Tanzania’s $10 billion China backed port facing strong headwinds over investment terms

According to Tanzania the conditions laid out by China for this infrastructure project are commercially unviable. Many economists say, China-backed infrastructure projects are a huge debt magnet and economically de-stabilises the economy of the host country.

According to a senior Tanzanian port official, the country’s planned $10 billion port project which is backed by China hit an impasse with the two sides disagreeing on terms of investment.

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

“The conditions that they have given us are commercially unviable. We said no, let’s meet halfway,” said Deusdedit Kakoko, director general of Tanzania Ports Authority (TPA). “It would have been a loss … they shouldn’t treat us like schoolkids and act like our teachers.”

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

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

The port, to be built in Bagamoyo, 47 miles (75 km) north of Dar es Salaam, would dwarf Kenya’s port at Mombasa – which currently is east Africa’s trade gateway some 300 km (180 miles) to the north; the port at Mombasa also includes an industrial zone and rail and road links to a region hoping to exploit new oil and gas finds.

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