Tanzania approves -Oman funded Bagamoyo economic zone project

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Oman’s State General Reserve Fund (SGRF) has announced that the government of Tanzania has approved the proposal to develop the Bagamoyo Special Economic Zone project.

The proposal, which SGRF submitted with China Merchants Ports (CMPort) in March this year, included the dredging of the navigational channel, construction of a port and logistics park, and the development of a portside industrial free zone.

The approval from the Tanzanian government will be followed by negotiations on legal agreements. Once those agreements are reached, environmental studies will commence, as will the tendering of EPC packages and construction works on the project.

The maritime port component of the project will be developed in phases, with Phase 1 including four marine berths. Two of the berths will be allocated to containers, one for multiple uses and another for support services.

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Phase 1 of the port will be developed parallel to the development of the supporting infrastructure, as well as the industrial zone associated with the port. An additional 700ha will be allocated for the future development of the port, which is expected to accommodate giant vessels.

The industrial zone will be connected to the port and will span 1,700ha, 70% of which will be occupied by factories, workshops, stores, and warehouses. The remaining space will be for transportation networks, landscaping, water, power, gas, and telecommunications networks.

Financial constraints have forced Tanzania to miss out on ownership of the $10 billion Bagamoyo Port and Special Economic Zone project.

Under a three-way partnership signed with Oman and China in 2013, Tanzania was to get an undisclosed shareholding in the project by dint of raising $28 million for compensating landowners who were to be displaced.

But the government managed to raise only $1.5 million and compensated a few of the 2,180 registered residents of the area earmarked for the project. There are other owners of large tracts who do not reside in the area and are yet to be registered for the compensation.

With investors anxious of losing the business opportunities envisaged from the project, the government is now negotiating with the investment partners for them to fund the compensation of land owners. In turn, the government will forego an equity stake in the project and only benefit from taxes on the land and occupancy by the investors.