Dubai Port World ups Dar, Mombasa rivalry with Sh37.54bn deal
MV Logos Hope, the biggest floating Library, arrives at the Port of Mombasa in this picture taken on August 22, 2023.
What you need to know:
- DP World will make future investments in modernising the Dar port, including temperature-controlled storage to enhance Tanzania’s agricultural sector.
- The deal between Tanzania and DP World is expected to turn the heat on Mombasa whose status as a key port in the region could come under threat.
Port operator, Dubai Port World (DP World) plans an initial Sh37.54billion(Sh250million) upgrade of the Dar es Salaam port after it bagged a 30-year concession deal to run the facility, turning the heat on Kenya to improve the Mombasa port that is highly rivaled by Tanzania gateway.
In a deal signed on Sunday, DP World said its primary objective would be to improve operations at the Dar es Salaam port to boost transport and logistics services throughout Tanzania and its hinterland.
“This is the first phase of a multi-phase investment plan. DP World will initially invest more than $250 million(Sh37.54billion) to upgrade the port and the investment could increase to $1 billion(Sh150,10billion) during the concession period, alongside hinterland logistics projects” DP World said in a statement.
DP World will make future investments in modernising the Dar port, including temperature-controlled storage to enhance Tanzania’s agricultural sector, as well as greater connections to rail-linked logistics.
“Investments will also potentially include the future development of a special economic zone together with the broader Port’s logistics sector, which will increase Tanzania’s role and influence on the future of global trade” DP World further said following the signing of the contract that was witnessed Tanzania President Samia Suluhu Hassan and its Group Chairman and CEO, Sultan Ahmed bin Sulayem.
The deal between Tanzania and DP World is expected to turn the heat on Mombasa whose status as a key port in the region could come under threat unless it undergoes expansion and modernisation to enable it to compete for containerised cargo.
For example, when shipping companies decide on a transshipment port to use, one of the crucial factors they examine is the depth and width of the approach channel—factors that Kenya would have to urgently address to keep the Mombasa port competitive.
The DP World concession deal comes barely a month after the Kenya Ports Authority(KPA) initiated plans to lease some of its key assets as part of an ambitious plan by the State to revitalise the country’s maritime industry through public-private partnerships (PPPs).
“The Kenya Ports Authority invites sealed bids from eligible tenderers for qualification of bidders for the development and operation of port assets through PPP (Lamu container terminal berth 1-3, Lamu Special Economic Zone, Mombasa port’s berth 11-14 and Mombasa port container terminal 1,” KPA said in a tender call.
The State projects to raise Sh1.4 trillion through the PPP exercise. Further, the government is seeking up to Sh 45.62 billion ($304 million) worth of private investment into the Port of Lamu, with a big chunk of the money being used to develop the port’s agribulk and liquid bulk terminals.
Interestingly, Kenya has been courting Dubai and Saudi Arabia multinational logistic companies for a possible investment at the Lamu Port.
Going by an earlier plan the concessions if agreed and signed, could give DP World operating concessions at Kenya’s major ports, including Mombasa, Lamu, and Kisumu.
At Mombasa Port, DP World is to be allocated four berths which currently are unable to handle container operations.
Under the proposal, DP World would turn them into a modern multipurpose terminal capable of handling one million TEU.
At Lamu Port, DP World was set to operate three berths and develop a 500-hectare parcel into a special economic zone, mainly focused on agricultural activity and servicing the Lamu corridor (the highway that connects the port to Ethiopia and South Sudan).
