Monopoly contract causes falling out in Uganda officialdom
Dar could be the beneficiary and Mombasa the loser in the falling out from the raging controversy over the operations of the proposed Tororo Inland Port.
Two senior government officials have broken ranks with their colleagues over a decision to offer exclusive rights to the operator of the dry port.
They are now telling the business community to consider routing their exports and imports through Dar es Salaam if the government remains adamant about forcing all Uganda-bound imports from Mombasa to terminate at the dry port in Tororo before they are shipped to their destinations.
State Minister for Transport and Works, John Byabagambi, and Uganda Investment Authority Executive Director, Dr Maggie Kigozi, argue the proposed exclusivity for Tororo Inland Port will add handling and storage costs to Ugandan imports and kill competition in Ugandas logistics industry.
Shippers say that, although the Central Corridor from Dar is all of 600 kilometres longer and costs five to 10 per cent more than Mombasa, the additional charges likely to be charged at Tororo could erode Mombasas advantage.
The Uganda Investment Authority cannot, in principle, support monopoly, although we do support the Tororo Inland Port. We feel that goods coming into Kampala through Mombasa will face additional costs, which are unnecessary, said Dr Kigozi.
Mr Byabagambi also categorically opposed giving the port operator monopoly over a business that is a major source of Ugandas revenue.
It increases costs instead of cutting them. Off-loading and loading at that inland port is a non-tariff barrier. Why should anyone, importers or exporters, be forced to use that port? If the operator genuinely intends to reduce costs on the Mombasa route, why the need for exclusivity rights? Mr Byabagambi posed. There is no way government is going to compel those people to use the port. They will identify a cheaper route. That is why I feel the southern route could win out.
The logistics industry has added its voice to the opposition, arguing that even Ugandan exports through Mombasa could become uncompetitive since shippers would begin charging extra for trucks to make the leg to Kampala to pick up export cargo.
Currently, exports are billed as return cargo, which attracts significantly lower charges as truckers also need it to avoid driving back with empty containers.
The inland port saga surfaced in 2006 after the Ministry of Trade signed an agreement with Great Lakes CFS (now Great Lakes Ports Ltd) granting the operator an exclusive licence to offer handling and Customs clearing services for Uganda-bound cargo.
Last March, the Uganda government awarded Great Lakes Ports a 10-year exclusivity period during which it would handle all imports and exports at its holding facility in Tororo.