China Eximbank pledges $587.35 million loan for Dar es Salaam Container Terminal Expansion Project

Project narrative

In 2009, a master plan study of Dar es Salaam Port was undertaken. It found that the port needed two more berths to handle container traffic. Then, on April 15, 2010, the Tanzania Port Authority and CCCC signed a memorandum of understanding (MoU) for a feasibility study. It was carried out in May 2010 and established a scope of work for the Dar es Salaam Container Terminal Expansion Project (or Dar es Salaam Harbor Upgrade Project). This project would involve the construction of two more berths (13 and 14), the dredging of an entrance channel, and the creation of a container stacking yard to better handle container traffic. The Government of Tanzania subsequently submitted a loan application to China Eximbank. Circa 2012, the Export-Import Bank of China agreed — at least in principle — to issue a $587.35 million concessional loan to the Government of Tanzania for the Dar es Salaam Container Terminal Expansion Project. The borrowing terms of the loan included a 2% interest rate and a 20 year maturity. The proceeds of the loan were to be used to finance approximately 85% of the total cost of a $691 million commercial contract. The Government of Tanzania would be responsible for finance the remaining 15%. However, in 2013, the CCCC contract was cancelled on overpricing grounds and a Congolese company known as Impala Africa was selected as the new contractor responsible for project implementation. Ephraim Mgawe, Director General of the TPA, was later sentenced to five years imprisonment in January 2017 for the fraudulent awarding of the Dar es Salaam Harbor Upgrade Project to the China Communications Construction Company, Ltd, in order to secure a China Eximbank loan. CCCC later brought litigation against the Tanzania Port Authority over the contract. It took the position that the Permanent Secretary of the Ministry of Transport decided to call for new tenders before termination of the contract and awarded the tender to contractors other than the CCCC on grounds that the Ministry of Transport had been directed by the Public Procurement Regulatory Authority not to deal with the company as it was among those banned by the World Bank. The World Bank, DFID, and TPA eventually stepped in to finance this project. In June 2017, CHEC signed a $154 million commercial contract to implement the World Bank-financed project. Project implementation commenced in July 2017. The project was officially completed and handed over to the local authorities on November 11, 2019.