China Eximbank agrees in principle to provide $200 million concessional loan for Zanzibar New Port Project

Project narrative

In March 2013, China Eximbank and the Government of Zanzibar signed a memorandum of understanding (MOU) for a potential $200 million concessional loan for the Zanzibar New Port Project (or Maruhubi Multipurpose Port Project or Mpiga Duri Port or Port of Malindi or 桑岛新港 or 桑新集散港). The loan reportedly carried a 25-year maturity and 5-year grace period. However, it is unclear if the two sides ever finalized a financing agreement for the project. As of February 2018, the Government of Zanzibar was still negotiating with China Eximbank for this loan facility. In June 2019, the Daily News reported that Zanzibar's Minister of Infrastructure, Communication, and Transport said negotiations with China Eximbank had stalled and therefore the Government of Tanzania would use its own funds to support this project. On the other hand, according to a 2019 report from the World Bank, construction was ongoing with financing from China Eximbank. A November 2020 article from The Citizen suggests that Zanzibar was completely starting over on this project and a January 2021 article from the same source describes a similar multipurpose port project now being implementing with Oman. In addition to $200 million of debt financing from China Eximbank, China Harbor Engineering Company (CHEC) signed an agreement pledging to provide another $30 million of equity financing on the condition that 13% of port shares will be lent back to CHEC after the completion of the project. CHEC signed the 36-month EPC contract on February 21, 2014. However, the project encountered various delays that had delayed implementation. The purpose of the project is to boost trade by constructing a new harbor in the Maruhubi area of Zanzibar. The port of Zanzibar is managed, operated and developed by the Zanzibar Ports Corporation (ZPC), a parastatal organization regulated by the Zanzibar Maritime Authority (ZMA). With approximately 1.5 million passengers per year, Malindi has one of the busiest passenger terminals in the East African region. However, the port was severely congested and dated so the 2007 Zanzibar Transport Master Plan created the Zanzibar New Port Project to solve those issues. The completed port is expected to include 300 meters of docking space, 65 meters for land craft, modern handling equipment for up to 200,000 containers and 250,000 tons of loose cargo.