solution under this area, where the Government or Municipal may build the infrastructure under a revenue sharing agreement, and a percentage of revenue generated by vessel operators through services rendered, is dedicated towards the recovery of the investment whereas the private capital is invested on vessels (ferries). The following subsections outline the required investment options in this area Option 1: Permanent Constructed Jetties a) Large Passenger and Motor Vehicle Carrier (Ferry) This option is considered a capitalintensive option and therefore, an assumption is made that the Government will undertake the development of the supporting infrastructure, namely the construction of five jetties in phases, as it does in other areas such as on highway infrastructure, ports or on airports. This assumption is made due to the social economic impact that is associated to the transportation sector, and indeed the impact it generates to the society. On the other hand, it is assumed that private capital will be required to invest in ferry boats (see Figure 7.1) with 500 passengers and about 110 motor vehicles carrying capacities. Submitted by BICO VII.228 Monday, 28 February 2011

231 Figure 7.1: A Typical Ferry Boat Projected Financial Results The estimated CAPEX of this investment option is outlined in Table 7.1 and Table 7.2 presents the assumptions about the costs and benefits analysis of this option. The project has a very critical social and economic impact due to the fact that it has the capacity to carry over 500 passengers and about 110 cars, which will generate benefits to the community, both in economic and air quality terms. The rationale for this type of ferry was to attract such passengers whom from day to day may wish to take other errands in town after work, therefore opt to use their vehicles elsewhere thus the need to have their vehicles for such purposes. This transport model is envisaged to have the following impact. Reduce congestion on the streets of Dar es Salaam (one trip will reduce 17 commuter buses of 30 passengers capacity and from the streets 110 motor vehicles) assuming that one commuter bus carries an average of 35 passengers Improve on the travel time and subsequently improve on the overall productivity Reduce carbon emission propelled by motor vehicles on traffic jams spanning over 3 hours Reduce fuel consumption and subsequently save the country on foreign currency, used to secure such fuel Submitted by BICO VII.328 Monday, 28 February 2011

232 Table 7.1: Coastal Shipping Estimates for Option 1 COASTAL SHIPING INVESTMENT COST ESTIMATES Unit Cost in US$ TZS USD Land acquisition for jets (5 pcs) By Government Buildings (Waiting rooms) 5pcs 35, ,500, ,000 Construction of Jets at $2M/Jet 5 jets By Government Shipping Vessel (500 PAX) 7,800,000,000 5,200,000 Workshop & Tooling 150,000, ,000 Utility Trucks 75,000,000 50,000 Furniture & Fixtures 15,000,000 10,000 Office Machines/waiting launch internet/computers 30,000,000 20,000 Communication Equipment 7,500,000 5,000 9,015,000,000 6,010,000 Pre Operational Expenses Pre operating Expenses 225,000, ,000 Handling & Shipment (2% of vessel costs) 271,500, ,000 SUB TOTAL 496,500, ,000 Total Investment Cost 9,511,500,000 6,341,000 Financing Plan Loan 40% 3,804,600,000 2,536,400 Equity 60% 5,706,900,000 3,804,600 Total Project Financing 100% 8,836,500 5,941,000 Note: Taxes have not been factored as the project is assumed to be under TIC Exchange Rate: USD 1/TZS 1,500 Land acquisition is estimated at USD 100,000 per location Table 7.2: Assumptions for Option 1 Description Units Vessel capacity PAX 500 Car Capacity Cars 110 Trips per day 6 4 pick hours 2 Slack Hours Fare Per Trip SHS 1100(PAX) Utilization capacity 80% 95% Given the socialeconomic potentials exhibited by this project, and the assumptions that the Government will undertake the construction of infrastructure which comprises the major cost component, the projected financials indicate that the project is financially viable. The loss made on the project during the inception years is associated to the high financial charges and the fares Submitted by BICO VII.428 Monday, 28 February 2011

233 charged which have remained very minimal over the years with insignificant increase despite the constant price increases on fuel and other operating costs. Compared to other infrastructures that are provided on other modes i.e. the railway; shipping terminals across the Zanzibar channel and the highways, where all these infrastructure investment layout already exists, and have been laid out by the public (Government), the infrastructure for the Dar es Salaam urban ferry do not exists and therefore need the development from the scratch. To allow benefits and attraction of private investment on this important transport mode that bears critical social impact to the community, the Consultant proposes that the Government invests in the infrastructure and subsequently levy charges to the user (vessel operators) or else design a mechanism of which a revenue sharing agreement may be established. Under such arrangement, the Government will receive a per centum of the revenue proceeds from the operator, to recover the costs incurred in the construction of the jetties, and subsequently keep on raising additional revenues for future maintenance of the facilities. The financial projections made on the basis where the infrastructure has been constructed by the Government, indicate a profitable business as demonstrated by the profit and loss summary provided in Table 7.3. Table 7.3: Summary: Profit & Loss Account and Key Financial Ratios Amount in TZS Investment Area Year 1 Year 2 Year 3 Year 4 Year 5 ROI ROA IRR Costal Shipping Constructed Jetties 366,160, ,393, ,036, ,199, ,681, % 14.30% The details of financial projections outlining 10 years projections on this modal are shown in Appendix IV. b) Option 1b: Medium Vessel without Car Carrier This option proposes investment in a vessel which carries about 350 passengers without capabilities for carrying motor vehicles. Such a vessel is considered to be light and faster and its capital layout is less than vessels with capabilities to carry motor vehicles. The vessel of this type is estimated to costs TZS 4.8 billion (USD 3.2 million). The capital expenditure for this type of vessel is summarised in Table 7.4. Submitted by BICO VII.528 Monday, 28 February 2011

234 Table 7.4: Estimates for the Case of a Vessel without Car Carrier COSTAL SHIPPING: VESSEL WITHPUT CAR CARRIER INVESTMENT COST ESTIMATES Shipping Vessels 4,800,000,000 Workshop & Tooling 150,000,000 Waiting Rooms 262,500,000 Utility Trucks 75,000,000 Furniture & Fixtures 15,000,000 Office Machines 30,000,000 Communication Equipment 7,500,000 Pre Operational Expenses TZS 5,340,000,000 Preoperations 195,000,000 Handling & Shipment (2% of vessel costs) 192,000,000 SUB TOTAL 387,000,000 Total Investment Cost 5,727,000,000 Financing Plan Loan 40% 2,290,800,000 Equity 60% 3,436,200,000 Total Project Financing 100% 5,727,000,000 Financial performance The financial projections of this type of ferry are based on the assumptions indicated in Table 7.5. The projections have also assumed that all infrastructures will be put in place by the Government. Despite this assumption, the projected financials indicate that the project is financially unviable in the first four years of operations. The unviability of the project is caused by following factors. Low vessel capacity Table 7.5: Basis of Projections for Option 1b Description Units Vessel capacity PAX 350 Trips per day 6 4 pick hours 2 Slack Hours Fare Per Trip SHS 1,100 Utilization capacity 80% 95% Submitted by BICO VII.628 Monday, 28 February 2011

235 Unlike the vessels which carry vehicles, of which will generate additional income, this vessel relies only on passenger fares Low fares charged to the passengers against the high operating costs The projection indicates that the viability of the project may only be realised after the 4 th year and therefore rendering this type of ferry unviable. Table 7.6 summarises the profit and loss performance and key financial indicators of this option, and detailed financial projections outlining 10 years projections on this modal are given in Appendix IV. Table 7.6 Summary: Profit & Loss Account (NPBT) and Key Financial Ratios (Amount in TZS) Investment Area Year 1 Year 2 Year 3 Year 4 Year 5 ROI ROA IRR G/Ratio Mwanza CT (46,244,211.10) % 10.95% 40:60 Note: NPBT = Net Profit before Taxation Further, this option also calls for a close working relationship with municipals for the parking space of passengers who will require a safe parking space for their vehicles that are left behind, and at a reasonable price, which will ultimately justify passengers leaving them behind in safe hands Option 2: Construction of Floating Dock This option will call for acquisition and installation of five (5) floating docks, construction of docks and purchase of ship vessels. The cost for acquisition or construction of a single commercial floating dock is estimated at TZS 1,500,000, (USD 100,000.00) and it is assumed that the Government will bear this cost whereas the cost of a 500 passenger capacity vessel estimated at TZS 7.8 billion is to be incurred by a private investor. The required locations will remain as in option 1 above, namely Mbweni, Bahari Beach, Kunduchi Beach and Kawe and Msasani, as illustrated in Figure 7.2. Submitted by BICO VII.728 Monday, 28 February 2011

236 Figure 7.2: Proposed Coastal Shipping Route The implementation of this model will require a further study on the determination of the suitability of the proposed site and type of dock that is to be used. This option will also call for a close working relationship with municipals for the parking space of passengers who will require a safe parking space for their vehicles that are left behind, and at a reasonable price, which will ultimately justify passengers leaving them behind in safe hands. The option is insignificantly less costly when compared to permanently constructed docs, with CAPEX cost reduction of about 3% compared to Option 1. The estimated CAPEX costs of this option are outlined in Table 7.7 and the project is financially viable (see option 1a). Submitted by BICO VII.828 Monday, 28 February 2011

237 Table 7.7: Coastal Shipping Estimates for Option 2 COSTAL SHIPPING ESTIMATES Option 2: Floating Dock Total Costs US$ CAPEX CLASSIFICATION Unit Cost US$ Year 1 Land Acquisition for floating dock mounting/waiting rooms ( 5 pcs) By Government 0 Buildings (Waiting Rooms 5) 35, ,000 Access roads Purchase/Construction of Floating Docks (5 pcs) By Government 0 Step Flip up Ladders (5 units) 500 2,500 Sub Total 177,500 Vessels Shipping Vessel (500 PAX) 5,200,000 5,200,000 Workshops & Tooling 50,000 50,000 Sub Total 5,427,500 Field & Management Transport: Utility Pickup trucks (1unit) 50,000 50,000 Motor Cycles 5,000 Sub Total 100% 50,000 Furniture & Office Equipment Office machines/waiting launch internet/computers 20,000 20,000 Furniture Fittings 10,000 10,000 Communication Equipment PreOp Expenses/Working Capital 150, ,000 Sub Total 235,000 Handling and Shipment costs (2% of vessel cost) 108,550 TOTAL Project Investment 100% 5,771,050 Depreciation AllowedStraight line Total Assets Net of depreciation. 1 5,771,050 Note: Taxes have not been factors as the project is assumed to be under TIC Land acquisition is estimated at USD 100,000 per location Coastal Shipping Services Across the Channel This category involves provision of sea ferry services between Dar es Salaam and Zanzibar, Pemba and Mafia. The average costs of these vessels ranges from TZS 3.45 to 4.8 billion (USD 2.3 to 3.2 million) for a vessel with the capacity of 200 and 350 people, respectively. The detailed CAPEX structure on investment in this option is shown in Table 7.8 whereas Figure 7.3 shows the route for the proposed coastal sniping across the channel. Submitted by BICO VII.928 Monday, 28 February 2011

238 Table 7.8: Across the Channel Cost Estimates COSTAL SHIPPING ESTIMATES Investment Across the Channel Total Costs US$ CAPEX CLASSIFICATION Units/Lots/Sets Unit Cost US$ Year 1 Vessels Shipping Vessel (350 PAX) 2 3,200,000 6,400,000 Workshops & Tooling 2 50, ,000 Sub Total 6,500,000 Field & Management Transport: Utility Pickup trucks (1unit) 1 50,000 50,000 Sub Total 50,000 Furniture & Office Equipment Office machines/waiting launch internet/computers 1 20,000 20,000 Furniture Fittings 1 10,000 10,000 Communication Equipment PreOp Expenses/Working Capital 100, ,000 Sub Total 135,000 Handling and Shipment costs (2% of vessel cost) 128,000 TOTAL Project Investment 6,808,000 Depreciation AllowedStraight line Total Assets Net of depreciation. 6,813,000 Note: Taxes have not been factored as the project is assumed to be under TIC Figure 7.3: Coastal Shipping across the Channel Submitted by BICO VII.1028 Monday, 28 February 2011

239 Projected Financial Results Revenue assumptions for this modal have been based on the parameters listed in Table 7.9. Table 7.9: Assumptions for Across the Channel Description Units Vessel capacity PAX 350 Vessel capacity CARS 0 Trips per day 2 Fare Per Trip (TZS) :PAX 15,000 Utilization capacity 75% 95% The projected financial and cashflow for this model indicates strong financial viability and performance. The reasons for this performance is attributed to the provision of infrastructure by the Government and the project therefore do not call for the development of infrastructure both at Dar es Salaam and Zanzibar. The second attribute is the low cost of investment associated with the vessels involved. The third reason is the fact that the fares chargeable consummate with the costs of operation. Table 7.10 presents the cashflow of this option. Table 7.10: Summary of Profit & Loss Account and Key Financial Ratios (Amount in TZS) Investment Area Year 1 Year 2 Year 3 Year 4 Year 5 ROI ROA IRR G/Ratio Costal Shipping across the Channel 1,131,824, ,734,451 1,007,984,451 1,168,634,451 1,336,484, % 40: Summary The financial projections indicate that where construction of jetties, purchase of floating docks and land acquisition are borne by the Government, the investment options become profitable. The consideration for the development of the infrastructure by the Government is advised due to the fact that these projects carry significant social benefits to the community while also taking into account the obligation of the Government not only to provide such infrastructure to the community, but also to facilitate a conducive atmosphere and the overall environment to attract investments. Submitted by BICO VII.1128 Monday, 28 February 2011

240 Financial performance of option 1a which involves construction of jetties and provision of large passenger and motor vehicle carrier have the same impact as option 2 (floating dock) as parameters applied are the same, except that the latter option will be a bit cheaper option for the government in terms of costs that are associated with the construction of jetties versus provision of floating docks. Option 1b which involves construction of jetties and provision of medium vessel without motor vehicle carrier proved to be financially unviable, especially in the first four years of operation. Additionally, the projected financial and cashflow for coastal shipping across the channel indicated strong financial viability of this investment option due to the low cost of the vessels involved and the fact that fares chargeable consummate with the cost of vessel operation. Table 7.9 presents a summary of the strengths, weaknesses, and opportunity for the coastal shipping options considered in the preceding sections. Table 7.9: Coastal Shipping Permanent Jetty, & Floating Dock and Across the Channel Strengths Weaknesses Opportunities Threats 1 Government zeal to Non existence of Potential market Entry barriers due develop this area of infrastructure heavy investment cost transport 2 Commitment of private Lack of long term Passengers ability to Unpredictable fuel costs stakeholders finances for such turn key projects travel with speed and ferry their cars for use in CBD 3 Competition from the existing players (Across the Channel services) 7.3 Inland Waterways Investments identified on inland waterways have been outlined in Chapter 4 and singled out on the basis of available market, ability of the investment to return such investments and possibility to access capital for the intended investment. They have been noted based on a need to provide transport as a basic service to communities living in the within and around the major lakes. The identified inland waterways investment has therefore been centred on Lake Victoria, Lake Tanganyika and Lake Nyasa, which have exhibited very high investment potential to obvious existing gaps in the transportation of both passenger and cargo across these vast water bodies that link several cities across and along the shores of these lakes. Submitted by BICO VII.1228 Monday, 28 February 2011

241 7.3.1 Lake Victoria As outlined in Chapter 4, a 500 passengers and 350 tons capacity ship is proposed for Lake Victoria to ply between Mwanza and port Bell, Jinja Kampala. The ship could be a typical container vessel or relatively a vessel that will be able to haul wagons, given the availability of relevant infrastructure on most of the existing ports on Lake Victoria, i.e., Kisumu, Jinja, Musoma, Kemondo and Mwanza. Although this route has both the potential and social impact to the community, the route viability is challenged by the poor rail system operations which have of late resulted into diversion of cargo destined to or from Uganda going through the Mombasa port and those coming through the Dar es Salaam port are subsequently hauled by road. As indicated in Chapter 4, the current services offered mainly by MSCL have not been able to meet the current demand of both passengers and cargo due to limited financial resources and outdated equipments and vessels owned by MSCL. The investment in these areas is therefore seen as capitalization of the existing opportunities and filling the market gap. Table 7.12 summarises the investment costs for the proposed investment option. Projected Financial Results Although the project has significant social impact, the financial projection analysis carried out by the Consultant indicates that investment in this area is not financially viable. Table 7.13 provides the assumptions basis about the projections whereas Table 7.14 provides the profits and loss accounts. Submitted by BICO VII.1328 Monday, 28 February 2011

242 Table 7.12: CAPEX for Lake Victoria Transport Service LAKE VICTORIA INLAND SHIPPING INVESTMENT COST ESTIMATES TZS Buildings (Waiting rooms) 82,500,000 Purchase of ship (500PAX, 350 Tons) 7,500,000,000 Assembling costs 485,000,000 Workshop & Tooling 82,500,000 Utility Trucks (1 unit) 75,000,000 Furniture & Fixtures 10,500,000 Office Machines 30,000,000 Communication Equipment 8,400,000 8,273,900,000 Pre Operational Expenses Preparation expenses 225,000,000 Handling & Shipment (2% of vessel costs) 271,500,000 SUB TOTAL 496,500,000 Total Investment Cost 8,770,400,000 Financing Plan Loan 40% 3,508,160,000 Equity 60% 5,262,240,000 Total Project Financing 100% 8,770,400,000 Table 7.13: Assumptions for Financial Projections INLAND SHIPPING Descriptions Lake Tanganyika Lake Victoria Lake Nyasa Total Annual Cargo (2008/2009 Stat.) 239, ,436 Proposed market Share (40% all Cargo) 95, ,974 Passengers Capacity Cargo Capacity Fare Per PAX 27,400 15,000 Fare Per Ton 38,900 19,700 Monthly Calls (Round Trip) Annual Average Calls Average distance Round Trip (Km) 1, Average Fuel Consumption/Km (in Lts) Fuel Consumption per Year (Lts) 830,818,560 3,102,497,280 Fuel cost per litter ,780 1,780 Passengers (2008/2009 Statistics) 456,955 Submitted by BICO VII.1428 Monday, 28 February 2011

243 Table 7.14 Lake Victoria: Summary Profit & Loss Account (Amount in TZS 000 ) Inland Shipping Year 1 Year 2 Year 3 Year 4 Year 5 Profit(Loss) Before Tax (3,352,536 ) (3,979,057) (3,979,057) (4,200,116) (4,200,116) Lake Tanganyika: A Lake Tanganyika investment calls for 500 passenger and 350 tons capacity vessel which is the same as the proposed ship for Lake Victoria. The vessel is to ply on Kassanga, Kigoma, Bujumbura and Kalemie/Moba/Muliro (DRC). Projected Financial Results As has been observed for the Lake Victoria case, the profitability of the proposed investment is hampered by the heavy capital investment, high operating costs in fuel and lubricants and low level of charges levied as fare for both passenger and cargo. Although it is evident that the services rendered under these investments play a critical role on social economic to the community, without Government intervention it will be difficult to attract any investor to invest in the business due to its obvious inability to return the invested capital, as shown in Table Table 7.15 Lake Tanganyika: Summary Profit & Loss Account (Amount in TZS 000 ) Lake Tanganyika Year 1 Year 2 Year 3 Year 4 Year 5 Net Profit Before Tax (971,285) (1,377,716) (1,376,166) (1,408,556) (1,442,164) In line with the Government s vision 2025, it is recommended that the Government provides further incentives in the areas of fuel, lubricants and spare parts to allow for such benefits to be passed over to the community by the investors. The objectives of the Vision 2025 are as follows. To build a strong, resilient and competitive economy capable of adapting to technological and market changes in the world economy. To satisfy the basic needs of people, eradicating poverty and ensuring availability of productive employment opportunities. To avail equal opportunity to all citizens to participate in and contribute to the development of the nation, paying particular attention to gender balance. To attain high levels of domestic savings, investment, and labour productivity through appropriate monetary policies. Submitted by BICO VII.1528 Monday, 28 February 2011

244 It can be noted that residents along the shores of Lake Tanganyika and Nyasa respectively, have become captive maritime passengers due to geographical features encompassing high escapements that renders difficulties in road construction. Therefore the obligation of the Government to provide these necessary transport facilities cannot be overemphasised Summary Although it was not possible to get complete and reliable data to enable cost benefit analysis of similar investment on Lake Nyasa, the financial projections undertaken for the proposed investments on both Lakes Victoria and Tanganyika have demonstrated non financial viability of these options. The most notable attributing factors to the commercial unviability of these projects are the heavy CAPEX where the revenue is generated from passenger and cargo fares with very minimal charges attributed to the low income levels of targeted users. On the other hand, operating costs and especially fuel and lubricants have remained very high and continue to rise with the inflation and the depreciation of the Tanzania shilling. From a regulatory point of view, it is important to also note that fares are regulated by SUMATRA, a regulatory body charged with regulation of surface and marine transport. This makes it impossible for the operators to immediately adjust fares to cover any operational cost variance resulting from fuel prices, currency depreciation or inflation impact. 7.4 Urban Rail The investment costs estimate for this modal is outlined in Table 7.16 while assumptions about the revenue projections are listed in Table Financial Projection Results On the basis of the assumptions which are presented in Table 7.17, the urban rail investment seems to be the most profitable of all the reviewed investment options despite its very high CAPEX layout. Though the projections indicate a loss on the years two and three respectively, the projected financials indicate that the project is financially viable with the ability to generate good revenue and profit from year one of the operations, and the situation reverses in year 4 and subsequent years to generate profit. Key financial indicators also demonstrate positive performance. This modal is therefore seen as the most ideal investment with potential to both the community and the investor at large. Submitted by BICO VII.1628 Monday, 28 February 2011

245 Table 7.16: Investment Cost Estimates for Urban Rail URBAN TRAIN Unit Cost $ TZS USD Locomotives (6pcs) 2,500,000 22,500,000,000 15,000,000 Commuter Coaches (24 units) 40,000 1,500,000,000 1,000,000 Construction of rail track (1.2 KM) 1,800,000,000 1,200,000 Passenger waiting sheds (11 units) 184,800, ,200 Workshop & Tooling 105,000,000 70,000 Utility Trucks (2 units) 150,000, ,000 Furniture & Fixtures 22,500,000 15,000 Office Machines 30,000,000 20,000 Communication Equipment 7,500,000 5,000 26,299,800,000 17,533,200 Pre Operational Expenses Pre operation expenses/working capital 150,000, ,000 Handling & Shipment (1% of loco/coaches) 240,000, ,000 SUB TOTAL 390,000, ,000 Total Investment Cost 26,689,800,000 17,793,200 Financing Plan Loan 40% 10,675,920,000 7,117,280 Equity 60% 16,013,880,000 10,675,920 Total Project Financing 100% 26,689,800,000 17,793,200 Note: Taxes have not been factors as the project is assumed to be under TIC Table 7.17: Urban Rail Revenue Assumptions Description Type Units Available Coaches Luxury 6 Standard 18 Coach capacity PAX Luxury 64 Standard 96 Trips per day 5 Fare Per Trip (TZS) Luxury 1,000 Standard 500 Utilization capacity 60% 95% As noted in Chapter 5, for effective utilization of the existing rail tracks improvement will therefore be necessary. The improvement will include construction of two (2) extra tracks lines at each identified terminal to facilitate shunting and crossing. The tracks are estimated to be 150 m long of track at each station, as proposed in Chapter 5. Table 7.18 presents a summary of the Submitted by BICO VII.1728 Monday, 28 February 2011

246 profit and loss account and key indicators of the proposed urban rail investment option while Table 7.19 presents the SWOT analysis of the proposed urban train infrastructure and services. The results are attributed to the fact that the infrastructure already exists with minor improvements as indicated in the capital investment structure. The volume of the passengers carried per day (economies of scale) also contributes enormously to the positive financial position of the project. Table 7.18: Urban Train Summary of Profit & Loss Account and key indicators (TZS) Investment Area Year 1 Year 2 Year 3 Year 4 Year 5 ROI ROA IRR G/Ratio Urban Train % 13.7% 40:60 Table 7.19: SWOT Analysis of Urban Train Strengths Weaknesses Opportunities Threats 1 Infrastructure already Poorly maintained exists infrastructure with no land for waiting sheds 2 Government Lack of long term commitment to finances for such turn key develop urban train in projects bid to reduce traffic congestion and pollution 3 Tariffs are controlled by Government regulatory body and therefore may hinder tariff increase to match increased operating costs Potential customer Entry barriers due to heavy base investment cost New legislations Unpredictable fuel costs such a PPP that brings about public private partnership capital Competition from the proposed Dar Rapid Transit if the ticketing system will not be integrated 7.5 Surface and Marine Intermodal Transport Surface and marine intermodal transport serves as a critical interconnection between the marine and surface transport modes and is vital for linkages to hinterlands and or landlocked countries. As outlined in Chapter 6, two critical intermodal areas of Isaka Inland Container Deport and Mwanza Container Terminal have been reviewed given their importance in the connectivity of Submitted by BICO VII.1828 Monday, 28 February 2011

247 both the Tanzania hinterland and the neighbouring countries bordering Lake Victoria. Table 7.20 presents the SWOT analysis of the proposed investments. Table 7.20: SWOT Analysis Surface and Marine Intermodal Strengths Weaknesses Opportunities Threats 1 Government commitment to develop this area of transport 2 Commitment of private stakeholders 3 Local ownership, locally managed and supervised Poor rail link Potential customer Entry barriers due heavy base investment cost Port operation inefficiency at Dar es Salaam port that forces clients to opt for alternative ports in the region Lack of long term finances for such turn key projects Increased hinterland Unpredictable fuel costs cargo including for neighbouring landlocked countries New legislations Unreliable electrical such a PPP that power brings about public private partnership capital 4 Competition from existing and planned ports, railways and IDCs in neighbouring countries Isaka ICD As elaborated in Chapter 6, an ICD is proposed at Isaka with a stacking area of about 12,000 sq. m. that can enable the terminal handle traffic destined to Rwanda, Burundi and Uganda. Table 7.21 presents the associated investment costs for setting up of the proposed Isaka ICD. Projected Financial Results The financial projections indicate that the project is financially viable with the ability to absorb operating costs and generate revenues with profits from its first year of operations. Table 7.22 provides a summary of financial results outlining the profitability before tax and key financial indicators. Submitted by BICO VII.1928 Monday, 28 February 2011

248 Table 7.21: Investment Costs for Isaka ICD SURFACE AND MARINE MULTIMODAL ISAKA ICD Total Costs US$ CAPEX CLASSIFICATION Units Unit Cost US$ Year 1 Land & Buildings Land Acquisition 350,000 Buildings 175,000 Sub Total 525,000 Equipment One Rail Mounted Gantry Crane (RMG 1 3,500,000 3,500,000 Rubber Tyred Gantry Crane (RTG) 2 1,875,000 3,750,000 Reach Stackers (RS 1 700, ,000 MT Container Handler 1 375, ,000 Two 5 Tons Fork Lifts 2 250, ,000 Generator 1 25,000 25,000 Workshops & Toolings 1 45,000 45,000 Sub Total 8,895,000 Field & Management Transport: Utility Pickup trucks (1 unit) 1 50,000 50,000 Sub Total 50,000 Furniture & Office Equipment Office machines/ticketing/computers 7,500 20,000 Furniture Fittings 1 10,000 10,000 Communication Equipment PreOp Expenses/Working Capital 30,000 30,000 Sub Total 60,000 Handling and Shipment costs (2% of equipments) 177,900 TOTAL Project Investment 100% 9,182,900 Depreciation AllowedStraight line Total Assets Net of depreciation. 9,707,900 Note: Taxes have not been factored as the project is assumed to be under TIC Table 7.22: Isaka ICD Summary of Profit & Loss Account and key indicators (TZS) Investment Area Year 1 Year 2 Year 3 Year 4 Year 5 ROI ROA IRR G/Ratio Isaka ICD 1,111,824, ,469, ,147, ,151, ,666, % 17.09% 40:60 Submitted by BICO VII.2028 Monday, 28 February 2011

249 7.5.2 Mwanza Port A Container Terminal is also proposed for Mwanza South port in Chapter 6 in order to serve as an intermodal terminal for goods delivered to or from Rwanda and Burundi via road or rail to the Dar es Salaam port. Table 7.23 presents the investment costs required to set up the proposed container terminal in Mwanza. Table 7.23: Investment Cost Estimates for Mwanza Container Terminal SURFACE AND MARINE MULTIMODAL MWANZA CONTAINER TERMINAL Total Costs US$ CAPEX CLASSIFICATION Units Unit Cost US$ Year 1 Equipment One Rail Mounted Gantry Crane (RMG 1 3,500,000 3,500,000 Rubber Tyred Gantry Crane (RTG) 2 1,875,000 3,750,000 Reach Stackers (RS 1 700, ,000 MT Container Handler 1 375, ,000 Two 5 Tons Fork Lifts 2 250, ,000 Generator 1 25,000 25,000 Workshops & Toolings 1 45,000 45,000 Sub Total 8,895,000 Field & Management Transport: Utility Pickup trucks (1 unit) 1 50,000 50,000 Sub Total 50,000 Furniture & Office Equipment Office machines/ticketing/computers 7,500 20,000 Furniture Fittings 1 10,000 10,000 Communication Equipment PreOp Expenses/Working Capital 30,000 30,000 Sub Total 60,000 Handling and Shipment costs (2% of equipments) 177,900 TOTAL Project Investment 100% 9,182,900 Depreciation AllowedStraight line Total Assets Net of depreciation. 9,182,900 Note: Taxes have not been factors as the project is assumed to be under TIC Submitted by BICO VII.2128 Monday, 28 February 2011

250 Projected Financial Results A review on the financial projections demonstrates that this project is financially viable. The results are attributed to the fact that the infrastructure already exists with minor improvements. The continued increase of cargo and the targeted cargo destined to Uganda which is now hauled through Mombasa port are key factors of the performance of this terminal. The success of this terminal is, however, hinged on the improvement of the railway system which is meant to bring the cargo to/ from the Dar Salaam port and subsequently to attract the Ugandan cargo currently using Mombasa port. Table 7.24 summarises the financial results of this investment option. Table 7.24: Container Terminal Summary of Profit & Loss Account and key indicators (TZS) Investment Area Year 1 Year 2 Year 3 Year 4 Year 5 ROI ROA IRR G/Ratio Mwanza CT 1,813,734,794 1,639,546,791 2,170,796,733 2,794,864,798 2,902,391, % 35.12% 40: Prioritization of Investment Options Based on Cost benefit Analysis Results On reviewing the cost benefit analysis, it was necessary to critically review the investment capital for each option and the associated profitability, including key financial ratios in order to determine the most optimal investment. Table 7.25 provides a summary of key financial indicator for each investment option and it therefore forms the basis of our recommended potential transport development areas. The areas of investment, which were subjected to cost and benefit analysis are as follows. Costal shipping involving the provision of a vessel which can carry both passengers and motor vehicles by the private sectors where the construction of permanent jetties is done by the Government. Coastal shipping involving vessels for passengers without carrying vehicles Coastal shipping with the provision of floating docks Coastal shipping across the channel, i.e. Dar es Salaam Zanzibar Inland waterways transport on Lake Victoria Inland waterway transport on Lake Tanganyika Urban Train Mwanza Container Terminal Isaka ICD Submitted by BICO VII.2228 Monday, 28 February 2011

251 Table 7.25: Income Statement Summary of Profit before Taxation Investment Area Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 CAPEX (Biln) ROI ROA IRR Loan Rate Tenor COSTAL SHIPPING Permanent Jets 366,160, ,393, ,036, ,199, ,681, ,845, ,830, ,828, ,039,904 1,060,675, % 14.30% 8% 10 yrs Floating Docks 366,160, ,160, ,160, ,160, ,160, ,160, ,160, ,160, ,160, ,160, % 10 yrs Without Car carrier (46,244,211.10) % 10.95% 8% 10 yrs Across the Channel % 10 yrs TRAIN Urban Train % 13.70% 8% 10 yrs SURFACE & MARINE INTERMODAL 10 yrs Isaka ICD % 17.09% 8% 10 yrs Mwanza Container Termi % 35.12% 8% 10 yrs NOTE: The parameters on floating dock and constructed jets are the same. The differences are on the infracture investments where the cosntructed jets costs much more Submitted by BICO VII.2328 Monday, 28 February 2011

252 On the basis of the summary, it can be noted that out of the nine investment options that were subjected to cost benefit analysis only six investment options (see Table 7.26) are cost effective and profitable. Shipping across the channel was found to be the most profitable investment option in the area of coastal shipping. Table 7.26 provides a summary of analysis of investment and returns of the identified areas. Detailed projected financial cashflow of each investment option is shown in Appendix IV. Investment Area Table 7.26: Summary of Investment and Returns of identified Areas CAPEX (Biln) ROI ROA IRR Loan Rate Tenor COSTAL SHIPPING Permanent Jets & Large Vessel % 14.30% 8% 10 yrs Floating Docks % 10 yrs Without Car carrier % 10.95% 8% 10 yrs Across the Channel % 16.00% 10 yrs TRAIN Urban Train % 13.70% 8% 10 yrs SURFACE & MARINE INTERMODAL 10 yrs Isaka ICD % 17.09% Mwanza Container Terminal % 35.12% 8% 10 yrs 7.7 Summary of Findings, Recommendations and Policy Implications Summary of Findings This chapter presented the cost benefit analysis of some of the identified transport potential development areas in coastal shipping, inland waterways transport, urban rail transport and surface marine intermodal transport. The financial viability demonstrated in the areas of coastal shipping investments and urban train has assumed that the Government will bear the costs of constructing and maintaining the supportive infrastructure e.g. land acquisition, construction of jetties, provision of a floating dock, railways tracks, etc, given the social benefits associated to these investments. Coastal shipping options which were found to be financially viable involve the use of a large vessel with a minimum of 500 passengers and 110 motor vehicles carrying capacity, shipping across the channel with a 350 passengers carrying capacity vessel, and use of a floating dock. However, shipping across the channel was found to be the most profitable investment option in the area of coastal shipping. The other investment options which were financially viable are the Submitted by BICO VII.2428 Monday, 28 February 2011

253 urban rail transport option, Mwanza South Container Terminal and Isaka ICD. The PPP arrangement is worth consideration here, they leverage resources by taping resources from both the private and the public thereby minimizing the gearing burden of the project. Some of the proposed investment options were found to be financially unviable because of the following main factors. Low vessel capacity Unlike the vessels which carry vehicles, of which will generate additional income, this vessel relies only on passenger fares Low fares charged to the passengers against the high operating While acknowledging and appreciating the role of SUMATRA in setting and regulating fare rates, the process nevertheless, should be revisited to make it responsive to the demands of market forces and inflation. SUMATRA can borrow a leaf from EWURA on this aspect, where prices are tracked and operators (petrol related) are adjusted accordingly to allow the benefit to be transferred to the operators Specific Recommendations The following recommendations focus on the identified transport potential development areas in the surface and marine transport subsectors, as analysed in the preceding sections. (i) Coastal Shipping Investment in coastal shipping, which is financially viable, has been divided into two components. First, Dar es Salaam urban coastal travel and, secondly, travel across the channel. Dar es Salaam Urban Coastal Travel o Introduce coastal passenger services running from Mbweni to the city centre via several stops, that is, Bahari Beach, Kunduchi, Kawe and Msasani. In order to implement this option, the Government should construct the infrastructure required for the operations of sea ferries namely jetties/ docks and encourage investors who will provide coastal passenger services to acquire large passenger vessels with a minimum carrying capacity of 500 passengers and 110 cars. For the purposes of Submitted by BICO VII.2528 Monday, 28 February 2011

254 providing suitable floating dock, a further comprehensive study is needed to determine the coastal behaviour that will determine a suitable type of dock to be used or constructed at the designated areas. Across the Channel o Introduce and/ or expand the provision of scheduled sea ferry services between Dar es Salaam and Zanzibar, Pemba and Mafia. o Encourage investors to secure vessels with carrying capacity ranging from 200 to 350 passengers excluding cars. (ii) Inland Waterways Transport Investments in inland waterways were found to be financially unviable. However, the following specific recommendations are drawn based on socioeconomic considerations. Although financial analysis renders investment in the three lakes financially not viable due to operational costs, the Consultant recommends the introduction of passenger and cargo scheduled services on Lakes Victoria, Tanganyika and Nyasa. In Lake Victoria, services should be offered between Mwanza and Port Bell and Jinja all in Uganda as well as to Kisumu (Kenya) and Musoma. In the case of Lake Tanganyika, ships should ply between Kigoma and Bujumbura to take advantage of Burundi export and import trade that is recording a positive trend at the Dar es Salaam port. (iii) Urban Rail Transport The Consultant having made a review and analysis of the various urban areas traversed by rail transport came up with the following recommendations: Urban rail transport should be established in the city of Dar es Salaam due to its high population and the current pressing challenges on the public transport system especially traffic congestion. Two routes are proposed which will make use of part of the existing TRL and TAZARA rail standards. TRL routes are Kamata to Ubungo via Buguruni and Kamata to Banana via Buguruni whereas the TAZARA route is from Buguruni (TAZARA) to Mwakanga. Submitted by BICO VII.2628 Monday, 28 February 2011

255 Rehabilitation and improvement of the existing rail network should entail construction of two extra track lines on each side of the existing network at identified stop centres to facilitate shunting and crossing. The project should acquire 6 locomotives each pulling 4 couches On the basis of the financial performance analysis, this model is highly recommended for investment out of the four areas. (iv) Surface and Marine Intermodal On the basis of the cost benefit analysis results, the Consultant makes the following recommendations: Establish an ICD at Isaka with a stacking area of about 12,000 sq. m. to enable the terminal to handle all traffic destined to and from Rwanda, and Burundi and Uganda. Establish a Container Terminal for Mwanza South port designed to serve as an intermodal terminal for goods destined to and from Uganda via rail or road from the Dar es Salaam port. For effective utilisation of the ICD at Isaka, the Consultant proposes that both the Container Terminal at Mwanza and the newly proposed Isaka ICD call for an approach towards ensuring that the existing TRL line between Dar es Salaam and Mwanza via Isaka is rehabilitaed and a new section be built to link Tanga port and Isaka so as to attract cargo to and from the hinterland of both Dar es Salaam and Tanga ports. The ICD will also act as a hub for the envisaged DarIsakaKigali/ Msongati via Keza railway. For example, Burundi coffee, which used to be a traditional transit cargo at the Kigoma port enroute to Dar es Salaam port for the last 20 years when the rail was perfectly functioning, has now moved to Mombasa port. With the increased volume of the transit trade across the ocean ports of Tanzania, isn t it the right time for SUMATRA to consider allowing the licensing of Multi Modal Transport Operators (MTO or NVOCCs) where these companies could assist in offering liabilities to cargo in transit, in the event of any loss or damage to cargo, thus build credibility to users and hence attract most of the landlocked customers. TRL, as noted by the Consultant, accepts goods at owners risk, the reason why customers considers TRL as the last option irrespective of the costs. Submitted by BICO VII.2728 Monday, 28 February 2011

256 7.7.3 Policy Implications The National Investment Promotion Policy 1996 together with its associated legislation, that is, the Tanzania Investment Act 1997 provides only for tax incentives on capital goods that the investor brings in. There is no incentive on operational costs, such as, fuel and spare parts which are costly items on the part of the operator. All the proposed investments in the four areas will require investors cum operators to incur operational costs in form of fuel and spare parts purchases. The Consultant recommends that investors in the four areas should be granted incentives on operation costs. Since inland waterways are best served by a railway intermodal, the Consultant advises SUMATRA to issue directives to Stakeholders (Shippers) that will deliberately reduce modal competition, and give the railway mode the exclusive right to transport/ haul cargo weighing over 20 tons to destinations exceeding 500 km where there is a railway track, by offering a 5 10 year threshold, pending the perfection of the national railway system. This directive is expected to serve the country from repetitive road maintenance caused by truck overloading, which ultimately are the major causes of highway pavement damage. Submitted by BICO VII.2828 Monday, 28 February 2011

257 CHAPTER EIGHT FUNDING OPTIONS, PROMOTION STRATEGY AND INCENTIVE PACKAGE 8.1 Introduction On reviewing the funding capabilities, available options, promotion strategy and incentive package, the study attempted to critically analyse the following so as to come up with the best possible models and source. CAPEX required and tenor for the project Fee and income generation and its volume Possibility of both private and public participation (PPP) Financial performance of each project Associated risks and challenges of each project Government policies including legislation and incentives towards the sector 8.2 Financing Sources and Options Having reviewed such parameters as the basis of the financing structure, efforts were made to identify various available financing structures so as to come up with either a single structure or a combination of various structures for recommendations as financing models of each investment plan. The reviewed financing options included: o Public private partnership o Public private partnership and debt o Debt financing Senior Debt Mezzanine Debt Combination of Senior and Mezzanine Debt o Equity financing o Combination of debtequity financing o Public financing through either Infrastructure Bonds or Initial Public Offer (IPO)s of shares Submitted by BICO VIII.18 Monday, 28 February 2011

258 On the reviewed financing options, the following options have been identified and selected as the best options suitable for financing of the identified investment opportunities either as single option or combination of several options. Table 8.1 presents the investment areas and the identified option and source for financing. Table 8.1: Financing Sources and Options S/N Investment Area CAPEX Proposed Funding Proposed Sources Structure D/E Ratio 1 Costal shipping Across the Channel Equity, Debt, PPP 40:60 Private Investors, banks, Public 2 Mwanza Container Equity, Debt, PPP 40:60 Private Investors, banks, Terminal Public 3 Urban Train Equity, Debt, PPP 40:60 Private Investors, banks, Public 4 Isaka ICD Equity, Debt, PPP 40:60 Private Investors, banks, Public 8.3 Promotion Strategy Based on the diversified nature of the areas of investment, efforts were made to design an integrated advertising modal with integrated themes targeting each segment of the targeted investors namely, Local, Regional and International Investors. The communication thematic has therefore followed the same pattern. Figure 8.1 illustrates the planned outreach, indicating the targeted segment and medium to be used. Submitted by BICO VIII.28 Monday, 28 February 2011

259 Thus, the following 3 Pillars guided our Rebranding Efforts Local Investors 1 Integrated Thematic Advertising TV, Radio, Newspaper Brochures 2 3 Regional Investors Integrated Outreach International Investors Integrated Outreach Figure 8.1: Promotion Strategy The following medium of communication has been identified to allow maximum outreach: Television Radio Newspapers (local, regional and international such as Economist) Brochures Direct Contact (to identified investors) Website It is proposed that the promotion be structured to emphasize the three (3) critical areas shown in Figure 8.1 in order to deliver quick and desired impact to the investors. Table 8.2 presents a summary of this methodology. Submitted by BICO VIII.38 Monday, 28 February 2011

260 AREAS Table 8.2: Areas of Promotion Emphasize on virgin areas of investment, highlighting the opportunities, supply gaps, competition and market. INCENTIVES Elaborate on national policies and specific incentives available in each area of investment, including tax and labour incentives. RETURNS Communicate clearly anticipated returns and rewards on investments. The three tier approach to communication should be delivered through different medium of communication. To allow a concise approach and maximum outreach impact, the delivery methodology should be divided into three categories as shown in Figure Promotional implementation programme In order to achieve good results of promotional programme and for it to have the desired impact, a 100 Amplification Programme is proposed to complement the implementation programme. This programme outlines an advertising medium, time scale and frequency as illustrated in Table Monitoring and Evaluation of the Programme After 100 days earmarked for the amplification programme, an evaluation should be carried out to identify responses and outcome of the programme. Non responsive areas should be identified and where possible the programme be repeated. The resulting objectives of the promotion program are to achieve: Exposure of the available opportunities to the targeted would be investors Execute a flawless rollout promotion program that delivers both in scale and depth Achieve a new foreign direct investment flow (FDI) to the exposed opportunities by the end of the branding phase Generate positive stories about Tanzania and its surface and marine transport subsectors Build preference for the Tanzania surface and marine transport subsectors Submitted by BICO VIII.48 Monday, 28 February 2011

261 Table 8.3: Promotion Amplification Programme and Estimated Costs S/N Medium No of Timescale Frequency Time Amount Medium (TZS) 1 Television Local and Day 1 90 Thrice a day Prime 1,800,000,000 International Twice a day 2 Radio Local Day Times Prime 70,000,000 3 Newspapers Local Day 1 40 Daily 21,000,000 Regional (EA) Day 5 40 Weekly 5,000,000 International Day ,000,000 (Eg Economist) Once a month 4 Brochures To be distribute at various Tanzania embassies/trade shows Constant 8,2000,000 5 Website SUMATRA and link to key investment website e.g. National website, TIC, etc Internal (Sumatra) 6 7 Direct Contact Identified List Follow ups Production All Identified above 14 days 50,000,000 SubTotal 1,964,800,000 Programme review Independent Agent 30 days Once 55,000,000 TOTAL 2,019,800, Incentive Package The investment incentive role for all business sectors in Tanzania is vested upon Tanzania Investment Centre under the Tanzania Investment act, Submitted by BICO VIII.58 Monday, 28 February 2011

262 The investment incentives offered are categorized into two main areas namely fiscal and nonfiscal incentives Fiscal incentives The Fiscal Incentives are available in two main areas: Import duty and VAT exemption on project capital goods. Import Duty Draw Back Scheme. Under this scheme, refund of duty charged on imported inputs used for producing goods for export and goods sold to foreign institutions and its agencies operating in Tanzania is made to the investor. The existing tax incentives structure falls under the Tanzania Investment Policy, 1996 and the Tanzania Investment Act 1997 and are pegged on capital goods mobilised by the investor for investment in the designated area. No tax incentives are provided on operating costs, such as fuel and spare parts. The review of cashflow on all investment options that were subjected to cost benefit analysis in Chapter 7 indicates a very high operational costs because of large amount of fuel consumed by the envisaged surface and marine vessels Nonfiscal incentives Under this category, incentives include: Immigration (i.e. allowed working permits) quota of up to 5 people Guaranteed transfer of: o Net profits or dividends of the investment o Payment in respect of foreign loans o Remittance of proceeds net of all taxes and other obligations o Royalties fees and other charges o Payment of emolument and other benefits to foreign personnel Strategic Investor Status For a big project of over US$ 20 million offering specific/great impact to the society or economy, investors can request for special incentives from the Government. All investments options under consideration are qualified for these incentives. Submitted by BICO VIII.68 Monday, 28 February 2011

263 Most of the projects under review, however, are of turnkey nature and may qualify for the Category No. 3 on Strategic Investor Status where projects with investments exceeding USD 20 million with both economic and society impact may request for special incentives from the Government. The review of cashflow on all modals indicates a very high operational costs on fuel, since tax exemption has already been granted on capital goods under the existing incentive, the Consultants proposes that a special incentive be requested on the waiver of taxes of fuel and lubricant products to assist the operators to reduce the high operating costs resulting from fossil fuel Proposed Incentives In reviewing the operations and viability of projects proposed in the areas of costal shipping, inland waterways, surface and marine intermodal and urban rail transport, the most costly item in operations is the fuel. This study found that about 60% of the cost components of fuel cost is from various taxes and levies charged on fuel by the Government. The Consultant, therefore, recommends that the Government should consider providing special incentives on operating costs, especially on fuel, for such projects with high social economic impact to the society. On the basis of the financial analysis done by the Consultant, most of the reviewed projects which are currently financially unviable could become viable if the fuel cost element is lessened from the operation costs, thereby allowing attraction of investment and social benefits that are associated with the reviewed investment options. It is worthy noting that transport fares and charges in Tanzania are highly influenced by the following major factors namely: Depreciation of the Tanzania shilling against major currencies and in particular USD which is the main import currency. Increase in fuel prices resulting from international price changes or as result of depreciation of local currency against the USD used to import the fuel Local taxes Review by the Consultant has shown that Tanzania shilling has continued to depreciate since 2000 from TZS 800/USD1 to TZS1500/USD 1 by November 2010, a depreciation of over Submitted by BICO VIII.78 Monday, 28 February 2011

264 76% in nine years as illustrated in Figure 8.2. Equally fuel per litre has continued to rise as shown in Table 8.4. The Depreciation of the local currency also affects prices of spare parts and associated accessories which are imported through major foreign currencies. Local taxes would affect transportation fares where new taxes either national or local government tax are imposed direct or indirectly to the operations of the transport sector. It is important therefore that SUMATRA as a regulator sets up a mechanism where review of fares to accommodate such changes brought by the market forces may be accommodated on time so as to ensure that private operators adjust the fares to cushion any loss that may be brought about by the above mentioned factors. Figure 8.2: USD/TZS Mean Exchange Rate, (Source: Bank of Tanzania) Table 8.4: Fuel Price (TZS) Item Jan09 Dec09 Feb10 Jun10 Nov10 Indicative Price 1, , , , ,673.0 Price Cap 1, , , , ,799.0 Source: EWURA Price for Dar es Salaam Submitted by BICO VIII.88 Monday, 28 February 2011

265 APPENDIX I: TERMS OF REFERENCE Submitted by BICO Monday, 28 February 2011

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