Kisarawe Final Report

Pre-feasibility study, review of PPP options and optimum option for establishment of the Kisarawe Freight Station

FINAL Report February 2011

Client: World Bank

ECORYS Nederland BV In association with:

DHV Consultancy and Engineering (The Netherlands) S & F Consultancy (Tanzania)

Prefeasibility study Kisarawe Freight station

2

ECORYS Nederland BV

P.O. Box 4175

3006 AD Rotterdam

Watermanweg 44

3067 GG Rotterdam

The Netherlands

T +31 (0)10 453 88 00

F +31 (0)10 453 07 68

E [email protected]

W www.Ecorys.com

Registration no. 24316726

ECORYS Finance

T +31 (0)10 453 87 73

F +31 (0)10 453 87 52

Prefeasibility study Kisarawe Freight station 3

Executive Summary

Introduction

Against the background of a problem analysis concerning the congestion observed in and around the Port of Dar Es Salaam, the Client has commissioned the Pre-feasibility study, review of PPP options and optimum option for establishment of the Kisarawe Freight Station. The government of Tanzania, through the Tanzania Ports Authority (TPA), is aware that large parts of the Kisarawe and Kibaha Districts are currently under-utilised and has identified this area for potential freight station development with the purpose of relieving the port and city of Dar es Salaam of congestion. This study is intended to explore the feasibility of developing the Kisarawe Freight Station and connecting the facilities to the Port (through rail and road connections) through Public Private Partnership (PPP) arrangements. This final report incorporates the comments of TPA and the World Bank received in the months of April, May and October 2010 and February 2011.

Scope of work

The ToR outlines the scope of work for this assignment to include the following items:

Review of existing ICDs; Review of the existing logistic chain and recommending improvements through

the KFS; Customs clearance and security; Preliminary Design and Cost Estimate; Review of the DSM port Import/Export Freight Characteristics Preliminary tariff study: pricing strategy and tariff risk analysis; PPP arrangements and regulations; Financial viability of the project; Drafting Terms of Reference for the Transaction Adviser; Stakeholder participation; Preliminary Environmental Review.


Identification of possible sites

A number of potential sites have been reviewed and data has been collected on the available areas of land and provision and condition of infrastructure, connectivity to road and rail, and social/environmental aspects. This has resulted in eight potential sites for the freight station (see Figure 0.1):

Kiwalani; Yombo; Tabata; Pugu North; Pugu South; Kisarawe South Kisarawe North; Ubungo.

Figure 0.1 Geographical location of the eight potential sites

Site selection

The following site selection criteria have been included in the site selection analysis:

Availability of land; Accessibility; Market volume freight station; Social and employment issues; Proximity to service providers; Construction cost;


Safety; Environmental conditions at the site level.

A multi criteria analysis was carried out based on certain weighing of criteria set by the Consultant in coordination with the World Bank and TPA. After reviewing the Kisarawe district visually and technically, it became evident that a site at Kisarawe close to the A7 (Morogoro Road, T1 road according to Tanroads classification) was considered as the preferred option based on logistics attractiveness and investment cost levels. In this report further detailed design and financial evaluation has been made for the Kisarawe North area only.

Objective, role and function of the Kisarawe Freight Station

The objective of the Kisarawe Freight Station (KFS) are to create an extended gate of the port of Dar es Salaam in the form of a freight station that will help relieve the city and port of Dar es Salaam of congestion. More in particular, the objectives are as follows:

Increase DSM port capacity Increase DSM port productivity Reduce congestion at ship-shore interface Reduce city congestion Lower environmental impact Improve asset utilisation for port, road and rail transport service providers Improve transport productivity and intermodal capacity Reduce transport cost Improve hinterland access (especially for remote locations and LLCs) Enhance competition between rail and road transport modes Become a pole of attraction for new value added activities and industrial

development Improve land use planning Free up space at DSM port for dry and liquid bulk handling

The KFS will act as an “Extended Gate” of the port of Dar es Salaam for all containers and cars destined or arriving from up-country and neighbouring country locations. This implies that all clients of TPA will be obliged to collect or deliver their containers/cargo for the above origins or destinations at the KFS. For cargo/containers originating from or with destination Dar es Salaam city the KFS may be used by clients, however under normal circumstances it would be more logical to transport directly to and from the port. The logistics of transporting cargo to the KFS and then backtrack into the city would not be efficient. This particular market segment will likely remain in the hands of ICDs or will be covered by direct delivery (by truck) from the DSM port. The functionality of the KFS will initially be limited to handling and storage of containers and (passenger) cars. The KFS as such may have an economic effect of reducing the functionality of ICDs in the city of Dar es Salaam for long haulage container flows .The ICDs will however maintain their role as service providers to the freight forwarding industry and support the reduction of long dwell times of containers in the port of DSM.


Location of the Kisarawe Freight Station (KFS)

The Kisarawe North area still covers a wide area with possible locations for the freight station. Based on the fact that cargo/containers between the hinterland and the freight station will be mostly transported by truck, the ideal location would be close to the T1, but at enough distance to reach relatively flat terrain and to avoid any obstruction by land occupation (buildings, electricity poles, etc). The (relatively) flattest area is located between the village of Tondoroni and the T1, along the unpaved rural road that connects the T1 to Kisarawe village. The freight station could be on either site of the rural road, some 3.5 km from the T1 (see Figure 0.2 on the next page). The area is still somewhat hilly and would require significant earthworks to achieve a level site to accommodate trains, wagons and the storage of containers and cargo. Although a visual inspection has been performed, no thorough geotechnical assessment has been made to determine the most ideal plot in the area. Google Earth imagery was utilized to indicate possible locations for the freight station. The KFS will serve as a terminus station for both TRL and TAZARA railways and is thus connected to both railway systems. The TAZARA connection will also be used by the dedicated shuttle line connecting the port and KFS. The planned Industrial Zone of Kisarawe (6 km west of Kisarawe village) would need to be connected to the KFS. The exact size of the location of this Zone is 279 ha (697 acre) while its shape is narrow and lays on a hilly terrain making it unsuitable for freight station operations.Preferably the Industrial Zone would ideally be constructed adjacent to the KFS which will save construction cost and transport cost for industries occupying the Industrial Zone. In Figure 0.3 on the next page, the KFS and the industrial zone are indicated on a map of the area.

Figure 0.2 Indication of the potential sites for the KFS at either side of the rural road between T1 and Kisarawe village


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Figure 0.3 Indication of the potential sites for the KFS and the industrial zone


Cargo flow forecast

Based on the Extended Gate function of the KFS the container/cargo flow forecasts have been dedicated to those container and car volumes that are expected to be delivered to or originate from locations upcountry in Tanzania or in neighbouring countries (the LLCs). Based on the Royal Haskoning Ports Master Plan (2008) initial forecasts were made. The consultant has updated these basic forecasts with new estimates from TPA and from its own sources. Forecast of potential container volume through KFS The forecast results for containers are presented in Table 0.1.

Table 0.1 Forecast of volume through the KFS 2014-2020, 2025 and 2035 (1000 TEU)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume

accommodated in KFS 180 300 436 476 520 569 622 902 1832

Of which

Imports Tanzania upcountry 49 83 123 136 150 167 185 284 586

Exports Tanzania upcountry 38 64 93 103 113 125 138 208 415

LLC imports 21 36 53 58 64 71 79 122 251

LLC exports 15 26 38 42 46 50 56 83 164

Empties (upcountry & LLC) 57 92 130 138 146 155 165 205 415

Forecast of potential vehicle volume through KFS The forecast results for vehicles are presented in Table 0.2.

Table 0.2 Potential vehicle volume through KFS in 2014-2020, 2025 and 2035 (1000 units)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume

accommodated in KFS 55 61 67 74 82 89 97 149 354

Of which

Imports Tanzania upcountry 30 34 37 41 45 49 54 83 196

LLC imports 24 27 30 33 36 40 43 67 158

Passenger, pickup, van 52 58 64 70 78 85 92 142 336

Trucks, buses 3 3 3 4 4 4 5 7 18

Logistics concept

The logistics concept of the planned KFS is a mixed concept of transport, handling and storage of containers and vehicles as well as the processing of relevant documentation.


The primary physical conditions of the KFS are:

Direct and unobstructed transport link to the DSM port terminals that handle containers via a dedicated rail shuttle line. This railshuttle will operate on the existing track on the TAZARA line from the port for the first few kilometres and then use an extension of the line to the KFS.

Railway access to both railway networks in Tanzania. The KFS will function as a terminus station for both the TAZARA and TRL railways and will tbhus be connected to both rail networks. The connection to the TAZARA main line will also be used by the shuttle trains (see above)

Free and undisturbed connection to the main roads to both Dar es Salaam and the hinterland.

Ample space for handling and storage of containers and vehicles (rail service centre, truck-trailer gates, yard routing, container stacking, vehicle parking)

Proper infrastructure conditions (stable soil composition, drainage, etc) to allow heavy vehicles and equipment to be operated.

Available utilities (water, electricity, fuels). The logistics package of the KFS should consist of a number of separate logistics services:

Rail shuttle service Port DSM – KFS. Custom bonded storage and customs inspection facilities. Handling and storage of all types of containers (incl. reefers). Handling/storage of LCL cargo in (bonded) warehouses. Handling and storage of cars and small vehicles.

Customs clearing

The new KFS would first of all need a license from TRA to operate as a bonded Port Area for the long term in view of the investments to be made and the length of the KFS concession. The license should be automatically renewed upon payment of the license fee.

Financial feasibility

The basic assumptions for the financial feasibility of the base case as well as the results are presented in Error! Reference source not found. on the next page.


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Table 0.3 Assumptions timing of project

Parameter Assumption (base case)

Number of concession years 25

Construction starts 1 January 2012

Construction ends 31 December 2013

Operation starts 1 January 2014

Concession ends 31 December 2036 (related to number of concession years)

Repayment starts A grace period is assumed

Days per year (period) assumed 365/366

Source: Ecorys

The investment costs consist of rail infrastructure (shuttle railway connections to the main railway lines including bridges/tunnels), road constructions (excluding industrial zone road) and KFS infrastructure (earthworks, pavements, rail sidings, buildings, gates, fences, etc). These capital costs of the basic infrastructure come at USD 183.2 million in total. The investment costs in handling equipment come at USD 43.2 million over the entire concession period. The total operational costs for the concession period (2014 2035) sum up to USD 1117.7 million. Most of these costs (USD 1028.1 million) are the operational costs of the rail shuttles; the remainder is labour, maintenance and operational costs of the cargo handling equipment. The project feasibility is calculated as follows:

1. The cost based fees (user costs) for rail shuttle transport, cargo handling and wharfage are calculated.

2. A margin is added to these fees to reach the desired RoE and IRR of the project. 3. The resulting total integrated fee is compared with the integrated fee structure of

the ICDs. The project feasibility study results in the following fees:

Wharfage fee (covering terminal site infrastructure and road and rail access): USD 16.25 per TEU or car.

Shuttle train transport fee (covering transport to and from the port): USD 72.67 per TEU and USD 95.63 TEU per car.

Handling fee (covering handling and storage of containers and cars at the terminal site): USD 7.93 per TEU or car.

The 3 fee items add up to an integrated fee of USD 96.85 per TEU and USD 119.81 per car. This is considered competitive with the average integrated fee per TEU of the ICDs reportedly quoted as USD 125. This competitive level will facilitate TPA to set the rule that all containers and/or cars from/to up-country and LLC countries are to be picked up or delivered at the KFS only. Two project alternatives have been considered: 1. A shorter rail connection to the existing railways, which however results in much

higher capital expenditures due to the higher number of bridges and tunnels required. The additional capital expenditures would be around USD 43.5 million


higher, resulting in the need to charge wharfage fee (USD 31.22 per TEU or car compared to USD 16.25 in the base case situation).

2. A terminal handling system based on RTGs instead of reach stackers. An RTG based system would require USD 51.9 million of additional investment in equipment compared to the reach stacker based system. These additional costs are not offset by the lower capex in terminal infrastructure (USD 19.5 million less than in the reach stacker option) and the lower operational costs (USD 4.1 million less during the entire concession period). On balance, the total costs during the concession period would work out USD 28.3 million higher for the RTG option, resulting in the need to charge almost double the handling fee (USD 7.93 per TEU or car in the reach stacker option versus USD 15.86 per TEU or car in the RTG option.

Financial feasibility sensitivity

A sensitivity analysis shows that the required integrated fee to cover 20% higher investment costs is still below that of the ICDs. This is also the case for a scenario with 20% less cargo volume, but no longer in a scenario with 40% less cargo volume.

PPP Options

The Government of Tanzania has the following PPP model options: 1. Integrated Concession Model 2. Multiple Concessions Model 3. Private Operator Model 4. Private Integrator Model

This involves all green field concessions. Brownfield concessions that imply public funding of the required assets is not considered in view of the limited funding resources of the government.


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Table 0.4 PPP model options

Type Model 1

Integrated

Concession

Model 2

Separate

Concessions

Model 3

Private Operator

Model 4

Private Integrator

Risk Allocation

Interface Risk Private Public Public Private

Construction Risk Private Private Public Public

Demand Risk Private Private Private Private

Context

Policy High

Involves high

degree of PPP in

line with

government policy

High

Involves high

degree of PPP in

line with

government policy

Low

Involves low degree

of PPP in line with

government policy

Medium

Involves medium

degree of PPP in

line with

government policy

Legal constraints No No No No

In line with

international

Practices

Yes Yes Yes To some extent

(private interface

management is not

common)

Criteria (score from 1 to 4 with 1 as highest)

Value for Money 1 2 4 3

Bankability 4 3 1 2

Affordability 1 2 4 3

Overall Score

6 7 9 8

Assuming the model of an integrated concession, it has to be decided upon who will act as the contracting authority or whether there should be several contracting authorities. Given that one contracting authority is to be considered for more efficient and effective leads to the question of who should be the contracting authority (and infrastructure owner/manager). For the purpose of the KFS it is recommended that TPA acts as the contracting entity because:

1. It is the main beneficiary of a KFS 2. It is most competent on PPP 3. It has the strongest balance sheet allowing if t necessary to provide guarantees

and or other financial support In addition to the concession contract it is recommended to include Service Level Agreements (SLA) with respective executing agencies that are responsible for making their infrastructure available. These SLAs should include agreements on:

Right of way Schedules Tariffs Quality of Service


SLAs should be agreed upon by the concessionaire most notably with TAZARA and RAHCO for the access rail infrastructure (including schedules and track access charges) Consequently the project structure can be summarised as follows:

Figure 0.4 Project structure

Source: Consultant

Pre-Transaction Process Specifically for the KFS the following specific actions are recommended next to the more general steps as in indicated in the previous sections:

Agree on a Public Sector Agreement Agree on a Financial Support Plan with the Development Partners Design and implement Land Acquisition Strategy

Transaction Advisor The transaction advisor is typically a consortium of professional consultants, from one or more firms, who work collectively as a team. The transaction advisor contracts with the institution through the lead firm. All other members of the consortium participate either through sub contracts with the lead firm or via a joint venture arrangement. To manage advisers successfully it is very important that the terms of reference are clearly defined. In addition, time scales and basic fees should also be specified clearly up front. The process for retaining a transaction advisor includes the following steps:

1. Establish the bid evaluation panel and the bid secretariat; 2. Define the transaction advisor terms of reference; 3. Prepare the rest of the bid package; 4. Publish the advertisement, brief bidders, and respond to queries; 5. Receive and evaluate bids; 6. Finalise and sign contract.


Conclusions

Of the two locations around Kisarawe, Kisarawe North was considered the best location for the freight station due to its vicinity to the T1 and the terrain structure which, though still far from flat, is much better geo-technically structured than any other location in Kisarawe region (South or North). The planned industrial development area at Kisarawe South is relatively unattractive from a logistical point of view as well as terrain structure (narrowly shaped and hilly) point of view. The Kisarawe North site offers ample space for development for both the freight station and adjacent industrial activity. The weak points of the Kisarawe locations are their relatively remote distance to the port and subsequently the rail infrastructure requirements that include a rail crossing to link both TRL and TAZARA railway lines to the freight station. On the positive side, a huge volume of road haulage of containers and cargo in and through the city will be eliminated, reducing traffic congestion on main roads, road accidents and air and noise pollution. The KFS will be connected by road to the T1 (Morogoro Road) and by rail to both the TRL and TAZARA lines (serving as a terminus station). A dedicated rail shuttle concept is to be developed for the transport of containers and cars from the port to the KFS and vice versa (using the link to the TAZARA rail line. The financial feasibility of KFS can be reached at an integrated fee structure that is below the fees charged by the existing ICDs. This assumes development by a private operator with private funds. It would be logical if the rail infrastructure will be developed and paid for by the railway authorities. Since both railway line systems need to be connected to the KFS, a joint vehicle may be established to design, plan and invest in the railway infrastructure for the shuttle service. Part of the wharfage fee may be allocated to this investment (and the maintenance costs). The rail shuttle service is recommended to be conceded to a third party on the basis of a Service Level Agreement. This third party consists preferably of private party that may lease rolling stock and staff from either railway operator (TRL or TAZARA).

Recommendations

Based on the above conclusions the consultants recommend to: 1. Start and proceed with investigations (cadastral survey) on land ownership at

Kisarawe North to define the exact plot. At the same time District and Ward boundaries should be analysed as it may occur that (parts of) the plot are under Kibaha District.

2. Investigate further the geo-technical features of the site and the potential bottlenecks for development of the area. This should be done for the areas between the TAZARA and TRL line and for the area just North of the TRL line (near Tondoroni).

3. Execute an economic feasibility study to assess the wider economic effects of the KFS in view of securing loans from financial institutions.


4. Review the rail shuttle track routing options in more detail in view of local terrain conditions and track construction cost

5. Review the rail shuttle operations in more detail by assessing the port handling platforms and rail operations (including the TICTS and berth 13/14 developments).

6. Agree on a Public Sector Agreement 7. Agree on a Financial Support Plan with the Development Partners 8. Design and implement Land Acquisition Strategy 9. Assess the affordability to TPA of proposed PPP options 10. Prepare the necessary legal and institutional concession framework for PPP after a

full economic feasibility study has been undertaken.


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Table of Contents

Executive Summary 3

List of Abbreviations 19

List of tables and figures 21

1 Introduction 25 1.1 Selection of freight station location 26 1.2 Site selection at Kisarawe 27 1.3 Freight station functions 28 1.4 Origin-destination patterns of cargo flows 29

2 Kisarawe Freight Station (KFS) 31 2.1 Initial study for viable freight station locations 31 2.2 Long term options 32 2.3 Kisarawe Study Area 34 2.4 Social impact and resettlement compensation 37 2.5 Environmental aspects 39 2.6 Customs clearing 43

3 Forecast of container and import cars volume 47 3.1 Methodology 47 3.2 Collection of existing data 49 3.3 The development of container volume 51 3.4 The relation between container volume and GDP 54 3.5 Forecast of container volume through the Port of Dar es Salaam 55 3.6 Forecast of container volume through the KFS 58 3.7 Forecast of vehicle volume through the KFS 61

4 Technical design KFS 63 4.1 KFS lay out and infrastructure 63 4.2 KFS functionality and operations 65 4.3 KFS Terminal Handling System 68

5 Connectivity of the KFS 71 5.1 Road Infrastructure 71 5.2 Rail infrastructure 72 5.3 Rail shuttle service 74 5.4 Rail shuttle capital and operating costs 77


5.5 DSM port terminal rail access and interface 80

6 Financial Feasibility of the KFS 83 6.1 Introduction 83 6.2 Financial model 83 6.3 Assumptions 85 6.4 Capital expenditures 87 6.5 Operational expenditures 89 6.6 Tariffs 91 6.7 Revenues 93 6.8 Cash flows 94 6.9 Finance 94 6.10 VAT and taxes 95 6.11 Results of the financial analysis 95 6.12 Sensitivity analysis 97

7 Conclusions and Recommendations 99 7.1 Conclusions 99 7.2 Recommendations 100


List of Abbreviations

ASECUDA Customs clearing system CAPEX Capital Expenditure CFADS Cash Flow Available for Debt Service CTMS Container Terminal Management System DFID UK Department For International Development DRC Democratic Republic of Congo DSCR Debt Service Coverage Ratio DSM Dar es Salaam EAC East African Community EDI Electronic Data Interchange FEU Forty feet Equivalent Unit ICD Inland Container Depot IRR Internal Rate of Return KFS Kisarawe Freight Station km kilometre LCL Less than Container Load LLC Landlocked Country m metre mln million MFEA Ministry of Finance and Economic Affairs MoID Ministry of Infrastructure Development mt metric ton NEMC National Environment Management Council NPV Net Present Value OPEX Operational Expenditure PAPC Pan-African Ports Cooperation PPP Public Private Partnership RAHCO Reli Assets Holdings Company RMG Rail Mounted Gantry crane RoE Return on Equity RTG Rubber Tyred Gantry crane SUMATRA Surface and Maritime Transport Authority TANROADS Tanzania National Roads Agency TATOA Tanzania Truck Owners Association TAZARA Tanzania - Zambia Railway Authority TEU Twenty feet Equivalent Unit TGS Terminal Ground Slots TICTS Tanzania International Container Terminal Services TISCAN Tanzanian Inspection Scanning Agency ToR Terms of Reference


TPA Tanzania Ports Authority TRA Tanzania Revenue Authority TRL Tanzania Railways Limited TSH Tanzanian Shilling USAID United States Agency for International Development USD United States Dollars WACC Weighted Average Cost of Capital WB World Bank WHO World Health Organisation


List of tables and figures

List of tables Table 0.1 Forecast of volume through the KFS 2014-2020, 2025 and 2035 (1000

TEU) 8 Table 0.2 Potential vehicle volume through KFS in 2014-2020, 2025 and 2035

(1000 units) 8 Table 0.3 Assumptions timing of project 10 Table 0.4 PPP model options 12 Table 2.1 Emission limit for heavy duty diesel engines (trucks) 40 Table 2.2 Emission standards for large cargo vehicles (locomotives included in

this category) 40 Table 3.1 Container volume through the port of Dar es Salaam 1992-2009 (1000

TEU) 50 Table 3.2 Average annual growth rates ’92-’08, ’92-’00 and ’01-‘08 51 Table 3.3 Annual GDP growth of Tanzania and the landlocked countries 1992-

2009 53 Table 3.4 Average annual GDP growth forecast Tanzania and the LLCs 2010-

20365 54 Table 3.5 Forecast of Tanzanian containers through the port of DSM 2014-2020,

2025 and 2035 (1000 TEU) 55 Table 3.6 Market shares of Dar es Salaam and Mombasa on transit trades to

LLCs 2001-2009 (1000 TEU) 56 Table 3.7 Forecast of north and westbound transit containers through the port of

DSM 2014-2020, 2025 and 2035 (1000 TEU) 57 Table 3.8 Forecast of southbound transit containers through the port of DSM

2014-2020, 2025 and 2035 (1000 TEU) 58 Table 3.9 Forecast of containers through the port of DSM 2014-2020, 2025 and

2035 (1000 TEU) 58 Table 3.10 Forecast of volume through the KFS 2014-2020, 2025 and 2035 (1000

TEU) 59 Table 3.11 Division of forecast in 20' and 40' boxes for 2014-2020, 2025 and

2035 (1000 TEU and boxes) 60 Table 3.12 Annual volume of reefers 2014-2020, 2025 and 2035 (1000 TEU) 60 Table 3.13 Annual volume of import vehicles 1994-2009 (1000 units) 61 Table 3.14 Annual volume of import vehicles through Dar es Salaam 2014-2020,

2025 and 2035 (1000 units) 61 Table 3.15 Potential vehicle volume through KFS in 2014-2020, 2025 and 2035

(1000 units) 62 Table 4.1 Terminal ground slots to be provided 65


Table 4.2 Terminal equipment requirements and investment costs for the reach stacker option 69

Table 4.3 Terminal equipment requirements and investment costs for the reach stacker option 70

Table 5.1 Import/ export container flows through the KFS 75 Table 5.2 Container flows through KFS (1000 TEU) and number of shuttle

trains needed 75 Table 5.3 Vehicle flows through KFS (1000 units) and number of shuttle trains

needed 76 Table 5.4 Operating costs of one shuttle turnaround trip 78 Table 5.5 Operating costs of one shuttle turnaround trip 79 Table 6.1 Assumptions timing 86 Table 6.2 Summary of the four scenarios 88 Table 6.3 Investments in handling equipment 88 Table 6.4 CAPEX for different scenarios 89 Table 6.5 Maintenance on KFS Infrastructure (all scenarios) 89 Table 6.6 Equipment operating costs 90 Table 6.7 Assumptions cash flows 94 Table 6.8 Assumptions finance 94 Table 6.9 Main results: fee structures for two scenarios 95 Table 6.10 Financial results applying the calculated fee structure 96 Table 6.11 Fees that need to be charged when investment costs are 20% higher 97 Table 6.12 Fees that need to be charged when forecast volumes are 20% and 40%

lower 98 Table J.7.1 Peer group country risk premiums 144 Table J.7.2 Peer group sector credit spreads 144 Table J.7.3 Average credit spread 145 Table J.7.4 Nominal cost of debt 146 Table J.7.5 Equity and Asset Beta Sector Emerging Markets 149 Table J.7.6 Size premia 150 Table J.7.7 Nominal cost of equity 151 Table J.7.8 Weighted Average Cost of Capital 151


List of figures Figure 0.1 Geographical location of the eight potential sites 4 Figure 0.2 Indication of the potential sites for the KFS at either side of the rural

road between T1 and Kisarawe village 6 Figure 0.3 Indication of the potential sites for the KFS and the industrial zone 7 Figure 0.4 Project structure 13 Figure 1.1 Geographical location of the proposed Kisarawe Freight Station 28 Figure 2.1 Geographical overview of potential locations 32 Figure 2.2 Geographical view of the planned Industrial Zone, the proposed KFS

and rail shuttle connection 34 Figure 2.3 Area picture West of Tondoroni 1 36 Figure 2.4 Area picture West of Tondoroni 2 36 Figure 2.5 Schematic layout of KFS location and rail shuttle service lines 37 Figure 3.1 Schematic presentation of the subdivisions of container volume in the

forecast 48 Figure 3.2 Container volume through the port of Dar es Salaam 1992-2009 (1000

TEU) 49 Figure 3.3 GDP development of Tanzania and the landlocked countries 1992-

2009 (1992=100) 52 Figure 3.4 Forecast of container volume KFS 2014-2036 (1000 TEU) 60 Figure 4.1 Schematic layout of KFS and connecting road and railway lines 64 Figure 4.2 Organisation chart KFS 66 Figure 5.1 Option for most direct rail links from KFS to TRL and TAZARA line 73 Figure 5.2 TICTS container terminal with extended RMGs 81 Figure 6.1 Structure of the model 84 Figure 6.2 Integrated Concession Model 86 Figure 6.3 CAPEX of the KFS base case 89 Figure 6.4 Staffing costs base case (reach stackers) 90 Figure 6.5 Total OPEX base case scenario (A1) 91 Figure 6.6 Total revenues for the calculated tariff structure - base case (A) 97 Figure J.7.1 Political risk map of Sub-Saharan Africa 143 Figure J.7.2 Understanding credit ratings 145


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1 Introduction

The underlying report is the Draft Final Report of the Pre-feasibility study, review of PPP options and optimum option for establishment of the Kisarawe Freight Station. The government of Tanzania, through the Tanzania Ports Authority (TPA), has identified an area of land at Kisarawe which may be acquired and owned by TPA for the development of an “Extended Port Gate” to be called Kisarawe Freight Station. This study is intended to explore the feasibility of developing such a freight station and connecting facilities to the Port (through railway lines and roads) through Public Private Partnership (PPP) arrangements. This report has incorporated the comments of TPA and the World Bank released to the Consultant during the months of March, April and October 2010. A number of issues were raised and discussed and revision has been made to the study.

Objectives of the Kisarawe Freight Station

The objective of the Kisarawe Freight Station (KFS) are to create an extended gate of the port of Dar es Salaam in the form of a freight station that will help relieve the city and port of Dar es Salaam of congestion. More in particular, the objectives are as follows:

Increase DSM port capacity Increase DSM port productivity Reduce congestion at ship-shore interface Reduce city congestion Lower environmental impact Improve asset utilisation for port, road and rail transport service providers Improve transport productivity and intermodal capacity Reduce transport cost Improve Hinterland access (remote location and LLCs) Enhance competition between rail and road transport modes Become a pole of attraction for new value added industries and industrial

development Improve land use planning Free up space at DSM port for dry and liquid bulk handling


Scope of work The ToR outlines the scope of work for this assignment to include the following items:

Review of existing ICDs; Review of the existing logistic chain and recommending improvements through a

freight station; Customs clearance and security; Preliminary Design and Cost Estimate ; Review of the DSM port Import/Export Freight Characteristics; Preliminary tariff study: pricing strategy and tariff risk analysis; PPP arrangements and regulations; Financial viability of the project; Drafting Terms of Reference for the Transaction Advisor; Stakeholder participation.

National developments The Port of Dar es Salaam has substantially recovered in 2010 from the lower volumes in 2008 and 2009 which resulted from the world recession. . Port development TPA has acquired land for expansion of port capacity in Dar es Salaam, Bagamoyo, Tanga and Mtwara to address the challenges of increasing cargo traffic volume and container congestion. A new project to be undertaken by TPA includes the construction of a new port at Bagamoyo; this port will however not need to be operational prior to 2018 (depending on growth). Furthermore plans are set for the establishment of more ship docks at Mwambani as well as in Tanga region. All plans are aimed at meeting the increased demand for port capacity, improvement of handling service rates and accommodating future growth. Industrial development During the presentation of the first version of the Draft Final Report by the Consultant on February 19, 2010 in Bagamoyo, the stakeholders requested a renewed focus on the area of Kisarawe. The driving force behind this focus is the importance of space in the Kisarawe area to create sufficient capacity to develop industries around or in the vicinity of the freight station. Another argument was the possibility of extension of the freight station to accommodate the demand of container (and car) flows adequately in case volumes would grow substantially.

1.1 Selection of freight station location

The site selection study for a new freight station has initially focused on the medium term development of the supply chain of containerized goods to and from Tanzania. In the Inception phase it became clear that also long term aspects should be reviewed. The consultant has therefore taken a long-term perspective in an alternative scenario. It is quite possible that both medium and long-term transport objectives for Tanzania can only be met by a phased and coordinated development of more than one freight station.


With a growing economy more than one additional freight station may be economically feasible. The consultants have focused on the immediate needs of the port and the city of Dar es Salaam from a logistics point of view to which the KFS is a solution that can serve the trading industry at relatively short term. The problems of port and road congestion within the city of Dar es Salaam as well as storage and handling capacity are existing today, and solutions need to be implemented without further delay.

1.2 Site selection at Kisarawe

Various stretches in the Kisarawe region have been observed and analysed by consultants to assess their suitability for a multi-cargo freight station complying with multi-modal connectivity requirements. The consultants have visited and scanned the entire area of Kisarawe, from the village of Kisarawe (south of the TRL railway line) up to Kisarawe North (ending at South of T1, Morogoro Road, west of Kibaha). Kisarawe South A first option for the KFS was presented by the Executive Administration of the Kisarawe District that have nominated an area for industrial development in Kisarawe South , e.g. 6 km north-west of the village of Kisarawe, south of the TRL railway line. The area covers some 279 hectare (697 acres). This zone is however considered not ideal in view of its narrow shape and its undulating terrain. The zone is furthermore currently not well connected to the T1 (Morogoro Road). The area structure in Kisarawe South is generally hilly with lots of vegetation and construction costs to prepare a sufficiently large flat plot for the freight station would be high. Kisarawe North Moving north to the T1, the structure of the land becomes flatter some kilometres north of the TRL line, starting at the village of Tondoroni/Mkurunge. This rather large area is unpopulated and the consultant has assumed that there are no physical limitations to the required size of the plot. The plot to be selected should be developed based on high forecast estimates of freight movement in order to allow an optimal terminal design that will keep operations most efficient and operating costs as low as possible. The consultants have not reviewed the option of a possible plot in between the railway lines of TRL and TAZARA since this area was neither preferred by the consultants nor by TPA/WB. It is recommended to assess the viability of this area in view of infrastructure development cost against the benefits of a shorter access to both railway lines. It was reported by the Kisarawe District Management that not all land at the East side of the Kisarawe village-A7 road is available, as it is either occupied by the Army or registered as private property. The consultants have not been informed which particular plots could be made available and have not analysed the legal issues of the KFS in further detail. A cadastrial survey is required to identify plot ownership and districtoral authority.


28

Figure 1.1 Geographical location of the proposed Kisarawe Freight Station

1.3 Freight station functions

The KFS will act as an “Extended Gate” of the port of Dar es Salaam for all containers and cars destined or arriving from up-country and neighbouring country locations. This implies that all clients of TPA will be obliged to collect or deliver their containers/cargo for the above origins or destinations at the KFS. For cargo/containers originating from or with destination Dar es Salaam city the KFS may be used by clients, however under normal circumstances it would be more logical to transport directly to and from the port. The logistics of transporting cargo to the KFS and then backtrack into the city would not


be efficient. This particular market segment will likely remain in the hands of ICDs or will be covered by direct delivery (by truck) from the DSM port. The functionality of the KFS will initially be limited to handling and storage of containers and (passenger) cars. The KFS as such may have an economic effect of reducing the functionality of ICDs in the city of Dar es Salaam for long haulage container flows .The ICDs will however maintain their role as service providers to the freight forwarding industry and support the reduction of long dwell times of containers in the port of DSM. Furthermore the handling and storage of LCL cargo (less than container loads) could be allowed at the KFS, which requires the construction of collection and distribution sheds. The Consultant is of the opinion that container consolidation facilities should only be allowed at the KFS in case enough space is available and in case these activities will not disturb the core activities of the KFS, being the handling of trains, rail wagons, containers, cars and truck/trailers. In the case the KFS at any time operates at (near) full capacity,the KFS territory may be expanded to accommodate value added logistic services. It is estimated that the container consolidation in the first phase of the development stage can easily be accommodated at the KFS based on a planned size of 100 ha. These value added logistics may however very well take place at the new Industrial Zone which will need to have Customs clearing facilities (bonded warehousing and open storage areas). While this option is perhaps preferred by traders and producers of commodities, it will raise transport cost slightly as a result of moving goods between Industrial Zone and KFS. This effect is considered insignificant in the total supply chain cost assessment. The handling and storage of other cargo types at the freight station, such as dry or liquid bulk and general cargo, is not considered wise primarily due to the low value of (bulk) commodities and the relatively low volumes. It is obvious that re-handling of bulk and general cargo in an inland freight station at short distance from the DSM port should be avoided.

1.4 Origin-destination patterns of cargo flows

During the early stages of the study the Consultant has analyzed the O-D patterns by using port statistics and by conducting interviews with shipping agents and freight forwarders. While the international O-D patterns are clearly recorded through port statistics, the national (e.g. domestic) O-D pattern is not. The Consultant has tried to obtain these statistics from the TRA (Tanzania Revenue Authority) office, who advised that the domestic O-D patterns are not recorded. After discussion with TPA in May 2010, a further study to the O-D data on ship’s manifests and/or bills of lading was not judged sensible since the data to be collected would not be reliable, even if a large sample of these documents would have been screened. The reason is that listed addresses of receivers or senders of cargo on any of the available documents may prove not to be the physical (cargo pick/up or delivery) address, but the office address of the receivers or senders. The consultants have therefore kept their original estimates as collected in the Draft Final Report of the study. Instead, a


sensitivity on the KFS volume has been done, reflecting for instance a shift in the balance of cargo flows with O-D in the Dar es Salaam area and O-D up-country to show the effect of shifts between these two categories on the financial feasibility of the KFS. It is recommended to design a data base system that discloses the origin-destination pattern of cargo through the port of DSM. There are various sources of data that can be collected regularly from parties involved in local or international overland transport. The best source of information may come from Freight Forwarders. The Freight Forwarders Association however does not cover all Freight forwarding companies. Yearly questionnaires may be issued under forwarders to obtain a reliable insight in cargo moving from/to Dar es Salaam and up country destinations/origins.


2 Kisarawe Freight Station (KFS)

2.1 Initial study for viable freight station locations

Identification of possible sites The consultant has undertaken several field trips during the course of the project to identify potential locations for the freight station. The project team has discussed the possible locations with several stakeholders and by opinion sampling of the team, after carefully studying the maps of the Dar es Salaam region, the railway tracks, marshalling yards, land occupancy and access roads. This has been done based on desk research of the existing infrastructure, know-how of the local consultant and an inspection of the local situation. Moreover, a number of site visits have been made and data has been collected on the available areas of land and provision and condition of infrastructure, connectivity to road and rail, and social/environmental aspects. This has resulted in eight potential sites for the freight station:

Kiwalani; Yombo; Tabata; Pugu North; Pugu South; Kisarawe South; Kisarawe North; Ubungo.

Figure 2.1 (next page) presents the location of all 8 identified areas for the establishment of the freight station and shows the proposed new ring road for DSM. The alignment of the new ring road is tentative.


Figure 2.1 Geographical overview of potential locations

2.2 Long term options

Reduction of port and city congestion The terms of reference for the study, and the comments to the Inception Report by TPA, state that ‘the primary objective of the creation of the freight station is not only reducing port congestion not but also reducing congestion on city roads. Furthermore the ToR for the Dar Port Rail Action Plan states that ‘the main objective of the Dar Port Rail Action Plan will be to submit a proposal for an appropriate solution to overcome the bottlenecks in the port-railways interface in Dar Port’. During interviews with TPA it was stated that poor performance of the railway sector is the biggest constraint to increasing capacity at the container terminal. All domestic containers and nearly all transit containers are currently moved in and out of the port by road, causing congestion in both the port area and elsewhere the city. The inability to move import containers away from the quayside quickly and efficiently affects the performance of the gantry cranes, which in turn affects the capacity of the port by increasing ship turnaround times. The problem has been partly alleviated by the establishment of a series of privately operated ICDs in the Dar es Salaam area, generally 10 to 15 km from the port. Import containers are moved there by road haulage. This has assisted in providing more space in the port, but has not solved the city road congestion problem, and has not reduced the number of trucks entering the port to load and unload. The operation is inefficient and adds to the logistics cost of Dar Es Salaam Port. Truck operators report that they can most often only complete one trip per day between the port and the ICDs or other local destinations, and that the delivery costs are between US$ 150 and US$ 185 per delivery.


The upgrading of Nelson Mandela Road and the planned new Dar es Salaam ring road are intended to divert the port freight traffic around the city centre, but port access by road and congestion of trucks within the port will remain a problem. The concept of a remote freight station, with a dedicated rail shuttle link to the port, would satisfy the freight forwarding sector if it can be demonstrated that the rail shuttle service and KFS provides equal or better cost/benefit ration than routing containers and cargo through existing ICDs. In that case forwarders would not object to use the KFS and would eventually not disagree to an obligation to route upcountry and LLC cargo exclusively through the KFS. . Industrial developments The development of a freight station should also provide a long term solution, in which enough land would be made available around the freight station for the development of industries that would logistically benefit from the freight station. The freight station would thus promote the development of a new industrial zone. The two objectives, focusing on improved transport logistics and industrial development respectively, require a long term development location for a freight station further away from the city centre, ideally close to the main transit route (T1), such as at the Kisarawe North (or Kibaha district) area close to the Morogoro Road. This site would also be favorably located to cater for the proposed new port development at Bagamoyo, as in the longer run the freight station could serve both ports. The exact site location would also be influenced by the railway. Kisarawe Industrial Zone During the study the consultants have visited the Executive Management of the District Council of Kisarawe. The council is responsible for the Region of DSM which includes 4 districts with Wards. The Council has drafted a plan for an Industrial Development Zone of 279 ha (697 acres) located 6 km from Kisarawe. The design is a narrow but long piece of land which would be unfit for establishing a freight station. The location of the planned industrial zone is west of Kisarawe - Kiruvya road and south of the TRL railway line. To the west is the Ruvu Forest Reserve (see combined area map, Figure 2.2).


Figure 2.2 Geographical view of the planned Industrial Zone, the proposed KFS and rail shuttle connection

2.3 Kisarawe Study Area

The boundaries of the Kisarawe area under investigation are defined by the TAZARA railway line in the South, the T1 (Morogoro Road) in the North, the Western boundary of the Industrial Zone of the Kisarawe District and to the East by a fictitious line drawn from the village of Kisarawe straight northbound. The eastern border includes an area of 2 km east of the rural road from Kisarawe village to junction with the A7 (see Figure 2.2). The total area covers roughly 16 x 5 = 80 km2.


The entire area has been visually inspected by the Consultant but no specific site analysis has been made in view of the large size of the area. For railway line design purposes, Google Earth imagery was utilised. The railway line routing will need to be re-assessed following route surveys carried out as part of the Feasibilty or Design stage of the project. Option 1: Kisarawe South A potential KFS plot could have been defined at the Industrial Zone at Kisarawe as, defined by the Executive Management of the District of Kisarawe. The industrial zone is spacious enough (250 ha) but unsuitable for freight station operations for a variety of reasons. Firstly the shape of the zone is very narrow and would not easily facilitate typical freight station operations with two rail way lines and a major transit road connected. Secondly, and more relevant: the terrain structure is, though vacant of buildings and economic activities, heavily dented and inhabited mainly by forest. These natural limitations require massive earth works to flatten the terrain, which would drive up investment costs. The exact earth works costs can only be assessed if the exact location is known. For both potential sites in the Southern area, analysis is made to the impact of transport cost based on infrastructure investment cost and the length of both KFS rail and road connection to the main trunk lines of TRL, TAZARA and the A7. Option 2. Kisarawe North The area North of Tondoroni (see pictures in Figure 2.3 and Figure 2.4) is much flatter and more suitable to establish a freight station, which would preferably be square. Furthermore, the T1 (Morogoro Road) is close which will reduce access road construction cost. The area has sufficient space for both a freight station and additional space for industrial zone development in case the planned District Industrial Zone (west of Kisarawe village) will not be developed or appears to be insufficient in the long term. The area around Kisarawe North is sparsely populated. The ideal location is some 3.5 km south from the T1, adjacent to the rural Road Tondoroni-Kibwegere in the Kibaha district. A negative element is the larger distance by rail (both shuttle/TAZARA line and the TRL connection) from KFS to trunk rail lines. The rail shuttle line is some 6 km longer than in the location options closer to Kisarawe village. This implies that shuttle trains take some 20 minutes time to cover the transit between port and KFS. Also railway construction cost are higher. The longer loop on the TRL line from KFS to main Gongolamboto junction) means a higher infrastructure investment. This extension is only used for up-country and LLC transport by rail which is at minimum 200 km but more often over 1000 km away from the KFS. The relative impact on transport cost of the additional 17 km to connect to the KFS is therefore negligible. It may very well be the case that the selected site is not located in the Kisarawe District but in Kibaha District. The Consultant has not been able to verify the district borders in this area. Further investigation to governance of land plots is required.


Figure 2.3 Area picture West of Tondoroni 1

Figure 2.4 Area picture West of Tondoroni 2


Recently the consultants have learned that the East side of the rural road Tondoroni-Kibwegere is allegedly military area, although it was also indicated that a cement factory is established there (on a plot of 44 ha). This information was so far not officially confirmed so consultants considered options for KFS sites at both the East and West side of the rural road. Subsequently a fictional plot has been identified which appears relatively flat and unoccupied (see above pictures of Tondoroni area, Figure 2.3 and Figure 2.4). Based on a visual inspection of the area in the pictures, calculations were made to assess the investment costs in the KFS and connecting transport links. Although the selected site appears to be the flattest available in the entire area, there is nevertheless a 16 m level variation over the site, which still means it will require substantial cut and fill. It is estimated that this will be close to 2 million m3. Figure 2.5 shows the proposed locations on either side of the rural road between the A7 and Kisarawe village.

Figure 2.5 Schematic layout of KFS location and rail shuttle service lines

2.4 Social impact and resettlement compensation

The development of freight station may have social effects to the population of greater Dar es Salaam. In all of the pre-selected sites residential areas and/or economic activities were observed. The establishment of a freight station will imply the relocation of these structures (houses, shops, workshops, factories, etc). Any eventual resettlement is inevitable due to the vicinity of the locations to the city of Dar es Salaam.


Social environment of railway infrastructure The social impact of cargo (and passenger) transport already affects the centre of the city: the existing TRL rail link is located right through the heart of the city and many dwellers have settled adjacent to the railway line and the railway line is used as passage to and from the city by pedestrians. With a train frequency of a few (TRL) trains per day at present this situation is already undesired from a point of safety. The possible utilization of the TRL line from the port of DSM for a high frequency rail shuttle service would be increasing the risk of rail traffic accidents. The dwellers (likely all illegal in view of railway right of way) along the line would need to be relocated. Fortunately, the TAZARA rail track is in a much better location as it bypasses the city centre at the south side of the city. Nevertheless consultants have found many pedestrians using the rail track frequently or its sidings for their own transport. While scoring the selected sites for a freight station on social issues the relocation of people and structure was assessed in a general way since no clear data of the exact inhabitation of all area around sites could be collected. The eight sites were assessed as described in the following sections. Labour market issues In Tanzania there is generally no shortage of labour. Job seekers will travel to any place that is accessible by means of transport. An important issue is however the availability of accommodation and utilities such as housing, water, and medical facilities. In principle all potential plots close to the T1 are easily accessible via public transport but would require dedicated transport services from the T1 to the KFS. This service may be served by special bus operators at a cost. Although the potential work force is large, the skills and knowledge of the potential workforce are likely insufficient for the specific operations of the KFS. KFS staff needs to be trained to achieve performance standards required to make the KFS a success. The training of staff includes improvement of skills in handling certain complex equipment (reach stackers, gantry cranes, tractor trains) and in organization and operations planning. While some experienced staff may be transferred from TPA, TICTS or existing ICDs, it is recommended to organize training programs and facilities prior starting KFS operations.The training is best undertaken by the concessionaire of the KFS under a selected PPP arrangement. Compensation and Resettlement With regards to resettlement of both legal and illegal inhabitants of an area, the relevant law, regulations, acts, national and international standards are listed in Annex K and L. When the general rules for compensation are applied, the market value for property valuation of a structure will be in the region of TSH 250,000 to 400,000 or USD 190 to 300 per m2. These estimates are provided by the DSM City council based on an average sized house normally found in the semi-urban setting.


In terms of compensation, some experts are of the opinion that when compensation is meant for Project Affected Persons that have encroached on government property, the rules and process for compensation are less stringent and the actual land and property estimates are not used. For valuation government the Land Law and regulations provide adequate norms which are in the region of TSH 150,000 to 250,000 or USD 120 to 190 per m2. Other experts claim that Project Affected Persons that have encroached on government property are not entitled to any compensation at all.

2.5 Environmental aspects

The environmental analysis considers both the construction and operational phases. The KFS is located in a rural area with scattered housing and buildings. Although no statistics are available on the density of the area in terms of utilized space, from visual inspection it is clear that the area has few inhabitants or social and commercial activities. This reduces the problem of resettlement of persons, functions and businesses if the KFS would be constructed. Construction phase The construction phase includes rail and road infrastructure works, the clearing of the site and construction of the KFS. The following environmental impacts can be expected:

Vegetation and habitat loss: The project will clear some trees shrubs and vegetation cover to pave way for construction of the proposed KFS. This will disturb the micro-organism of the area. The impact is short term and of low significance.

Noise and vibration: The heavy machinery (caterpillars and tractors) used during site clearance, compaction of land and earth works will lead to emissions of noise and vibration. The accumulated effects from various sources of noise and vibration can adversely affect the health and well being of workers, as well as humans and fauna in the proximity of the site.

Dust emission: During clearing of the land, large quantities of top soil have to be removed and be disposed at designated areas. Large quantities of sand quarry are required for leveling and other earth works. The activities will generate dust and debris hence increasing Suspended Particulate Matter (SPM) in the air causing discomfort to the workers and surrounding community.

Solid waste generation: The construction activities will generate solid wastes such as metals, torn packing materials such as cement bags, plastics, woods, cans, paper bags and glass.

Sewage disposal: During construction, vendors and migrant workers will flock to the area surrounding the project site. The mushrooming vendoring activities in unplanned area may result in sewage pollution with disease causing pathogens for diarrhea, cholera, malaria etc.

Increased risk of traffic accidents: Transport of construction materials including heavy equipment and removal of the excavated soil and debris will lead to increased traffic and potential accidents on the already congested Mandela Road and Nyerere Road. These roads already have high accident rates, especially around TAZARA terminal.


Air pollution: A part of dust emission, degradation of air quality will also be caused by gaseous emission from diesel combustion during land clearing, construction and transportation of building materials.

Public health impact: The influx of migrant workers, vendors and service providers will increase the risk of communicable diseases such as cholera, typhoid, TB, HIV/AIDS etc.

Operational phase The following environmental impacts can be expected during the operational phase:

Air pollution: Emission standards approved by Tanzania Bureau of Standards are adopted from EU approval standards. They are Euro I of 1992 and Euro III of October 2000. Whereas the standards for passenger cars are measured in g/km, for trucks they are defined by engine power measured in g/kWh.

Although the distance from the port to the intended KFS is relatively short, the noxious gases from the diesel engines of the locomotives of the shuttle train will contribute to the deterioration of air quality. The impact per hour of the operation of a standard 2500 KW diesel engine is about 12.73g of noxious gases. Based on a planned volume of 12 trains per day (forth and back) the total impact will be 152.76g of noxious gases (CO, HC, NOX and PM). The impact per hour of a heavy – duty diesel engine is 14.21 g of noxious gases and has higher smoke emission of 0.8 in m-1 compared to 0.1 in m-1 for a shuttle train. The rail shuttle service is expected to be at least 10 times less polluting than using trucks/trailers. Table 2.1 and Table 2.2 show the emission limits for trucks and locomotives.

Table 2.1 Emission limit for heavy duty diesel engines (trucks)

Pollutant g/kWh

Smoke

In m -1 limit

Reference standard

CO 4.5 Euro I

HC 1.1 Euro I

NOX 8.0 Euro I

PM 0.612 Euro I

Smoke 0.8 Euro III

Source: Tanzanian Bureau of Standards

Table 2.2 Emission standards for large cargo vehicles (locomotives included in this category)

Pollutant g/kWh

Smoke

In m -1 limit

Reference standard

CO 2.1 Euro I

HC 9.0 Euro I

NOX 1.23 Euro I

PM 0.4 Euro I

Smoke 0.1 Euro III

Source: Tanzanian Bureau of Standards


Workers should use protective gear such as dust protection muffles and water spraying should be used during compaction and soil/sand transportation to avoid dust generation. Trees and vegetation can be planted along the site boundary to reduce the amount of CO2 in the surrounding atmosphere. Periodic measurement of engine emissions is required to ensure that they are within emission limit for heavy duty diesel engines for the pollutants of CO, HC,NOX, PM and smoke. Regular servicing and maintenance program for fuel powered equipment will support limitation of hazardous air emissions.

Decrease in traffic accidents: The connecting roads of the KFS may get more congested which may enhance the risk for traffic accidents when entering or leaving the KFS. Since the volume of trucks will decrease gradually in favor of container rail transport in future, the risk of road accidents may reduce. The reduction of truck transport in the city and the short link by road from the KFS to the A7 will have also a positive impact on the reduction of traffic accidents. The effect will be even more positive when the planned ring road becomes operational. Both truck and KFS vehicles require competent and qualified drivers preferably licensed by SUMATRA. Traffic rules should be installed for all access roads including speed limits, lane separation (vehicles/staff/public), parking lots, lighting, etc. Construction and KFS equipment drivers should be trained and comply with ergonomic and safe labour conditions including working time limits, training and tests and knowledge of operational procedures. A decent traffic circulation plan should be made to regulate traffic safely and avoid traffic accidents. This includes installation of traffic signaling, road lane separation, pedestrian paths, parking lots etc. The fairly high frequency of trains on the shuttle line makes fencing along the line necessary as civilians tend to use railway tracks as local roads.

Noise and vibration: Operation of the trucks, reach stackers, terminal tractors and trains will increase the noise and vibration levels within the surrounding community. This may affect productivity or become a nuisance to the public. Where noise levels exceed the standards ample hearing protection needs to be supplied to workers. Noise levels need to be kept below the maximum level of 70 dB(A). The construction activities should be preferably be carried during day time to minimize discomfort to the public. The contractor should provide protective gear and safety equipment to construction and KFS staff operators.


Oil spill and grease: The project has several engines operating daily. Oil spills and grease -if not properly managed - will drain into the storm water system and endanger aquatic life. Servicing of HD diesel engines and other project vehicles needs to be carried out at a work shop with oil separator. The discharge from the service bay will drain into an oil/water separator where the oil is recovered and ensure that the oil content of the waste water does not exceed 20mg/liter (according to the environment guidelines of World Bank / WHO. Waste oil recovered from oil/water separator, used engine oils and sludge need to be collected by authorized private waste oil collecting company registered by NEMC in order to ensure compliance with regulations governing waste oil disposal or recycling.

Hazardous cargo: Some containers may contain chemicals, fertilizer or other hazardous materials. There is possible damage through accidental leakages or liquids and toxic gases especially when contents are stored for longer periods. Spills from such containers will pollute water bodies, soil and air, endangering workers, public health and animals. Containers with hazardous material need to be stored in confined areas with impermeable bottoms to prevent any pollution to the soil and ground water.

Liquid waste: A separate drainage system should exist for storm water sanitary waste and on site waste water. The storm water may drain into the public storm water system whereas the sanitary waste should be collected into septic tanks for disposal by municipal authorized companies. The site waste water should be treated before draining into the public storm water system.

Solid waste: The contractor should sort solid waste by separating hazardous waste from non-hazardous waste for appropriate disposal. This requires the provision of adequate number of suitable solid waste containers. The project will collaborate with the Temeke Municipal authority to ensure the waste generated during excavation works is been disposed in designated areas by the municipality. An area for solid waste collection should be designed.

Sewage disposal: The KFS should provide sanitary facilities for the staff and visitors. Sewage should be drained into septic tanks to be disposed of by municipal authorities.

General health and safety: Compliance is required to National Health and Safety Standards as stipulated on Occupational Health and Safety Authority as well as existing international standards. Training of all personnel in the use of protective equipment and chemical handling is necessary. The Contractor should employ as much as possible people from within the local community of the area to minimize influx of migrant workers. In addition it should carry out awareness training of communicable diseases such as HIV/AIDS. Provision of round the


clock first aid services at the sites are to be managed by a qualified staff. The area should have a properly laid fire hydrant system.

2.6 Customs clearing

Customs clearing at DSM port Until April 2009 the port faced heavy congestion of containers (and ships). The average dwell time for containers in the port of DSM has since been reduced significantly from maximum 30 days to a level of 17 days (excluding volumes transported directly to ICDs). A special dwell time reduction committee under the supervision of TPA and TRA has been established between stakeholders to reduce the high dwell time. Part of the observed reduction in the past year may have been caused by the economic downturn, which has also caused the reduction in vessel waiting time from 3 to 10 days to virtually zero. The Asecuda++ Customs clearing system introduced by TRA is operational but allegedly not 7 days per week/24 hours per day. The pre-clearance of containers however is increasing rapidly: now 80 % of the containers are pre-cleared via Asecuda++. TRA still inspects some 40-50 % of all import (not transit) containers based on risk assessment and plans to inspect containers directly upon discharge from ship in the near future. This inspection rate is high compared to European standards. By applying a bonus/malus system for frequent clearing by forwarders or traders, TRA should be able to reduce inspection percentages significantly. Recently the TRA has taken over the tasks of TISCAN as scanning operator. TRA has one scanner in operation but ordered 2 more scanners to reduce scanning delays (to be delivered soon). Theoretically, the scanner capacity is 25 containers per hour during 20 hrs per day. The establishment of the KFS would require more scanners to be located at the KFS with capacity depending on container flow estimates. Whereas the physical obstructions in the clearing process of containers are being removed, the level of inspections is still high due to risk assessment policies at TRA. ICD/freight station licensing The new KFS will act as an extended gate to the port of DSM. This would logically imply that the status of the port as Customs Bonded Area will be extended to the KFS. The Port Law may however restrict this and the TRA may consider the KFS as just a special ICD (which it is in fact too). There are presently two regulations in force according to East African Customs Management Act of 2004. Therein, section 12 deals with the licensing rules (see Annex M). The regulations distinguish between two types:

ICD, meant for import of goods; Freight station, meant for export of goods.


Both licenses are to be obtained for 1 year and can be renewed for 1 year. At present some 12 companies have licenses. The rules include a number of financial, structural and operational rules. Main financial criteria in the rules are that the applying ICD firm needs to put up a security bond (not a bank guarantee) of at least TSH 800 mln (or € 400,000) as coverage for taxes and duties on of non-cleared goods. Structural criteria include the ownership of land (state) or a minimum lease of 33 years, a minimum size of of 4 ha for an ICD and 1 ha for a freight station. Operational requirements include the utilization of at least 2 owned reach stackers, sufficient fencing, security, parking space and transit sheds, as well as a customs shed (minimum 300 m2). A logistics requirement is stipulating that the distance from the port should not exceed 10 km to minimize transport cost. License structure The KFS would need first of all a license to operate under Customs regulations for a long term in view of the investments to be made and the length of the KFS concession agreement. The license should be automatically renewed upon payment of the license fee. Since the projected KFS is not a freight station in the sense of the Customs Act due to its size, new provisions need to be drafted in the Act and regulations. The provisions should include the operations of the KFS to be executed by third parties (concessionaire/service provider). Import clearing The processing of customs clearance should not be different from that of the port of DSM. Firstly the entire KFS needs to be declared as Customs Bonded area in order to freely move goods from rail terminals to stack and to exit gates for truck/trailers. Secondly it is vital that the container flow movement system at the KFS is directly connected to that of the DSM port (at TPA terminals, TICTS and in future with the system used at berths 13/14) in order to facilitate direct transfer by rail wagons of full containers from port to the KFS. This would require uninterrupted full customs bonded transport without physical inspection at the port. Once containers arrive by rail at the KFS they may be stored (still under bond) in the relevant stack for either on-carriage or may be stripped when more consignees are listed on the container documents. This LCL cargo needs to be stored temporarily prior to be distributed by van/truck to (nearby) destinations. These stripping operations need to be done at a customs bonded location (either inside or outside the KFS). When handled inside the KFS, the KFS management would install an automated warehouse inventory control system that, subject to (occasional) Customs Authority inspection guarantees duties are settled prior to departure of goods from the KFS to consignees. Obviously the free movement of goods inside the KFS requires also a sound checking/security system both in terms of entry of goods, vehicles and persons and of a sound documentation system that guarantees that goods only leave the KFS when either all import duties are paid or when transit permits are granted.


Duty guarantee system At present the customs clearing system is based on direct payment of dues and taxes on clearance of goods. This should be changed in future to a system where clearance can be done after goods have left the KFS in order to speed up logistics processes. This would logically require a proper guarantee system whereby TRA is safeguarded that all dues and taxes will be paid within a certain number of days. The application of such a delayed payment system would require the KFS to be fully liable for any incorrect of insufficient payment of dues and taxes when proven. The KFS needs in that case to provide sufficient financial guarantees to TRA to cover any eventual short payments. The level of the guarantees can be fixed according to the value of goods at the KFS. It would be practically impossible to establish exact values as they fluctuate continuously due to the entry and exit of goods. The TRA could apply a guarantee system that is based on average values (and subsequently pre-calculated dues ad taxes, as is applicable in Europe). It is clear that the present limits for guarantees in the law (see Annex M) are insufficient due to the high volume of containers and goods moving through the KFS. While the KFS maintains overall responsibility for any illegal clearance of containers or goods from the KFS, the KFS should act under the Port Act regulations. Physical conditions destined for TRA According to the present ruling, any ICD/freight station needs to provide offices for customs officers (minimum 5) and administration staff. It is important that the TRA assesses the volume of consignments at the KFS and prepares a plan for its customs clearance activities (administration, verification, inspection). By law the TRA will provide customs staff and the clearing system (Asecuda++).


3 Forecast of container and import cars volume

This chapter presents the forecast volumes of containers and cars through the KFS.

3.1 Methodology

Methodology for container volume The forecast of the container volume for the KFS was made according to the following methodology and steps:

1. Preparation: data on the past and existing volumes through the port of DSM were collected, from TPA and TICTS. Most importantly this includes port and trade statistics on container volumes, with a split in various subcategories:

Import, export and transshipment Containers generated by the Tanzanian economy and containers in transit

to the landlocked countries (LLCs): Uganda, Rwanda, Burundi, DR Congo, Zambia, Malawi.

20’ units and 40’ units Loaded and empty containers Standard containers and reefers.

The information from the statistics was complemented by a series of interviews with stakeholders in the port, to get an understanding of past and future developments and trends in container volumes through the port of DSM.

2. Forecast of the total volume of containers through the port of DSM. An

analysis has been made of the relation of container volume through the port of DSM and the development of GDP as a major trade generating factor. A distinction has been made in containers generated by the Tanzanian economy (depending on GDP development in Tanzania) and those generated by the LLCs (depending on the GDP developments in each LLC). The relation between GDP and container volume development was subsequently used to forecast the future volume of containers through the port of Dar es Salaam. A division has been made in:

Import, export and transshipment flows, division based on recent developments.

Transit imports and exports per LLC: for this purpose, an assessment of future market share developments of DSM versus competing ports such as Mombasa and Durban will be made. Transit imports and exports will be grouped into those transported along the central corridor (North & Westbound to Uganda, Rwanda, Burundi and DR Congo) and those


transported along the Southern corridor (Southbound to Zambia and Malawi).

Empty versus loaded containers, division based on recent developments. The forecast will be provided for the period 2010-2036, so that it covers the operational period of the KFS (construction in 2012 and 2013, first year of operations 2014 and end of the 25-year concession period in 2036).

3. Forecast of the potential volume of containers through the KFS. In this step, the share of the total container volume through the port of Dar es Salaam that will potentially use the KFS will be assessed. This share will basically consist of all containers with origin/destination in the LLCs or further afield in Tanzania (i.e. outside of the Dar es Salaam area). A subdivision of this forecast will be made into:

Containers with origin/destination in the DSM area, elsewhere in Tanzania, the central corridor LLCs and southern corridor LLCs. For each of these divisions, the share that will potentially use the KFS will be different.

20’ versus 40’ boxes by making assumptions on the development of the TEU/box ratio.

Amount of reefer containers by making assumptions on the development of the share of reefer containers.

Modal split by making assumptions on the use of road and rail on the connection between port and KFS and between KFS and hinterland.

Figure 3.1 gives a schematic view of the division in different volumes that will be considered in the forecast.

Figure 3.1 Schematic presentation of the subdivisions of container volume in the forecast

oceanLLCsN&W

DSMCFS

Tanzania

DSM area

LLCs S

transhipment

imports

oceanLLCsN&W

DSMCFS

Tanzania

DSM area

LLCs S

transhipment

imports

Note that whereas the picture shows imports, it is also valid for exports.


Methodology for vehicle import volume The KFS is also considered to cater for import vehicles. The methodology for the volume of import vehicles is as follows:

1. Preparation: data on the past and existing volumes through the port of DSM were collected, from TPA and internet.

2. Forecast of the total volume of import vehicles through the port of DSM.

Here, the average growth rate of high and low scenarios as used in the Tanzania Port Masterplan of 2008 is adopted.

3. Forecast of the potential volume of import vehicles through the KFS. In this step, the share of the total import vehicles volume through the port of Dar es Salaam that will potentially use the KFS will be assessed. This share will basically consist of all vehicles with origin/destination in the LLCs or further up-country in Tanzania.

3.2 Collection of existing data

The starting point of the forecast exercise is a time series of container throughput volumes of the port of Dar es Salaam. These are available from TPA for the years 1992 to 2009. Container volume port of Dar es Salaam 1992-2009 Based on the abovementioned source, a time series was constructed for the years 1992 to 2009. Table 3.1 on the next page gives the container volume through the port of Dar es Salaam for the years 1992 to 2009, divided in subcategories. Figure 3.2 gives the development of the major subcategories Tanzanian imports and exports, transit imports and exports and transhipment.

Figure 3.2 Container volume through the port of Dar es Salaam 1992-2009 (1000 TEU)

0

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1992

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1996

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1000

TE

U

export Tanzania

import Tanzania

export transit

import transit

export empties

import empties

transhipment

Source: Tanzania Port Authority (TPA) statistics


Table 3.1 Container volume through the port of Dar es Salaam 1992-2009 (1000 TEU)

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tanzania 23 23 22 23 25 30 33 35 38 47 53 60 68 72 80 96 115 118

transit LLCs 12 16 13 14 12 12 10 11 11 16 16 26 31 38 44 60 64 48

Uganda 0 0 0 1 1 1 1 3 2 2 2 2 4 4 3 3 2 1

Rwanda 2 3 2 2 2 3 1 3 3 3 2 2 4 10 17 17 19 13

Burundi 2 3 3 2 2 0 1 1 2 3 2 2 5 5 5 6 7 8

DR Congo 1 1 2 3 2 3 3 2 3 5 6 15 11 9 5 14 18 12

Zambia 5 7 6 5 4 4 2 2 2 2 2 3 6 8 10 18 15 11

Malawi 2 1 1 0 1 0 0 0 0 0 1 1 1 1 2 3 2 1

Others 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0

Empties 7 6 5 7 9 8 3 3 5 5 5 4 6 6 3 4 2 2

IMP

OR

T

Total 43 45 40 44 45 50 46 49 54 69 73 90 106 115 128 160 181 168

Tanzania 14 14 13 19 20 20 18 15 18 20 20 30 32 40 33 36 43 36

transit LLCs 14 14 13 13 12 8 8 8 8 8 8 10 12 13 17 18 21 16

Uganda 1 1 2 0 2 1 1 2 1 1 1 1 1 1 0 0 0 0

Rwanda 0 0 0 0 1 0 0 0 0 0 1 0 0 2 4 0 1 0

Burundi 2 2 2 2 1 0 1 1 1 1 2 1 1 0 2 4 2

DR Congo 1 1 1 1 1 0 0 0 0 0 0 0 1 2 3 6 4 5

Zambia 7 8 8 9 7 7 7 5 5 5 5 6 7 8 9 10 12 10

Malawi 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Others 0 0 0 0 0 0 0 0

Empties 12 17 16 16 17 21 24 26 34 39 40 38 50 60 71 82 110 102

EX

PO

RT

Total 39 46 42 48 50 49 50 49 61 67 68 78 94 114 121 136 174 154

Transhipment 0 1 2 1 0 0 18 4 4 13 25 37 56 59 61 57 38 35

Total Dar es Salaam 83 91 84 92 95 99 113 103 119 148 166 204 255 288 310 353 393 357

Sources: Tanzania Port Authority (TPA).

Notes: transhipment concerns the number of moves: inward plus outward


Table 3.1 and Figure 3.2 show that the annual volume of containers has increased significantly, with a decline in 2009 due to the worldwide economic crisis. Table 3.2 shows annual average growth figures for the different categories and periods.

Table 3.2 Average annual growth rates ’92-’08, ’92-’00 and ’01-‘08

'92-'08 '92-'00 '01-'08

Imports Tanzania 11% 6% 13%

Transit 11% -1% 22%

Empties -8% -4% -12%

Total 9% 3% 15%

Exports Tanzania 7% 4% 12%

Transit 3% 13% 15%

Empties 15% 15% 16%

Total 10% 6% 15%

Transhipment 32% 31% 17%

Total Dar es Salaam 10% 5% 15%

It is clear that the total volume grew much faster in the years 2001-2008 than in the years 1992 to 2000. It is also interesting to note that the transit imports have grown at a very high rate in the period 2001-2008 and that the export of empties has constantly grown. Transshipment volumes have increased as well, but growth has come to a standstill or rather decline in recent years, presumably under the pressure of lacking capacity at Dar es Salaam container terminal. From the interviews it is known that transshipment predominantly concerns transshipment to the smaller Tanzanian coastal ports and to the islands of Zanzibar, Pemba and Mafia. Base year for the forecasts The year 2009 will be taken as the base year for the forecasts. The advantage of taking 2009 as the base year is that it may be assumed to form the lowest point of the economic crisis, thus incorporating the effect of the economic crisis into the base year. From 2010 onwards, the economy and container volumes may be expected to recover again. The total volume of 2009 is 357,000 TEU, which is almost 10% below the volume of 2008.

3.3 The development of container volume

The main factors impacting the volume of container transport are the development of: the level of economic activity; the degree of containerisation; the linkage to global supply chains.

The level of economic activity The level of economic activity is expressed by GDP and may be broken down by economic sector, by specific industry and in the case of large countries also by region. This study uses the GDP developments of Tanzania and of the landlocked countries


(LLCs) using the port of Dar es Salaam: Uganda, Burundi, Rwanda, DR Congo, Zambia and Malawi. GDP development figures as provided by IMF are used to compile a data series from 1992 to 2009 for these countries, see Error! Reference source not found.. Figure 3.3 shows an indexed development of the GDP of Tanzania and the LLCs, with 1992 set equal to 100.

Figure 3.3 GDP development of Tanzania and the landlocked countries 1992-2009 (1992=100)

0

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350

400

1992

1994

1996

1998

2000

2002

2004

2006

2008

Tanzania

Uganda

Rwanda

Burundi

DR Congo

Zambia

Malawi

Source: based on IMF World economic outlook, April 2010


Table 3.3 Annual GDP growth of Tanzania and the landlocked countries 1992-2009

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tanzania 0.6% 1.2% 1.6% 3.6% 4.5% 3.5% 3.7% 3.5% 4.9% 6.0% 7.2% 6.9% 7.8% 7.4% 6.7% 7.1% 7.4% 5.5%

Uganda 2.8% 8.2% 6.4% 11.3% 9.1% 5.5% 3.8% 8.2% 5.4% 5.2% 8.7% 6.5% 6.8% 6.3% 10.8% 8.4% 8.7% 7.1%

Rwanda 6.6% -10.4% -41.9% 24.5% 11.6% 14.9% 8.3% 5.1% 8.3% 8.7% 13.5% 1.4% 7.0% 9.0% 8.6% 5.5% 11.2% 4.1%

Burundi 1.0% -6.2% -3.8% -7.9% -8.0% 0.4% 4.8% -1.0% -0.9% 2.1% 4.4% -1.2% 4.8% 0.9% 5.1% 3.6% 4.5% 3.5%

DR Congo -10.5% -13.5% -3.9% 0.7% -1.1% -5.4% -1.7% -4.3% -6.9% -2.1% 3.5% 5.8% 6.6% 7.9% 5.6% 6.3% 6.1% 2.8%

Zambia 2.1% -0.1% -13.3% -2.8% 6.9% 3.3% -1.9% 2.2% 3.6% 4.9% 3.3% 5.1% 5.4% 5.3% 6.2% 6.2% 5.7% 6.3%

Malawi -7.3% 9.7% -10.3% 13.8% 10.0% 6.6% 1.1% 3.5% 0.8% -4.1% 1.7% 5.7% 5.4% 3.3% 13.6% 1.2% 9.4% 8.0%

Source: IMF World economic outlook, April 2010


Forecast of GDP developments The forecast of GDP growth for the years 2010-2014 is based on IMF forecasts. For the years after that, assumptions have been made by the Consultant. Error! Reference source not found. shows the GDP forecasts.

Table 3.4 Average annual GDP growth forecast Tanzania and the LLCs 2010-20365

2010 2011 2012 2013 2014 2015 ’16-‘20 ’21-‘36

Tanzania 6.2% 6.7% 7.5% 7.5% 7.5% 7.0% 6.0% 5.0%

Uganda 5.6% 6.4% 7.0% 7.2% 7.4% 7.5% 6.5% 5.5%

Rwanda 5.4% 5.9% 6.4% 6.9% 6.5% 7.1% 6.0% 5.0%

Burundi 3.9% 4.5% 4.8% 5.0% 5.0% 4.9% 4.5% 4.0%

DR Congo 5.4% 7.0% 6.8% 8.1% 6.7% 7.0% 6.0% 5.0%

Zambia 5.8% 6.0% 6.3% 6.2% 6.4% 6.5% 5.5% 4.5%

Malawi 6.0% 6.3% 6.6% 6.8% 7.1% 7.1% 6.0% 5.0%

Source: 2010-2014 IMF World economic outlook, April 2010, 2015 onwards Consultant’s estimate

The degree of containerisation The degree of containerisation is important too and depends on the specifics of the various commodities in combination with the volume that is traded. TPA statistics show that the share of containerised volume in the total trade through the port of Dar es Salaam has in creased from a low 36% in 1992 to 59% in 2008. The linkage to global supply chains Another factor driving the large growth in container volumes worldwide is the increased trend of worldwide outsourcing. This especially resulted in large volumes of container trade between industrialising nations and the developed countries. This factor is not of major influence in East Africa.

3.4 The relation between container volume and GDP

The precise impact of the factors mentioned in section 3.3 cannot be assessed separately as this would require a great amount of detailed data which is usually not available. A generally applied approach by container market consultants such as Drewry Shipping Consultants and Ocean Shipping Consultants is to establish a quantitative relationship between growth in container throughput and GDP. The development of the ratio as experienced in the past is analysed and compared with the development of the ratio found in comparable countries. On this basis a forecast is made of the development of the ratio in the future. Container-GDP ratio in this study In this study, the container-GDP ratio for the Tanzanian container volume can be derived from the volume of containers generated by the Tanzanian economy. Ideally, the development of the total amount of containers generated by the economy of Tanzania would be taken as a starting point, but data on the total volume is not available. However, as the port of Dar es Salaam handles by far the largest share of the Tanzanian container volume (with very minor shares going through the ports of Mtwara and Tanga, and Mombasa in Kenya), it is possible to use the TPA statistics for Dar es Salaam as a proxy for the Tanzanian container volume.

Prefeasibility Study Kisarawe Freight station 55

The average annual growth of the volume of imports and exports of Tanzanian containers in 1992-2008 was 9.5%, whereas the average GDP growth was 5.2%. This implies that container volume grew at a ratio of 1.84 compared to GDP. This factor, rounded to 1.8, will be used in this forecast. For the LLCs, the relation between container volume and GDP cannot be derived from TPA statistics, as the port of Dar es Salaam is not the only point of entry for these countries. As the trade and transport characteristics of these countries are quite similar, the ratio found for Tanzania is assumed for the LLCs. In the forecast, the ratio is assumed to stay at 1.8 until 2025 and then to go to 1.5 for the period 2026-2036.

3.5 Forecast of container volume through the Port of Dar es Salaam

The volume of containers to go through the Port of Dar es Salaam is split up in 4 major categories:

1. Tanzanian imports and exports, with a subdivision into containers generated in the DSM area and containers generated elsewhere in Tanzania;

2. Transit imports and exports, containers generated in the LLCs with a subdivision in containers generated north and west (Uganda, Rwanda, Burundi, DR Congo) and containers generated south (Zambia, Malawi);

3. Empties import and export; 4. Transshipment.

Tanzanian imports and exports The Tanzanian imports and exports of containers depend on the development of the Tanzanian economy. As explained, a ratio of 1.8 compared to GDP growth is used to forecast the total container volume generated by the Tanzanian economy. The division in imports and exports in the port of DSM was around 70% versus 30% in the last decade, which is kept constant in the forecast. The division of volume over the DSM area and the rest of the country is set at 50%-50%. No reliable data could be obtained to justify this ratio, therefore it was taken from interviews with shipping agents and TICTS . Table 3.5 gives the forecast for the period 2014 to 2020 plus target years 2025 and 2035.

Table 3.5 Forecast of Tanzanian containers through the port of DSM 2014-2020, 2025 and 2035 (1000 TEU)

2014 2015 2016 2017 2018 2019 2020 2025 2035

imports 196 221 245 272 301 333 369 568 1172

exports 84 95 105 116 129 143 158 244 502

total 281 316 350 388 430 476 528 812 1674

Transit imports and exports The transit import and exports are divided into north and westbound transit (Uganda, Rwanda, Burundi and DR Congo) and southbound transit (Zambia and Malawi). In rail terms, north and west are serviced by TRL whereas south is serviced by TAZARA. It should be noted that


DR Congo transit containers should be divided into Great Lakes area (which would be under north and westbound) and Copperbelt area (which would be under southbound), but that data for this subdivision is lacking. Therefore, all DR Congo transit is included under north and westbound. For the north and westbound transit trades, the port of DSM competes with the port of Mombasa in Kenya. Until 2007, DSM lost market share to Mombasa on all trades except transit to DR Congo, mainly because of the congestion in DSM. However, in 2008 and 2009, DSM has recaptured market share for Rwanda and Burundi. This may be due to the fact that Mombasa increasingly experiences congestion too and it may also be due to the economic crisis, which from late 2008 onwards caused a significant drop in container volumes which helped relieve the congestion in the ports. According to interviewees, cargo owners are willing to accept a slightly higher transport cost (in the range of a few hundred USD per TEU depending on the destination) to avoid delays in the port of DSM or Mombasa. Error! Reference source not found. shows the development in market share for the years 2001-2009.

Table 3.6 Market shares of Dar es Salaam and Mombasa on transit trades to LLCs 2001-2009 (1000 TEU)

2001 2002 2003 2004 2005 2006 2007 2008 2009

Mombasa 94% 98% 95% 94% 97% 98% 99% 98% 99% Uganda

Dar es Salaam 6% 2% 5% 6% 3% 2% 1% 2% 1%

Mombasa 61% 63% 78% 76% 72% 74% 76% 62% 52% Rwanda

Dar es Salaam 39% 37% 22% 24% 28% 26% 24% 38% 48%

Mombasa 7% 31% 5% 17% 16% 38% 25% 23% 7% Burundi

Dar es Salaam 93% 69% 95% 83% 84% 62% 75% 77% 93%

Mombasa 63% 50% 38% 37% 37% 35% 32% 33% 36% DR Congo

Dar es Salaam 37% 50% 62% 63% 63% 65% 68% 67% 64%

Source: 2002-2009: TPA, 2001: Feasibility study upgrade Dar es Salaam to Isaka railway, BNSF Railway,

September 2009

In the forecast of future volumes, we assume that DSM will be able to maintain the status quo, under the assumption that the congestion in the port of DSM compared to that in Mombasa will be eased. We assume the following developments of market shares:

Uganda: a constant share of 1%. Rwanda: a constant share of 45%. Burundi: a constant share of 90%. DR Congo: a constant share of 65%.

As no data are available for the total amount of containers generated by the economies of these countries, we adopt a different approach: We assume the number of transit containers for these countries through the port of DSM will grow equally to the growth of GDP in these countries, multiplied by the ratio of 1.8. This implies keeping the market share of DSM constant. The division between imports and exports for all north and westbound transit trades was in the last decade 82%-18%. It fluctuated around these averages, but not significantly. In the


forecast, a division of 80%-20% is adopted. Error! Reference source not found. gives the forecast for the period 2014-2020 plus target years 2025 and 2035.

Table 3.7 Forecast of north and westbound transit containers through the port of DSM 2014-2020, 2025 and 2035 (1000 TEU)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Uganda 2 3 3 3 4 4 4 7 16

Rwanda 22 25 27 30 33 37 41 63 130

Burundi 14 15 16 18 19 20 22 31 56

DR Congo 31 35 39 43 47 52 58 89 184

total 69 77 85 94 103 114 126 191 386

imports 55 62 68 75 83 91 101 153 309

exports 14 15 17 19 21 23 25 38 77

The southbound transit trades concern Zambia and Malawi. For Zambian trades, the port of DSM competes with the port of Durban in South Africa. Especially the Copperbelt area in Zambia (and DR Congo) receives about 80% of its traffic through Durban, the rest goes through Dar es Salaam. The port of Durban offers the advantage of direct services by mainline container vessels. The fact that most large mining companies have their offices in the Johannesburg area and import a lot of their project cargo through South Africa is another explanation for the position of the port of Durban on this trade. For the Zambian trades as a whole, the market share of Dar es Salaam in 2006 was about 45%. For the trades with Malawi, there is competition from the Mozambican ports of Nacala and Beira, and to a lesser extent of Maputo and Durban. The market share of DSM in 2006 was about 25%. As information on the development of these market shares is lacking, the market shares of DSM are kept at 45% in the Zambian trades and 25% in the Malawi trades in the forecast. Similarly to the forecast o the north and westbound trades, there is no data are available for the total amount of containers generated by the economies of these countries. Therefore it is assumed that the number of transit containers for these countries through the port of DSM will grow equally to the growth of GDP in these countries, multiplied by the ratio of 1.8. The market share of DSM is kept constant. The division between imports and exports for all southbound transit trades changed a division of roughly 40%-60% in the nineties to about 55%-45% in the past 5 years. In the forecast, this latter division is adopted. Error! Reference source not found. gives the forecast for the period 2014-2020 plus target years.


Table 3.8 Forecast of southbound transit containers through the port of DSM 2014-2020, 2025 and 2035 (1000 TEU)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Zambia 35 39 43 47 52 57 63 93 178

Malawi 3 3 3 4 4 4 5 7 15

total 38 42 46 51 56 62 68 100 194

imports 30 34 37 41 45 49 54 80 155

exports 8 8 9 10 11 12 14 20 39

Empty containers and transhipment In 2009, empty container imports have come done to zero from about 15% of all imports in the early nineties. In the forecast it is assumed that there will be no more imports of empty containers. The export of empties has increased from about 35% in the early nineties to 60%-65% in recent years. In the forecast, it is assumed that of all exports, 65% consists of empty containers, both for Tanzanian and transit trades, gradually coming down to 50% in 2025 after which it stays constant. Transhipment containers are not relevant for the KFS, but they do consume capacity in the port of Dar es Salaam. Therefore transhipment is considered for comparison of expected demand and capacity in the port. The port of DSM handles a certain share of transhipment, mainly destined for ports on the islands of Zanzibar, Mafia, Pemba and smaller mainland ports. In the early nineties, this was a negligible percentage, but in recent years transhipment had grown to a high of 55% of the combined Tanzanian imports and exports, thereafter coming down to 24% in 2008, presumably as it was driven elsewhere under pressure of the congestion in the port. In the forecast, it is assumed that transhipment will be at 20% of the combined Tanzanian imports and exports in 2010, gradually decreasing to 7.5% in 2035. Forecast of total container volume through the port of Dar es Salaam The above leads to the following forecast of total container volume in the port of Dar es Salaam, with various subdivisions as shown in Error! Reference source not found..

Table 3.9 Forecast of containers through the port of DSM 2014-2020, 2025 and 2035 (1000 TEU)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Tanzanian containers 281 316 350 388 430 476 528 812 1674

north & westbound transit 69 77 85 94 103 114 126 191 386

southbound transit 38 42 46 51 56 62 68 100 194

empties (export) 180 194 206 218 232 246 261 327 667

transhipment 62 67 72 77 82 87 93 116 136

total 628 696 759 827 903 985 1076 1546 3056

3.6 Forecast of container volume through the KFS

The KFS , as an extended gate to the port of DSM, will on;y be handling containers (and cars) with origin or destination up-country Tanzania or LLC countries (transit). It is assumed that the KFS will not be used for container cargo to/from the city of Dar es Salaam due to the logistics cost of transporting containers from the port to the KFS and back again into the city.


This particular market segment will remain in the hands of ICDs or will be covered by direct delivery (by truck) from the DSM port. The total volume as presented in Error! Reference source not found. in the previous section is considered to be the potential volume of the KFS, regardless of whether these containers will be landed at the current terminals in DSM port or in future developments such as Kurasini or Bagamoyo. As argued above, out of this potential volume, only the containers with destination or origin upcountry Tanzania and transit to/from the LLCs will go through the KFS. The containers bound for the DSM area will find their way to their final destinations directly or through one of the existing ICDs, without using an intermediate storage location such as provided by KFS. In the forecast, the assumption is that all Tanzanian (non DSM area) imports and exports as well as all transit import and exports to the LLCs, including all empty returns, will use the KFS. It is also assumed that in the first year of operations (2014) 25% of this volume will be realised, 50% in 2015, 75% in 2016 and finally 100% from 2017 onwards. These assumptions lead to the following volumes for the KFS (see Error! Reference source not found. and Error! Reference source not found.).

Table 3.10 Forecast of volume through the KFS 2014-2020, 2025 and 2035 (1000 TEU)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume accommodated 180 300 436 476 520 569 622 902 1832

Of which:

Tanzanian imports (upcountry) 49 83 123 136 150 167 185 284 586

Tanzanian exports (upcountry) 38 64 93 103 113 125 138 208 415

LLC imports 21 36 53 58 64 71 79 122 251

LLC exports 15 26 38 42 46 50 56 83 164

Empties (upcountry and LLC) 57 92 130 138 146 155 165 205 415


Figure 3.4 Forecast of container volume KFS 2014-2036 (1000 TEU)

0

500

1000

1500

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2014

2016

2018

2020

2022

2024

2026

2028

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Empties

LLC exports

LLC imports

Tanzanian exports

Tanzanian imports

Ratio of TEUs versus boxes Both TPA and TICTS give information about the ratio of TEUs versus boxes, which indicates the number of 20’ and 40’ units in the total volume. This ratio has grown more or less steadily from 1.11 in 1992 to 1.39 in 2008, indicating that the share of 40’ boxes is increasing. It is still rather low compared to for instance the Far East to Europe trade, where ratios of 1.6 to 1.7 are normal. In the forecast, the ratio is assumed to be 1.4 in 2010, gradually increasing to 1.5 by 2030, staying at that level afterwards. This leads to the following division in 20’and 40’ boxes (Error! Reference source not found.).

Table 3.11 Division of forecast in 20' and 40' boxes for 2014-2020, 2025 and 2035 (1000 TEU and boxes)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume TEU 180 300 436 476 520 569 622 902 1832

Volume 20' boxes 74 121 174 188 202 218 236 321 611

Volume 40' boxes 53 89 131 144 159 175 193 291 611

total number of boxes 127 210 305 332 361 394 429 612 1221

Share of reefer containers From interviews it is known that the share of reefer containers is fairly low, about: 0.5%. This corresponds to a percentage of 0.4% mentioned by TPA at the Parastatals Accountability Conference in Dar es Salaam on 23-24 January 2009. In the forecast the share of reefers is assumed to start at 0.5%, gradually reaching 1.0% by 2035. Error! Reference source not found. shows the anticipated annual volumes of reefers at the KFS.

Table 3.12 Annual volume of reefers 2014-2020, 2025 and 2035 (1000 TEU)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume TEU 1 2 3 3 3 4 4 7 18


Modal split The modal split between port and KFS and vice versa is assumed to be 100% rail, as a rail shuttle will be implemented in order to bring down transport costs.

3.7 Forecast of vehicle volume through the KFS

Existing data The volume of vehicles through the port of DSM concerns imports for the Tanzanian and LLC markets. Data on past volumes are available from TPA for the years 1994-2009. Only the total volume is given, without subdivisions. See Error! Reference source not found..

Table 3.13 Annual volume of import vehicles 1994-2009 (1000 units)

‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09

16 21 21 21 18 18 17 19 20 22 27 33 36 41 55 52

Source: TPA

Forecast of vehicle volume through the port of Dar es Salaam Since no details are known on the imports of vehicles through the port of Dar es Salaam, the growth rates applied in the forecast of the Tanzania Port Masterplan prepared by Royal Haskoning in 2008 are adopted here. We apply the average growth rate of the high and low growth scenarios of the Masterplan, which means 10.5% growth annually until 2018 and 9% annually in the years thereafter. This Masterplan forecast is until 2028, but has been extended to 2035 with equal growth rates for this study. The resulting forecast is given in Error! Reference source not found..

Table 3.14 Annual volume of import vehicles through Dar es Salaam 2014-2020, 2025 and 2035 (1000 units)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume vehicles 85 94 104 115 127 138 151 232 550

Forecast of potential vehicle volume through KFS As no information is available on the division of the import vehicle volume over DSM area, the rest of Tanzania en the LLCs, a similar division is adopted as for containers. This leads to the following potential volume of vehicles through KFS, where all import vehicles to the rest of Tanzania (non DSM area) and the LLC are assumed to use the KFS. The division passenger cars, pickups and vans versus trucks and buses is assumed to be 95% versus 5% (see Error! Reference source not found.).


Table 3.15 Potential vehicle volume through KFS in 2014-2020, 2025 and 2035 (1000 units)

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume

accommodated 85 94 104 115 127 138 151 232 550

Of which:

Tanzanian imports 30 34 37 41 45 49 54 83 196

LLC imports 24 27 30 33 36 40 43 67 158

Passenger, pickup, van 81 89 99 109 121 132 143 221 522

Trucks, buses 4 5 5 6 6 7 8 12 27


4 Technical design KFS

4.1 KFS lay out and infrastructure

The lay out of the KFS is proposed in Error! Reference source not found. (next page). While the proposed layout requires only 67 ha, it is recommended to enlarge the initial stage to 100 ha in order to accommodate value added services, such as container consolidation, packing, labelling and other value added service industries. It must however be made clear to operators that these activities may need to be removed in phase 2 when container volumes have increased substantially. These activities may then be transferred to the (by then) established Industrial Zone. In view of the possible unavailability of land at the east side of the rural road Tondoroni-Kibwegere, the lay out may be copied to the west side of the road. This would imply a rerouting of the rural road. The nature of the site will require significant earthworks. Detailed survey and computation will dictate a suitable level for the surfacing so as to balance, as far as possible, the cut and fill. Preliminary calculation shows such balance, accommodating the required rail grades, to be possible. To facilitate adequate drainage the terminal will be constructed with falls to the centre of the container yard where a slot drain would be constructed. To cope with existing drainage canals traversing the site it will be necessary to construct several box culverts, the main one being a major culvert that bisects the site, flowing from west to east, which will also pick up the run-off from the site. The paving of the container yard will be segmental concrete block paving, on a foundation of imported compacted crusher run. Roads will be constructed either in asphalt or also in segmental block paving. The rail sidings will be constructed on a prepared formation of imported crusher run using concrete sleepers, Pandrol fastenings and 45kg/metre rails. Sets of points and crossings will be 1:9 sets on steel sleepers. Buildings (gatehouse, administration building, staff facilities, etc) will be reinforced concrete framed, or brick buildings under steel roofs. Since the terminal is to be operated 24 hours per day, high mast lighting is to be provided enabling an illumination level of at least 25 lux at ground level. This will also facilitate security of the site. The usual utilities will be provided: water, fire protection reticulation, sewerage, electrical power supply and telecommunications.


In order to comply with the ICD compliance rules, a 3 meter high perimeter fence is to be provided. The fence will be constructed of concrete block masonry, topped by razor wire.

Figure 4.1 Schematic layout of KFS and connecting road and railway lines


4.2 KFS functionality and operations

Provision is made to accommodate the following principal operations: 1. Container stack area; 2. Rail loading/offloading lines for both TAZARA and TRL lines; 3. Freight station sheds; 4. Import vehicle park; 5. Truck stop waiting area outside the terminal; 6. Access control gates to both container and vehicle terminals; 7. Offices and staff facilities; 8. Workshop for equipment maintenance.

Operational Options Based on the volume forecast for containers the KFS terminal is designed to be operated with reach stackers for vertical lifts and terminal tractors for horizontal transport of containers. This selection of equipment is based on an expert opinion offered by Cargotec, and division of Kalmar Industries. To provide optimum flexibility the import and export stacks (full containers) are stacked in blocks two containers wide, three containers high. However, consolidated container blocks and empty container stack area the blocks are four containers wide, 5 containers high. Provision is made for reefer (refrigerated) containers. In total, in accordance with the forecasted throughput, terminal ground slots (TGS) are provided as indicated in Error! Reference source not found.. The calculations for the number of TGS (and parking space for vehicles) is provided in Annex N.

Table 4.1 Terminal ground slots to be provided

Category Terminal ground slots (2035)

Tanzanian imports 2853

Transit imports 1232

Tanzanian exports 1223

Transit export 808

Reefers 90

Empties 2886

Total 9092

Error! Reference source not found. (next page) shows a tentative organization chart of the KFS organization once established.


Figure 4.2 Organisation chart KFS

Source: Ecorys The KFS should be manned with an organization capable of handling the requirements as a result of the traffic flow forecasts. An indicative functional capacity scheme is presented in Annex A. As an example, the KFS may be manned as indicated in the text below (based on 24 hour operation, 7 days per week, 365 days per annum operational service level). Staffing Levels Based upon the forecast traffic volumes, and associated handling equipment requirements, an assessment of staffing levels required to man the FS has been made (Annex A) which resulted in a staff of 466 persons excluding the Rail shuttle service. In this estimate the level is based on a 24 hour operation, 7 days per week, 365 days per annum. Container Terminal Management System A Container Terminal Management System (CTMS) needs to be selected and installed by the terminal operator. Numerous systems are available on the market. The CTMS should be based on IT/internet technology for easy access by clients of the terminal and exchange of data files through EDI messaging. It adopts a multi-tier hardware configuration for easy expansion of the system as container volumes increase in the future. The system is required to be easy to maintain and to be adaptable to future enhancements. The basic requirements of the CTMS are:

The system should be designed to handle container yard movements; The system will capture all inward containers from the gate entry and manage them

until they leave the container yard; The system monitors the stock position by providing valuable information to the

management as well as for the container owners; Most importantly the system should be capable of invoicing for lift-on, lift-off

containers, stored containers, shifting and on-off hire containers, and should perform the following:

o Invoicing (support module); o Container history records are maintained for reference; o EDI Reporting; o Customer connections for cargo consolidators/shipping lines; o Graphical screen to display yard occupancy;


o Printing of container discharge list, container load list; o Graphical screen to reserve yard space for containers expected to come to the

terminal over the next two weeks; o Creation of import and export container details from Delivery Order and

Shipping Order brought to the terminal by forwarding agents; o Updating of customs release status for import and export containers; o Capturing of entry and exit of containers at the gate and printing of EIR at

exit with inspection details of container; o Computation of charges for shipping agents and forwarding agents and

printing of bills for these customers; o EDI of standard terminal departure reports to shipping agents; o Printing of operational performance reports for review by container terminal

managers. An estimate to provide the software and services for a Container Terminal Management System is between USD 710,000 to USD 1,420,000, depending on the level of sophistication of the operations and the amount of customisation required. The price was sourced from Portek IT & Automation Pte Ltd, of Singapore. KFS Security The gatehouse is the focal point of site security. The gatehouse is to be built with access to the roof for security personnel. All vehicles must report to security staff upon entry and exit from the depot. Security staff should sit at side windows of the gatehouse at a height sufficient to be able to see inside the cabs of all vehicles and to receive documents from drivers without the need for them to alight from their cabs. Security staff on the ground floor can check container seals and loads while, if necessary, roof access can allow checking of containers for damage on top of loads which would otherwise be out of sight. The security guard at the reporting window should control moving barriers outside the gatehouse, allowing traffic to proceed in and out of the depot when the documentation has been verified. All vehicles entering or leaving the site must have a relevant permit authorized by a designated authority in the administration. Security staff must be empowered to search and examine all people and vehicles leaving the site, even if this power is exercised only in random fashion. Such control will minimize the possibility of revenue loss to customs and importers. Full personnel facilities will be provided in the gatehouse. The perimeter fencing will comply with the standards set by the authorities, comprising a 3 m concrete wall topped by razor wire. All gates will match this standard of height, and will be secured against all unauthorized access. Lighting levels required for night-time operations will exceed illumination levels required to meet the lighting standards required by the authorities. Security staff will be positioned in the KFS during operational hours so as to carry out random checks on cargo loading and to prevent pilferage. Such staff will also be responsible for securing the KFS when it is not in use and for patrolling the site perimeter.


4.3 KFS Terminal Handling System

In considering the optimum KFS terminal handling system it would be necessary to undertake a simulation study of the various handling equipment types, and on the basis of these simulations to undertake a detailed costing of each type, and finally to perform a Multi-Criteria Decision Analysis, which takes into account all factors which would affect the ultimate suitability. Such a study would evaluate the following types of handling equipment. Rubber Tyred Gantry (RTG); Rail Mounted Gantry (RMG); Straddle Carrier (and bath-tub hauler); Reach Stacker (and terminal hauler); Fork-lift Truck (and terminal hauler). In this study two options are considered:

1. Reach stackers (in combination with terminal haulers); 2. RTGs (in combination with RMGs at the rail yard and terminal haulers).

The main differences are in the requirement of land: the reach stacker option requires 61.5 ha of land (as reach stackers need more manoeuvring space) and the RTG option requires 51.7 ha of land. In terms of costs, reach stacker option requires a 20 million USD higher investment in basic infrastructure (in land) compared to the RTG option. However, the investment in equipment in the RTG option is 50 million USD higher compared to the reach stacker option. The operational costs of the RTG option are about 4 million USD lower during the entire concession period. For more information on the financial aspects of both options, please see Chapter 6. For the KFS it is considered that the most appropriate handling system would be the reach stacker combination. This choice was based on the anticipated throughput of the freight station, being just over 750,000 TEUs/annum within the first 10 years, doubling only to just under 1.6 million in 20 years. It is the consultant’s experience in world ports that for terminals, handling less than 1.5 million TEUs/annum, suit the individual lifting device (straddle carrier, reach stacker, fork-lift) unless space constraints dictate otherwise. The financial comparison of the reach stacker and RTG options results in a support for the choice for the reach stacker option too. Another aspect to be taken into consideration is that reach stackers are fairly commonly in use in Dar es Salaam port and in ICDs, and therefore there will be better served both from the point of view on maintenance and spares as on driver and mechanic expertise. Any other form of equipment would be unique in Tanzania, escalating costs and usually resulting in greater downtime when equipment breaks down. Nevertheless new technology will be introduced when sufficient incentive is provided in the form of higher throughput volumes. It is believed that the reach stacker option will provide one of the most competitive options, and will be suitable for the KFS. However, a full simulation and Multi-Criteria Decision Analysis could be carried out at the design stage. In the end of the day it is the concessionaire that will decide on handling technology and further examination of options is in the consultant’s view at this pre-feasibility stage irrelevant.The terminal equipment requirements for the reach stacker option are shown in Error! Reference source not found. and for the


RTG option in Table 4.3. A breakdown of the investments in infrastructure for the RTG option is presented in Annex I.


Table 4.2 Terminal equipment requirements and investment costs for the reach stacker option

TERMINAL HANDLING EQUIPMENT REQUIREMENTS KFS

REACH STACKER OPTION 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Moves per annum x1000 58 128 211 307 334 363 396 431 463 496 533 572 615 658 704 753 805 861 925 993 1065 1144 1228

Working days 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 Moves per day 158 350 579 840 914 995 1084 1181 1267 1360 1460 1568 1685 1802 1928 2062 2206 2360 2533 2719 2919 3133 3363 Working hrs/day 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 Yard moves/hour 6.6 14.6 24.1 35.0 38.1 41.5 45.2 49.2 52.8 56.7 60.8 65.3 70.2 75.1 80.3 85.9 91.9 98.3 105.6 113.3 121.6 130.6 140.1

Rail/Yard Reach stackers Railyrd 0.41 0.91 1.51 2.19 2.38 2.59 2.82 3.08 3.30 3.54 3.80 4.08 4.39 4.69 5.02 5.37 5.75 6.15 6.60 7.08 7.60 8.16 8.76

Stack 0.41 0.91 1.51 2.19 2.38 2.59 2.82 3.08 3.30 3.54 3.80 4.08 4.39 4.69 5.02 5.37 5.75 6.15 6.60 7.08 7.60 8.16 8.76 Terminal Tractors Both 1.10 2.43 4.02 5.83 6.35 6.91 7.53 8.20 8.80 9.45 10.14 10.89 11.70 12.52 13.39 14.32 15.32 16.39 17.59 18.88 20.27 21.76 23.36

Stack/Road Reach stackers 0.45 1.00 1.66 2.41 2.62 2.85 3.11 3.38 3.63 3.90 4.18 4.49 4.83 5.16 5.52 5.91 6.32 6.76 7.26 7.79 8.36 8.98 9.63 Terminal Tractors 0.11 0.24 0.40 0.58 0.63 0.69 0.75 0.82 0.88 0.94 1.01 1.09 1.17 1.25 1.34 1.43 1.53 1.64 1.76 1.89 2.03 2.18 2.34

Reach stackers 1.27 2.82 4.68 6.78 7.38 8.04 8.75 9.54 10.23 10.98 11.79 12.66 13.60 14.55 15.56 16.65 17.81 19.05 20.45 21.95 23.56 25.29 27.15 Total excluding

availability Terminal Tractors 1.21 2.67 4.43 6.42 6.98 7.60 8.28 9.02 9.68 10.39 11.15 11.98 12.87 13.77 14.73 15.75 16.85 18.03 19.35 20.77 22.30 23.93 25.69

Reach stackers 1.42 3.14 5.20 7.54 8.20 8.93 9.72 10.60 11.37 12.20 13.10 14.07 15.11 16.17 17.29 18.50 19.79 21.17 22.72 24.39 26.18 28.11 30.17 Allow 90%

availability Terminal Tractors 1.34 2.97 4.92 7.13 7.76 8.45 9.20 10.03 10.76 11.54 12.39 13.31 14.30 15.30 16.36 17.50 18.73 20.03 21.50 23.08 24.78 26.59 28.55

TOTAL Reach stackers 2 4 6 8 9 9 10 11 12 13 14 15 16 17 18 19 20 22 23 25 27 29 31 Terminal tractors 2 3 5 8 8 9 10 11 11 12 13 14 15 16 17 18 19 21 22 24 25 27 29

Annual investment Rate * 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 New equipment Reach stackers 725 1450 1450 1450 1450 725 0 725 725 725 725 725 725 725 725 725 725 725 1450 725 1450 1450 1450 1450

Terminal Tractors 137.8 276 138 276 413 0 138 138 138 0 138 138 138 138 138 138 138 138 276 138 276 138 276 276 Replacements Reach stackers 1450 1450 1450 1450 725 0 725 725 725 725 725 725

Terminal Tractors 276 138 276 413 0 138 138 138 0 138 138 138 138 138 138 138 TOTAL IN YEAR 1726 1588 1726 1863 725 138 863 1138 863 1138 1276 2313 2451 2451 2451 1588 1001 2588 1726 2588 2451 2588 2588

* 2009 costs (all in 1000 USD)

Life expectancy of Reach Stackers 10 years

Life expectancy of Terminal Tractors 7 years


Table 4.3 Terminal equipment requirements and investment costs for the reach stacker option

TERMINAL HANDLING EQUIPMENT REQUIREMENTS KFS

RTG OPTION 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Moves per annum x1000 58 128 211 307 334 363 396 431 463 496 533 572 615 658 704 753 805 861 925 993 1065 1144 1228

Working days 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 Moves per day 158 350 579 840 914 995 1084 1181 1267 1360 1460 1568 1685 1802 1928 2062 2206 2360 2533 2719 2919 3133 3363 Working hrs/day 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 Yard moves/hour 6.6 14.6 24.1 35.0 38.1 41.5 45.2 49.2 52.8 56.7 60.8 65.3 70.2 75.1 80.3 85.9 91.9 98.3 105.6 113.3 121.6 130.6 140.1

Rail/Yard RTG Railyrd 0.33 0.73 1.21 1.75 1.90 2.07 2.26 2.46 2.64 2.83 3.04 3.27 3.51 3.75 4.02 4.30 4.60 4.92 5.28 5.67 6.08 6.53 7.01 RMG Stack 0.26 0.58 0.97 1.40 1.52 1.66 1.81 1.97 2.11 2.27 2.43 2.61 2.81 3.00 3.21 3.44 3.68 3.93 4.22 4.53 4.86 5.22 5.61 Terminal Tractors Both 0.94 2.08 3.45 5.00 5.44 5.92 6.45 7.03 7.54 8.10 8.69 9.33 10.03 10.73 11.48 12.28 13.13 14.05 15.08 16.19 17.37 18.65 20.02

Stack/Road Reach stackers 0.26 0.58 0.97 1.40 1.52 1.66 1.81 1.97 2.11 2.27 2.43 2.61 2.81 3.00 3.21 3.44 3.68 3.93 4.22 4.53 4.86 5.22 5.61 Terminal Tractors 0.38 0.83 1.38 2.00 2.18 2.37 2.58 2.81 3.02 3.24 3.48 3.73 4.01 4.29 4.59 4.91 5.25 5.62 6.03 6.47 6.95 7.46 8.01

RTG 0.33 0.73 1.21 1.75 1.90 2.07 2.26 2.46 2.64 2.83 3.04 3.27 3.51 3.75 4.02 4.30 4.60 4.92 5.28 5.67 6.08 6.53 7.01 RMG 0.53 1.17 1.93 2.80 3.05 3.32 3.61 3.94 4.22 4.53 4.87 5.23 5.62 6.01 6.43 6.87 7.35 7.87 8.44 9.06 9.73 10.44 11.21

Total excluding

availability Terminal Tractors 1.32 2.91 4.83 7.00 7.62 8.29 9.03 9.84 10.56 11.33 12.17 13.07 14.04 15.02 16.07 17.19 18.38 19.67 21.11 22.66 24.32 26.11 28.03 RTG 0.37 0.81 1.34 1.94 2.12 2.30 2.51 2.73 2.93 3.15 3.38 3.63 3.90 4.17 4.46 4.77 5.11 5.46 5.86 6.29 6.76 7.25 7.79 RMG 0.58 1.30 2.15 3.11 3.39 3.69 4.02 4.38 4.69 5.04 5.41 5.81 6.24 6.67 7.14 7.64 8.17 8.74 9.38 10.07 10.81 11.60 12.46

Allow 90%

availability Terminal Tractors 1.46 3.24 5.36 7.78 8.46 9.22 10.04 10.94 11.73 12.59 13.52 14.52 15.60 16.69 17.85 19.10 20.43 21.85 23.46 25.18 27.03 29.01 31.14 RTG 2 2 2 2 3 3 3 3 3 4 4 4 4 5 5 5 6 6 6 7 7 8 8 RMG 1 2 3 4 4 4 5 5 5 6 6 6 7 7 8 8 9 9 10 11 11 12 13 TOTAL

Terminal Tractors 2 4 6 8 9 10 11 11 12 13 14 15 16 17 18 20 21 22 24 26 28 30 32

Annual investment Rate * 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 New equipment RTG 2700 5400 0 0 0 2700 0 0 0 0 2700 0 0 0 2700 0 0 2700 0 0 2700 0 2700 0

RMG 2910 2910 2910 2910 2910 0 0 2910 0 0 2910 0 0 2910 0 2910 0 2910 0 2910 2910 0 2910 2.910 Terminal Tractors 137.8 276 276 276 276 138 138 138 0 138 138 138 138 138 138 138 276 138 138 276 276 276 276 276

RTG 5400 0 0 0 2700 0 0 0 Replacements RMG 2910 2910 2910 2910 0 0 2910 0 0 2910 0 0 2.910

Terminal Tractors 276 276 276 276 138 138 138 0 138 138 138 138 138 138 138 276 TOTAL IN YEAR

8586 3186 3186 3186 2838 138 3048 276 413 6023 3323 3186 6096 5886 3048 5813 8796 276 3323 11633 413 6023

* 2009 costs (all in 1000 USD)

Life expectancy of RTGs 10 years

Life expectancy of RMGs 15 years

Life expectancy of Terminal Tractors 7 years


5 Connectivity of the KFS

The KFS needs to be linked to both the TAZARA and TRL railway systems as well as to the main road arteries of the country, primarily the A7 (Morogoro Road).

5.1 Road Infrastructure

In principle the KFS requires two access roads: one from the North drawn from the A7 and one leading South to the Industrial Zone as planned by the District Council of Kisarawe. Connection to the A7 Road access to the A7 would be via a 7.4 meter wide asphalt road, 3.75 km in length. Access at the intersection of the two roads would be a right turn refuge. In time it may become necessary to signalise this intersection. The road from the A7 to the KFS needs to be a heavy duty road in view of the huge number of trucks calling the KFS with cargo and containers. The cost of this access road has been estimated to be in the order of USD 3.5 mln (see Annex B). The road construction requires relocation of businesses and people that are residing now at the alignment of the A7. Kisarawe Industrial Zone. The Kisarawe Industrial Zone west of Kisarawe village (see Figure 2.2) should be connected to the KFS by a heavy duty road as well. The estimated distance between the Zone and KFS is 10 km based on the location data provided by the Kisarawe District Council. The cost of construction of this dedicated Industrial Zone Road has not been taken into account in this pre-feasibility. The existing rural road adjacent to the planned KFS leads from the A7 to Kisarawe village. Although it would facilitate traffic from the A7 to Pugu Road it is not recommended to use this route for large/heavy vehicle traffic and subsequently any freight or container haulage. DSM Ring Road A major Ring Road is being constructed around the city of Dar es Salaam. The total length is 68.9 km. The trace of this Ring Road can be viewed on a regional map (see Figure 2.1) and runs from Mbezi beach at the Indian Ocean (north of DSM) via Goba-Mbez (Morogoro Road) - Kinyarezi (Ilala)- Segereya – Banana (Pugu Road) – Jetty Club – Kiloa Road that connects to Port of DSM on the south side. The ring road will be a four lane tarmac road and construction is under control of TANROADS. The Consultant has no indication on a starting date of implementation of this project. Relocation and resettlement claims are currently being dealt with by the Dar es Salaam City Council.


5.2 Rail infrastructure

Selected rail track The KFS will have direct rail access to both the TAZARA line (1067mm track gauge) and the TRL line (1000mm track gauge), requiring new rail lines to be constructed respectively to the Yombo (28 km) and Gongolomboto (17 km) marshalling yards. This will incorporate a doubling of a section of the existing TAZARA line, which will serve as the route for a dedicated rail shuttle service between the KFS and Yombo yard. From Yombo yard to the DSM port, the existing TAZARA will be doubled to serve as a dedicated rail shuttle service to the port terminals, serving both the existing TICTS and TPA terminal, as well as the future planned container terminal at berths 13 and 14. The TAZARA route is favoured ahead of the TRL route for the shuttle service because the alignment is more suitable for expansion and port terminal access. From the TAZARA mainline in the vicinity of Pugu, new track needs to be constructed northwards to pass under the Pugu Road and the TRL main line near Gongolomboto, in grade separation structures. The line will then proceed northbound, and then westwards to the KFS. The area to be traversed is very hilly, and unlike roads, rail lines are very limited in their ability to climb hills. The consultants have adopted a maximum ruling grade of 1 in 60. A more direct route from the west, and therefore shorter in track length, may be technically feasible, but would require significantly more earthworks, possibly tunnels and viaducts. An investigation of such a route is beyond the scope of this project, but several alternative routes would need to be evaluated in the design phase. There is also the need for the take-off from the main line to be at a station/marshalling yard for traffic control purposes. Gongolomboto is such a station. There is the possibility that the TRL rail operations will in the future be replaced or supplemented by a new standard gauge rail service. The upgrading of the TRL link to the KFS will have to be incorporated into the design of the new system and the TRL rail link and associated structures to the KFS should be such that it can be upgraded to standard gauge in the future. It is assumed that this could be a longer term development. The siding at KFS provided for the TAZARA system has two loading/discharging lines, each capable of accommodating 50 wagons (each 13m length), as well as a locomotive escape line. Rail access to the TRL system would take off the mainline at Gongolomboto station and join the TAZARA alignment as it makes its way to the KFS. The siding for the TRL line at KFS also provides for two loading/discharging lines, each capable of accommodating 50 wagons of 13 metre length, as well as a locomotive escape line. Shortest link rail shuttle option The Consultant has furthermore studied an alternative rail line based on the shortest possible connection from the KFS to both main railway lines (TAZARA and TRL). These routes are shown schematically on the attached drawing (see Error! Reference source not found.). Consultants have herewith not made any attempt to follow contours, but are aware that the terrain for such a rail line is very hilly. Therefore only a certain amount of rationalisation has been applied to our cost estimates.


Figure 5.1 Option for most direct rail links from KFS to TRL and TAZARA line


The shortest length between the TAZARA line and the intended KFS is 12.5 km. There is no existing station at the possible take-off site, so it would be necessary to establish a 3 x 800 metre exchange yard at this point, and TAZARA would have to operate the yard as a signalled station. However, this take-off point is 23.9 km from the facing points of Yombo Yard, and according to TAZARA officials it will be necessary to double the line to allow unrestricted access to the KFS. It will therefore be necessary to double the line for a total of 32.5 km from the port to the take-off at Vigama. Given the nature of the terrain between Vigama and the KFS the consultant estimates that of the 12.5 kilometres, 5% would require tunnelling, 15% would require deep cuttings, 5% would require viaducts/bridges and 10% would require deep fills. Only 65% of the line could be laid on conventional graded formation. Although it is difficult to estimate accurately without knowledge of the sub-strata likely to be encountered on the excavations/tunnels, the consultant estimates the costs of the tunnel section to be USD 14,000 per m, and that of the viaducts to be USD 16,000 per m, though both rates are highly dependent on the detail configuration. The total cost estimate of this alternative (short-cut) route is roughly estimated at USD 107 mln (excluding contractors preliminary, general expenses and consultancy fees) or 130 mln (including all). This option will cost around USD 47 mln more than the preferred (longer) option. A breakdown of cost of the most direct route is presented in Annex H. The shuttle transport cost calculations have not been adapted for this alternative, as the distance to be covered on the access rail links to the KFS is shorter, but the distance to be covered on TRL or TAZARA lines is larger. Overall, the difference in distance for the shuttle trains will not be very different. For trains to/from upcountry Tanzania and the LLCs, the shortest rail connection results in an additional distance of about 17 km compared to the optimal rail link option. This should however be seen in light of a total distance of up to 1000 km that these trains will cover. Moreover, this is applicable to only a small share of the total volume, as even in the best case the share of rail transport to upcountry Tanzania and the LLCs will be in the range of 25% (as compared to a current rail share of about 5% from the port of Dar es Salaam). In all, the saving of 17 km distance for the long haul trains will not outweigh the additional investment costs in the shorter rail connection.

5.3 Rail shuttle service

Modal transport pattern and modal split forecast It is envisaged that in future all transit containers (and containers with destination or origin upcountry Tanzania) will be taken by rail shuttle to the KFS, which will have unimpeded and dedicated road access to the T1 transit route. The performances of both TAZARA and TRL have been poor and loss-making for many years, but there is now a concerted effort by all the regional governments to focus on a meaningful restructuring and improvement of the rail services. For this to be successful, it will require trains to be operated on a contracted scheduled basis, providing longer trains,


shorter transit and turnaround times and lower operating costs. The establishment of the KFS should assist in promoting this, subject to a joint performance based operating agreement being concluded between the two railway operators, the KFS operator, and the port terminals. Container rail shuttle capacity requirements The future volume projections for the rail shuttle service have been based on the imported containers which are expected to be transferred to the KFS – both up-country domestic and transit imports. The return trip from the KFS to the port terminals will carry the containerised exports and empty containers. It is expected that some high value bulk exports, such as copper and agricultural exports will be consolidated and containerised at or around the KFS. The forecast is presented in Error! Reference source not found..

Table 5.1 Import/ export container flows through the KFS

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume

accommodated 90 200 327 476 520 569 622 902 1832

Of which:

Tanzanian imports 25 55 92 136 150 167 185 284 586

Tanzanian exports 19 42 70 103 113 125 138 208 415

LLC imports 11 24 39 58 64 71 79 122 251

LLC exports 8 17 28 42 46 50 56 83 164

Empties 28 61 97 138 146 155 165 205 415

Total import flows 43 98 162 239 264 292 323 492 1001

Total export flows 47 102 165 238 257 277 299 410 831

Error! Reference source not found. indicates the number of shuttle trains per day, operating in each direction. It is assumed that the KFS rail shuttle service will operate on a 24/7 basis. In order to assure zero downtime, it is assume there will always be one complete additional set of 2 locomotives and 50 wagons of 2 TEU capacity on standby. With a turnaround time of 10 hours (thus 2.4 roundtrips per day), the capacity of one shuttle set is 2.4 x 2 x 100 x 350 = 168,000 TEU in both directions, or 84,000 TEU in each direction. Between 2030 and 2035 a doubling of the track to the KFS will be required.

Table 5.2 Container flows through KFS (1000 TEU) and number of shuttle trains needed

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume of containers 90 200 327 476 520 569 622 902 1832

Number of shuttles in operation* 2 3 3 4 5 5 5 7 13

* includes one train shuttle set on standby

Car rail shuttle capacity requirements Vehicles can be transported from the car terminal to the KFS by road car transporter, taking 6 vehicles per trip, or by rail shuttle using special wagons. If all the vehicles are transported by rail shuttle, assuming a 20 wagon train with special dedicated rolling stock able to load up to 6 cars per wagon, each train could handle a total of 120 units per round trip (there will be only imports). With 3 roundtrips per day, this means an annual capacity of 3 x 120 x 350 = 126,000 vehicles. The projected volume of vehicle imports through the KFS and the related


number of shuttles is shown in Error! Reference source not found.. It is proposed that the TRL line is used for the car train shuttle, which is also more appropriate in respect the rail to port interface and location.

Table 5.3 Vehicle flows through KFS (1000 units) and number of shuttle trains needed

2014 2015 2016 2017 2018 2019 2020 2025 2035

Total volume of vehicles 55 61 67 74 82 89 97 149 354

Number of shuttles in operation* 2 2 2 2 2 2 2 3 4

* includes one train shuttle set on standby

General rail shuttle operating principles The main rail shuttle operating principles will be based on achieving a high level of equipment utilisation in order to minimise costs. Rail shuttle services between the port terminals and Yombo yard will in the first years of KFS operation be limited to 20 wagon train lengths from the existing terminals, and up to 50 wagons from the new container terminal. At Yombo yard it will be possible to combine shorter trains from the port terminals to make up 50 wagons trains for the 27 km service to the KFS. For the export direction, the full 50 wagon trains will be loaded at the KFS with containers placed on wagons destined for a designated port terminal and vessel, allowing the train to be split (if necessary) at Yombo yard. Ideally, trains should be kept together as block trains at all times, including the locomotives, to achieve the shortest possible train turnaround time – with the exception of the train splitting and assembly at Yombo yard. A train turnaround time of (less than) 10 hours should be aimed for, allowing each train to carry out 2.4 return trips each day. The KFS includes the development of an import car terminal – this can also be served by the rail shuttle service, or by road car carriers. Given the limited space within the existing container terminal and associated container rail sidings and handling equipment, it would difficult to mix the loading of containers and cars at the same facility. It is proposed to locate the rail car sidings adjacent to the port car terminal and to use the TRL line for the car rail shuttle to the KFS. With the operation of the rail container shuttle on the TAZARA system, the TRL link to the port is expected to remain relatively underutilised, but this will depend on the possible future nickel exports and the plans for the standard gauge railway development. If the rail car shuttle is to be operated on the same line as the containers, this line will require doubling at an earlier stage and, and the overall logistics management will become more complex. The special car rail carriers should be designed such that they can be upgraded to standard gauge in future. Rail shuttle service schedule The projected container volumes and assumed train lengths indicate that it will be necessary to provide a passing loop to accommodate 50 wagons trains between Yombo-yard and the KFS. The following tentative operating schedule is proposed:

Unloading and loading the train at the port terminal, initially with 3 or 4 forklifts; Loading and unloading 20 to 50 wagons, 40 to 100 TEUs: 3 hours; Train transit time between the port terminal and Yombo yard: 30 mins;


Clearance and possible arrangement in Yombo yard: 30 mins; Train transit between Yombo and the KFS, 27 km: 1 hour; Loading and unloading at the KFS; Return to Yombo yard : 1 hour; Yombo yard: 30 mins; Transit time Yombo to port terminal: 30 mins.

Total train turnaround time estimated at 10 hours, making 2.4 return trips per 24 day possible. Each 50 wagon train unit will therefore have a capacity of 100 x 2.4 x 350 days = 84.000 TEUs per annum in each direction.

5.4 Rail shuttle capital and operating costs

Container rail shuttle capital costs It is assumed that the rail shuttle service will be operated as a separate business unit and cost centre, possibly as a concession, or as a separate operating division within TAZARA or TRL – which in turn may also be privately operated in future, despite the recent poor experience with railway concessioning. It is important that the equipment – locomotives and wagons – are wholly dedicated to the shuttle service, and that the maintenance of both the equipment and the track infrastructure is carried out on a fixed performance contract basis to ensure a very high level of operational reliability. Track maintenance should ideally be carried out by one of the two existing railway companies, probably TAZARA, due to safety and legal considerations. The use of the track by the shuttle service could be on a track access fee basis. Consultants have calculated an overall infrastructure user fee (wharfage fee) for the entire project, which means KFS terminal site infrastructure and road and rail connections to the existing network(see Chapter 6). As the rail infrastructure capex is about 42% of the total infrastructure capex, about 42% of the wharfage fee applies to the rail links. The track access fee for part of the rail trip that takes place on the existing rail network is not included in this wharfage fee, but has been included as a track access fee in the shuttle operation costs (see sections below and Error! Reference source not found. and Error! Reference source not found.). The equipment can be purchased or leased on a full maintenance basis. For the purposes of costing, it has been assumed that the equipment is leased from TAZARA, as it will operate on the same track gauge of 1067mm, and that the daily lease cost will only be charged and paid on basis of equipment availability. Equipment availability of 100% is therefore assumed. Container rail shuttle operating costs Initial operating costs for the rail shuttle service have been estimated using the following assumptions for each train set of 50 wagons, assuming a full load of 100 TEUs of full and empty containers in each direction:

Train sets of 50 container wagons and 2 locomotives; 2.4 trips of 35km each way = 186 km per day per train set; Locomotive lease at USD 1200 per day, wet lease, including maintenance.

Locomotives can be leased from TAZARA any other regional supplier, on a daily hire basis, based on 100% availability. Maintenance and repair should ideally be subcontracted to TAZARA, in order to avoid safety issues related to both equipment


and track. Non performance should be covered by a provision for outsourcing, with the costs offset against hire charges. The alternative is for the KFS company to purchase its own locomotives, at about USD 2 mln per unit, to be maintained by TAZARA workshops;

Wagon lease at USD 30 per day, including maintenance – with similar contractual arrangements as for the locomotives. A new wagon is estimated to cost about USD 40,000.

In order to assure zero downtime, it is assume there is always one complete set of 2 locomotives and 50 wagons on standby;

Fuel consumption at 4 litres per 1,000 gross tonkm; Total mass of train 3.200 tonnes.

o Gross tonkm per shuttle round trip = 22,4000 gross tonkm; o Total fuel consumption per round trip = 900 litres; cost of fuel: USD 1.2 per

litre; Cost of 3 train crews per unit per month = USD 7,500; Track access fee = USD 0.01 per gross tonkm (track maintained and signalled by

TAZARA). This access fee is more than is currently charged by TAZARA for access by the Zambia operator, RSZ;

Administration and operating margin: 25%; Whereas the current port terminal configurations cannot take 50 wagon trains, it is assumed that in a few years time the configurations will have been adapted to 50 wagon trains. The shuttle cost estimate therefore assumes 50 wagon trains, even though in practice in the first 2 years of KFS operations (when volumes are still relatively small) shuttles of 20 wagons may have to be operated. Thus, the cost of operating one shuttle turnaround between the KFS and the port are indicated as in Error! Reference source not found.. Assuming a load factor of 100% (=200 TEUs per round trip), the costs per TEU are USD 31.55. The unit cost however does not take underutilization of trains into account: less than fully loaded trains will occur whenever capacity exceeds the capacity of the existing shuttles, a new train set needs to be put in service. With growing volumes, this new train set will grow towards full utilisation; at the moment it reaches full utilisation another train set will be put in service, etc. When the underutilization (less than full wagon trains) is taken into account the unit costs will change. The average cost per TEU during the entire 23 years of operation works out to USD 37.00.

Table 5.4 Operating costs of one shuttle turnaround trip

Cost category Costs in USD

Locomotive and wagon lease 1,625

Fuel costs 1,080

Train crew 104

Track access 2,240

Administration and operating margin 1,262

Total per shuttle roundtrip 6,311

Road – Rail Comparative Costs The comparative cost of road transport are USD 102 per TEU (or USD 350 per round trip), assuming:

2 TEUs per truck;


0.75 load factor; 70 km round trip distance; allowing for an 0.5 days congestion charge at USD 150/day; one trip per day, transport tariff of USD 2.50 per km.

Some containers will however be too heavy to allow 2 TEUs per truck, thus increasing cost per TEU. The comparative rail shuttle costs are USD 37.00. Car rail shuttle The existing TRL line and new link to the KFS could be utilised for operating the car shuttle, without the need at this stage for doubling the line between the port and the KFS. It is proposed to operate this on similar principles, but shorter train units, using 20 wagon trains with one mainline locomotive, with an estimated train turnaround time of 8 hours as a non-stop service (each train completing 3 trips per day). It is expected that the car shuttle will be empty on the return trip and a load factor of 50% is therefore assumed for the round trip. This means a total number of 20 wagons x 6 cars x 5% = 120 cars per shuttle turnaround can be transported. The cost of the special car wagons has been estimated at USD 120,000 each and full maintenance lease costs at USD 60 per day. Thus, the cost of operating one rail car shuttle turnaround between the KFS and the port car terminal are indicated as in Error! Reference source not found.. This works out to a cost of USD 36.07 per car. The unit cost however does not take underutilization of trains into account: less than fully loaded trains will occur whenever capacity exceeds the capacity of the existing shuttles, a new train set needs to be put in service. With growing volumes, this new train set will grow towards full utilisation; at the moment it reaches full utilisation another train set will be put in service, etc. When the underutilization (less than full wagon trains) is taken into account the unit costs will change. The average cost per car during the entire 23 years of operation works out to USD 48.12.

Table 5.5 Operating costs of one shuttle turnaround trip

Cost category Costs in USD

Locomotive and wagon lease 800

Fuel costs 806

Train crew 104

Track access 1,680

Administration and operating margin 848

Total per shuttle roundtrip 4,238

Multi-story car park TPA has plans to construct a multi-storey car park at Dar es Salaam harbour. TPA stated recently at the 8th Pan-African Ports Cooperation (PAPC) conference that the car park will have a capacity of accommodating over 8,000 vehicles and will operate as special Car Freight Station. This plan would undermine the viability of a dedicated rail shuttle service from DSM port to the KFS since the multi-story car park will not induce consignees of cars to have their vehicle been delivered at KFS. In order to stimulate dispatch of cars to the KFS the storage fees in port should be substantially higher than the combined cost of transport and storage of cars at KFS.


In case TPA would not decide to establish a rail shuttle for cars in view of relatively low dwell times in port, rolling stock cost for car shuttle locomotives and rail wagons can be avoided.

5.5 DSM port terminal rail access and interface

The consultant has studied the rail configuration at both TPA and TICTS terminals to review the possible bottlenecks that arise from establishment of the rail shuttle service. The existing port to rail interface is poor, although direct rail access to the TICTS container terminal is provided for both TAZARA and TRL, accommodating train lengths of 20 wagons. The TAZARA line approaches from the south and the TRL from the north with a gantry crane spanning two lines for each service. In theory this should work well, however this means accepting the constraint of the short train lengths. Development constraints prevent the lines from being located further away from the quay side to provide more yard storage space. The lines could be lengthened, possibly doubled, but this would require the main container port road entrance to be relocated much further to the south. There is an operating agreement between TICTS and TRL for loading 1000 import TEUs per month, about one 20 wagon train per day, but this is hardly being utilised at present, mainly because of the TRL operating difficulties. Each party to the agreement blames the other for non-performance, with delays in train loading, equipment shortages and absence of scheduling being the main issues. It would appear that the main difficulties are related to operational and contractual problems rather than the lack of infrastructure. The railway operating efficiency needs to be improved before an infrastructure upgrade can be justified. The rail shuttle service should be able to operate with the existing facilities. For the new container terminal at berths 13 and 14, which are entering the design phase, railway sidings to accommodate 50 wagon trains should be provided, up to 800m long, including rail mounted rail gantry system, located at the rear of the container yard. An aerial on the Google map indicates that this should be possible, provided that the oil storage tanks and Kurasini Terminal are relocated. It is proposed that the TRL line to the KFS be considered for the operation of the rail car shuttle, so that the operations of container and car rail shuttles do not conflict with each other, and that the use of the track infrastructure is optimised. Based on the TICTS map (see Error! Reference source not found. on the following page) the consultant has prepared a map showing that it is possible to extend the Rail Mounted Gantry rails, and associated rail lines serving them, to accommodate up to 540 m required to load/unload 40 wagons conveying 40ft containers or two 20 ft containers. However, this extension would require alterations to the rail track layout, relocation of the port access road (which may require substantial bank removal) and the possible relocation of the TICTS boundary. It is most likely that the extended length of the terminal would demand an additional gantry crane to be provided.


Figure 5.2 TICTS container terminal with extended RMGs


6 Financial Feasibility of the KFS

6.1 Introduction

For the financial analysis, a financial model in Microsoft Excel was built to simulate the business case from the perspective of a future private company that will develop, maintain and operate the KFS over a certain period (base case: 25 years). This chapter introduces the financial model, provides a description of the assumptions underlying the model and presents the results of the analysis. Finally, recommendations will be made focussing on steps to be taken to take the project forward. This section describes the financial analysis for the development of the KFS. The financial analysis aims to provide insight in the financial feasibility of this development from the perspective of a private developer. It considers the project’s ability to attract a private company (or consortium) to develop, maintain and operate the KFS including a dedicated rail connection with the port under a lease arrangement (25 years) with the Tanzanian Port Authority (TPA). Financial feasibility The financial analysis provides information about the financial feasibility of the project from the perspective of the private developer. The main criteria to map out if the project is financially feasible are:

The project Internal Rate of Return (IRR) is at least equal to the Weighted Average Cost of Capital (WACC). The reasoning and calculation of the WACC is illustrated in Annex J;

The expected return on investors’ equity corresponds with the characteristics and risks related to the projects. This is measured by the Return on Equity (RoE). The reasoning and calculation of the Return on Equity is also illustrated in Annex J;

The project generates sufficient cash-flow to meet its financial obligations (interest payments and debt repayments). This is measured by the Debt Service Coverage Ratio (DSRC).

The financial analysis will result in calculation of the fee structure that private developers may apply in order to make the project commercially attractive.

6.2 Financial model

Objective The objective of the model is to calculate the financial feasibility from the point of view of a project developer to:

Develop/construct the KFS including a dedicated rail connection;


Maintain and operate the KFS including the dedicated rail connections over a period of 25 years.

Assumptions Assumptions made for the financial model are based on the:

Design and cost calculations by the consultant; Analysis and research with respect to general, macro-economic and financial

indicators relevant for this project; Communication with the client and other stakeholders. Based on a mission conducted

in November 2009 an analysis has been drawn that describes the rationale for the proposed business model being the ‘integrated concession model’.

Structure The model has been structured as per Error! Reference source not found..

Figure 6.1 Structure of the model

Source: ECORYS

The financial model makes it possible to easily assess the financial feasibility for different assumptions than estimated for the base case, for instance for 10% higher or lower investment and operational costs, fees, timing and tax assumptions. Input The input part of the model consists of a worksheet presenting the assumptions taken into account in the model. The assumptions refer to aspects like timing, demand (revenues), costs, finance, returns (required) and taxes and will be further elaborated on in the next section. The input part of the model is the part that every other part of the model refers back to. Calculation The model uses the input to calculate all data needed to determine the output. The model contains calculations with respect to:

The timing of the project (for instance the model indicates whether or not debt repayment has started, etc.);

The total and annual capital expenditures (CAPEX); The total and annual operational expenditures (OPEX); The demand over the years and consequent revenue streams; The cash flows of the project over the years; The retained earnings of the project over the years; Finance in terms of debt, repayments, interest, equity, dividends etc;

INPUT OUTPUT

COCKPIT

CALCULATION


Tax regime; Relevant cover ratios (Debt Service Cover Ratio minimum/average). The effect of the risks and opportunities can be calculated as the cockpit makes it

possible to immediately assess the influence on the financial feasibility when e.g. timing, expenditures or revenues assumptions change.

Output The output sheets refer back to the calculation sheets. For this model the output consists out of:

Cash flow statement; Profit and loss account; Balance sheet; Calculation of financial ratios.

Cockpit The cockpit is constructed once the model is completed. It is the summary sheet of the model, showing the main results as well as the main drivers of the model. The drivers of the model can be changed in the cockpit, and the cockpit sheet will immediately show the results of such changes. This allows for the model to be easily optimized and scenarios to be assessed. The cockpit for this project allows to assess the impact of different input (for timing, required return- and interest rates, finance, revenues and costs) on the:

Return on equity generated (RoE); Internal rate of return (IRR); Annual- and minimum Debt Service Coverage Ratio (DSRC); Net present value (NPV).

Furthermore, as the financial analysis will be used to calculate the expected fee structure to make the project commercially attractive for private developers, the cockpit provides insight in the estimated fee structure under different assumptions. This is done by means of the ‘goal seek’ function. With this function the minimum fee structure for which the financial criteria (IRR, RoE, DSCR) are met are calculated in terms of:

Transport fee per TEU; Transport fee per car; Handling fee per container or car; Wharfage fee per container or car.

6.3 Assumptions

All assumptions made have been verified in discussion with the client. The assumptions as presented in this section determine the “base case” of the project. Business/PPP model An ‘integrated model’ will be used (see Figure 6.2). In this model all building blocks are transferred to a single private entity under an integrated concession agreement as shown in the figure below. This implies that all the risks (except land acquisition risk) are allocated to one single private entity including the complex interface risks.


This model allows for a single contracting authority on the side of the public sector. This would normally be TPA.

Figure 6.2 Integrated Concession Model

Source: ECORYS

Timing Important assumptions with respect to timing are stated in Error! Reference source not found.:

Table 6.1 Assumptions timing

Parameter Assumption (base case)

Number of concession years 25

Construction starts 1 January 2012

Construction ends 31 December 2013

Operation starts 1 January 2014

Concession ends 31 December 2036 (related to number of concession years)

Repayment starts A grace period is assumed if necessary to meet financing

requirements (Debt Service Coverage Ratio)

Days per year (period) assumed 365/366

Source: ECORYS

Inflation As this is a pre-feasibility study inflation is not taken into account. Moreover, the concession period is rather long (25 years). It is expected that potential investors will be highly reluctant to accept the risk on inflation over such a period. All numbers in this report are in real terms. It is noted that the financial model allows inflation to be incorporated. This makes it easier to build on the model in the next phases of project development.


6.4 Capital expenditures

Cost estimates are made for the following items: Land (purchase) of max 100 hectare (about 250 acres); Relocation and resettlement of persons and objects; Rail infrastructure: rail shuttle line TAZARA and TRL; Road infrastructure: connection to the A7 (Morogoro Road); Freight station infrastructure (earth works, pavement, utilities, etc); Container and car handling equipment (reach stackers, tractor trailers etc); Terminal buildings, fences , etc; Terminal operations management system; Rail shuttle equipment: locomotives and rail wagons (lease); Operating cost for the rail shuttle services (diesel, crew, track access etc); Operations and maintenance of terminal infrastructure and equipment.

The Consultants have based all development cost on their own knowledge. For certain items the assistance of stakeholders has been called in.

a) The Executive Agency of the District of Kisarawe has indicated that the cost of land is on average USD 1,000 per acre in the Kisarawe South area (Industrial zone). This figure has been used to estimate the cost of land for Kisarawe North.

b) Relocation and compensation costs are based on findings in section 2.4, being between USD 190-300 per m2. The population density of the Kisarawe North area is limited and for calculation purposes the consultants have assumed a total compensation of some USD 80,000.

The details of cost items can be observed in Annexes B to G. KFS infrastructure Four scenarios for KFS infrastructure have been analysed. The scenarios differ with respect to: i) Rail infrastructure approach: the base case scenario (A) is according to the

Consultant’s advice on the optimal rail connection in terms of investment costs. This rail connection does not follow the shortest route from the existing railway lines to the KFS in order to avoid high investments for structural works such as tunnels and bridges. In this case the total CAPEX is USD 183.2 million including indirect costs (contracts preliminary and general costs; consultant fees). Of this, the rail access costs are USD 63.6 million (excluding indirect costs). The shortest route scenario (B) is based on using the shortest link for KFS rail connections to the existing rail network, resulting in higher estimates of investments in structural works such as tunnels and bridges. In this case the total CAPEX is USD 236.5 million including indirect costs (contracts preliminary and general costs; consultant fees). Of this, the rail access costs are USD 107.1 million (excluding indirect costs);

ii) Terminal handling equipment: the base scenario (1) assumes the use of reach stackers and terminal tractors. The alternative scenario (2) assumes the use of rubber tyred gantry cranes (RTG) and terminal tractors for terminal handling and rail mounted gantry cranes (RMG) for the shuttles. Whereas in the alternative scenario the costs of terminal infrastructure are lower with approximately USD 20 million, the capital costs of terminal equipment are significantly higher (about USD 50 million). The operating costs of terminal equipment are slightly lower (about USD 4 million).


Error! Reference source not found. summarizes the scenarios.

Table 6.2 Summary of the four scenarios

Scenarios Terminal handling equipment base

case – reach stackers

Terminal handling equipment

alternative case – RMG/RTG

Infrastructure base case – optimal link A1 A2

Infrastructure alternative - shortest link B1 B2

Source: ECORYS

Terminal handling equipment The required terminal handling equipment (see Error! Reference source not found. and Table 4.3) grows as the container flows through the KFS grow and are therefore calculated based on the traffic forecasts and KFS capacity. In the base case (1) there are two types of handling equipment:

Reach stackers to be replaced every 11 years; Terminal tractors to be replaced every 7 years.

In the alternative case (2) there are three types of handling equipment:

RTGs to be replaced every 10 years; RMGs to be replaced every 15 years; Terminal tractors to be replaced every 7 years.

The investment costs for handling equipments are stated in Error! Reference source not found.below. It is shown that the capital costs of RTGs and RMGs are significantly higher.

Table 6.3 Investments in handling equipment

Category CAPEX (USD)

Per reach stacker (1) 725,000

Per terminal tractor (1&2) 137,750

Per RTG (2) 2,910,000

Per RMG (2) 2,700,000

Source: ECORYS

During the entire concession period CAPEX on terminal handling equipment adds up to:

Base case: USD 43,202,750; Alternative case: USD 95,065,600 .

Total CAPEX Total CAPEX over the entire concession period is illustrated in the table below.


Table 6.4 CAPEX for different scenarios

Scenarios Terminal handling equipment base

case – reach stackers

Terminal handling equipment

alternative case – RMG/ RTG

Infrastructure base case – optimal link 226,438,084 (A1) 258.831.941 (A2)

Infrastructure alternative - shortest link 279,699,759 (B1) 312.093.616 (B2)

Error! Reference source not found. on the next page shows the development over time of CAPEX for the KFS base case, for infrastructure CAPEX during the investment period in the first 2 years and CAPEX for purchasing handling equipment during the operations period.

Figure 6.3 CAPEX of the KFS base case

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10

20

30

40

50

60

70

80

90

100

2010 2015 2020 2025 2030 2035

x U

SD

mln

Source: ECORYS

6.5 Operational expenditures

The operational costs are divided in four main categories: Maintenance costs KFS Infrastructure; Staffing costs; Equipment operational costs; Rail shuttle operational costs.

Maintenance costs KFS Infrastructure Maintenance costs grow after the first 5 years of operation and are shown in Error! Reference source not found. below.

Table 6.5 Maintenance on KFS Infrastructure (all scenarios)

Maintenance on KFS Infrastructure USD/year

First 5 years of operation 637,759

After 5 years of operation 1,837,111

Source: ECORYS


Staffing costs Staffing of the KFS is calculated based on the growing need for staffing as container flows through the KFS grow. Annex A provides an estimate of the number of staff required in line with the traffic flow forecasts for the different positions in the KFS organization. In the terminal handling base case (reach stackers) the organization will grow from 114 in year 1 to 466 after 25 years. Based on an average salary per head of USD 700 per year, the total staffing costs add up to USD 5,081,300.- . See Error! Reference source not found.. In the terminal handling alternative case (RTG/ RMG) the organization grows to 375 people in 11 years and stays stable after. Due to a faster growth in staffing costs this leads to a slightly higher total of USD 5,218,500,-.

Figure 6.4 Staffing costs base case (reach stackers)

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50

100

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250

300

350

2009 2014 2019 2024 2029 2034

x U

SD

Th

ou

san

ds

Source: ECORYS

Equipment operating costs Equipment operating costs are made for the operation of reach stackers and terminal tractors as shown in Error! Reference source not found. on the next page.

Table 6.6 Equipment operating costs

Category OPEX (USD/ year)

Per reach stacker (1) 129,200

Per terminal tractor (1&2) 36,323

Per RTG (2) 160,000

Per RMG (2) 160,000

Source: ECORYS

Rail shuttle operational costs Costs of rail shuttle operations calculations are given in section 5.4 of this report. They make up the largest part of OPEX. As argued, the distance to be covered by the rail shuttle between DSM port and the KFS will not be (very different) between both railway connection options


(optimal link versus shortest route). For trains to/from upcountry Tanzania and the LLCs there is a distance saving of about 17km. Total OPEX Total OPEX in the base case scenario (A1) over the lifetime of the concession adds up to USD 1,117,670,360. Error! Reference source not found. shows the development over time of OPEX.

Figure 6.5 Total OPEX base case scenario (A1)

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50

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70

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100

2010 2015 2020 2025 2030 2035

x U

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mln

Source: ECORYS

6.6 Tariffs

The Revenues of the KFS project consist of: Revenues from transport fees that are related to rail shuttle operations; Revenues from handling fees that are related to the OPEX excluding rail shuttle

operations. These also cover storage; Revenues from wharfage fees (fee for use of infrastructure) that are related to the

investment and maintenance of KFS infrastructure (terminal site infrastructure, road access and rail access).

Revenues of custom clearing services are not taken into account as will not be levied by the KFS operator but by third parties (customs clearing agents). Transport fees (rail shuttle service) The revenues are based on an estimated tariff applicable for each of the services (containers/cars). A separate transport fee is calculated for containers and cars. The first step in calculating these tariffs is calculating the unit costs for transporting one TEU or car assuming real figures (excluding inflation) and without taking into account the costs of finance. In the second step, the tariffs are calculated that should be applied by the private developer if the costs of finance are taken into account.


Benchmark of road versus rail transport fees The tariff for the rail shuttle should compete with the tariff that ICDs charge to their clients for picking up containers from the port to an ICD. The comparison however defaults since the KFS is at a much larger distance form the port than all of the existing ICDs. The economy of scale resulting from the large volume of containers (and cars) on the rail shuttle leads to a much lower transport unit costs in comparison with any truck transport cost. Although the economic evaluation is not part of this feasibility study, it is clear that the savings of unit transport cost by using the rail shuttle is a major contributor to economic feasibility. Handling fees (KFS operations) The services include handling and storage of containers and cars. One handling fee is calculated that is applicable to one TEUs as well as to a car. In the calculations it is assumed that the fee for handling 1 TEU equals that of handling 1 car. The first step in calculating these tariffs is calculating the unit costs for handling a TEU or car assuming real figures (excluding inflation) and without taking into account the costs of finance. In the second step, the tariffs are calculated that should be applied by the private developer if the costs of finance are taken into account. Recommended tariff policy A tariff policy needs to be made to control excessively long periods of storage of containers and vehicles. The Consultant has not studied the effects of any tariff policy in detail but recommends to offer a number of days free storage (as applicable in DSM port and ICDs) after which a rising rate scale may be set. Logically all tariffs should be subject to SUMATRA guidelines and policies for general transport fees and tariffs. The tariff structure should be clear, uniquely defined and kept simple as in the case of ICD service tariffs. Customers should have one tariff for handling in and out (including rail shuttle transport) and a separate one for storage based on the length of stay, facilitating their pre-trade calculations. Handling of LCL cargo (stuffing, stripping of containers, repacking, etc) needs to be charged separately (as is an additional service). Benchmark of handling fees The observed handling tariffs in benchmark locations are:

TICTS terminal: Delivery fee: USD 79/119 per 20'/40' for FCL domestic en USD 70/105 for FCL

transit (excluding ship to shore handling). From general cargo berth TPA (non-TICTS traffic) to railhead: USD 30/45 per

20’/40’. Storage USD 20/40 per 20’/40’ per day from day 7 to 21. Until 7 days storage is

free, after 21 days the storage tariff is doubled.

Maputo container terminal (MIPS, 2007): Delivery fee: USD 140/252 per 20'/40' (excluding ship to shore handling). General handling in/out: USD 40/72 per 20'/40'.


Wharfage fee The wharfage fee is the fee that is to be charged to cover the investment and maintenance costs of KFS Infrastructure (terminal site, road access and rail access) and does not cover any vehicle, rail car or cargo handling and storage cost. Preferably one wharfage fee is calculated that is applicable to containers as well as cars. It is assumed that the fee for transportation of 1 TEU equals that for transportation of 1 car. The first step in calculating these tariffs is calculating the unit costs for the KFS infrastructure per TEU or car assuming real figures (excluding inflation) and without taking into account the costs of finance. This is done by taking total infrastructure investment and maintenance costs for the entire concession period and dividing this by the accumulated volume of the entire concession period. In the second step, the wharfage fee is calculated that should be applied by the TPA if the costs of finance are taken into account. Cost of finance and tariff The tariffs as calculated above give the fees in real terms, based on the associated costs for each fee but without taking into account the costs of finance. It is noted that due to the duration of infrastructure concessions, the costs of financing are of a significant magnitude, especially for private financing where investments would have to funded from loans at market rates. However, also when the KFS would be realized completely with public funds costs of financing would apply, albeit at lower rates (soft loans).

The additional financing costs that are imposed by the application of PPP are expected to be covered by the benefits of PPP being a more efficient realization, maintenance and operation of the infrastructure. The PPP contract will result in such gains due to the structure of the business model that contains incentives for the private operator to realize and operate the infrastructure according plan and because of an optimal risk division between public (procuring) authority and private developer in which both contracting parties assume the risks they can best handle.

Depending on the characteristics of the business model and financing arrangements, the calculated fees are significantly higher than the cost based fees that have been explained above.

6.7 Revenues

The revenues for the base case are calculated based on: The traffic forecasts for transport, handling and storage of containers to and on

the KFS; Tariffs as indicated in previous section being container/car handling fees, storage

fees and wharfage fees. As the aim of the financial analysis is to calculate a fee structure for which the project is feasible from the private developer’s perspective, the revenues will be further discussed under the section 6.11 results of the financial analysis.


6.8 Cash flows

Assumptions with respect to days needed/allowed to collect revenues and to make payments are made. These are relevant for working capital calculations. See Error! Reference source not found..

Table 6.7 Assumptions cash flows

Parameter Days

Average collection time 30 + 1

Average payment time 40 + 1

Source: ECORYS

6.9 Finance

Assumptions with respect to finance are stated in the table below. The main assumption is that finance (equity and debt) will be attracted to cover negative project cash flows. The assumptions with respect to the expected returns that investors and banks will need to make to engage in the KFS are illustrated in Annex J. The debt repayment period is minimized under the condition that the requirements for Debt Service Coverage Ratios (DSCR) are met using a Debt Sculpting Scheme in the financial model. As a minimum – by banks desired -DSCR of 1 is assumed this means that all Cash Flows Available for Debt Service (CFADS) are used for repayment of interest and debt. A grace period for interest repayments should be applied in the years that interest that the payable interest is higher than CFADS because otherwise DSCR is not met.

Table 6.8 Assumptions finance

Parameter Assumption (nominal) Assumption (real)

Equity to capital ratio (initially) 30 %

Grace period In the years payable interest is higher than CFADS

Repayment period Debt Sculpting is applied (financial engineering technique)

Cost of debt 10.6 % 8.4 %

Cost of equity 20 % 17.6 %

WACC/ IRR required 13.4 % 11.2 %

DSCR minimum required 1

DSCR average required 1.3

Interest on cash 20 %

Interest on overdraft 20 %

Source: ECORYS


6.10 VAT and taxes

VAT is excluded from this financial analysis. The corporate tax rate for Tanzania is 30% and is included in the calculations.1.

6.11 Results of the financial analysis

The main criteria to map out the project’s financial feasibility are: Equity investors get a return that largely compensates for the project specifics and

risks. This is measured by the Return on Equity (RoE). The desired RoE for this project is 17.6% (real). For detailed calculation of the RoE required see Annex J;

The project Internal Rate of Return (IRR) is calculated. The IRR should be at least equal to the Weighted Average Cost of Capital (WACC). The desired WACC for this project is 11.2% (real). For detailed calculation of the WACC required see Annex J;

The project generates sufficient cash-flow to meet its financial obligations (interest payments and debt repayments). This is measured by the Debt Service Coverage Ratios (DSRC). The average required DSCR for this project is 1.3 and the yearly minimum DSCR for this project is 1 (to be met every year of debt payment).

The financial analysis aims at providing estimates for the fee structure to be applied for which the project is expected to be commercially attractive for the private developer. The main assumptions with respect to the fees were handled under the ‘Tariffs’-section of this chapter. Fee structure estimates Error! Reference source not found. below shows the expected tariff structure for the two scenarios for rail access (A. base case; B. shortest-route rail access).

Table 6.9 Main results: fee structures for two scenarios

A1. Optimal link –

reach stacker

(USD real)

A2. Optimal link –

RTG/ RMG (USD

real)

B1. Shortest link

–reach stacker

(USD real)

B1. Shortest link

–RTG/RMG (USD

real)

Transport fee per TEU* 72.67 72.97 72.97 72.97

Transport fee per car* 95.63 97.04 97.04 97.04

Handling fee TEU or car 7.93 15.86 8.06 15.86

Wharfage fee TEU or car 16.25 15.05 31.22 31.73

Total fee per TEU 96.85 103.89 112.26 120.57

Total fee per car 119.81 127.96 136.33 144.64

Source: ECORYS

* The transport fee for the shortest link is not calculated separately, as the distance to be covered by the shuttles is

not very different

Interpretation of the results The results of the financial analysis show that the KFS is financially feasible with fees that are below those currently applied in the ICDs. The combined (integrated) tariff for containers

1 Tanzania Investment Guide 2008 and Beyond


for shuttle train transport, handling and wharfage is between USD 97 and USD 120. For cars these rates are between USD 120 and USD 144. For all scenarios the integrated container service tariffs are still below the present comparable market level of USD 125 per TEU that is known to be charged by ICDs in the vicinity of the DSM port. In other words, to some extent, the new KFS operator has room to raise tariff before loosing business to the competition in logistic services, primarily from ICDs. Wharfage fee for case A and case B For the shortest route case (B) the calculated wharfage fees are significantly higher than in the base case (A). The difference is with around USD 32 per TEU or car against USD 16 almost a factor 2 higher. Based on the results of the financial analysis it is therefore advised to carry out the project under the infrastructure base case scenario (A) in which rail access is designed against the optimal investment costs. Handling fee for case 1 and case 2 The capital and operational costs of handling equipment are translated in the handling fees. The analysis of the various scenarios shows that the use of RTG/ RMG handling equipment results in significantly higher handling fees. For this reason it is advised to carry out the project under the base case scenario (A1) in which rail access and handling equipment are designed against the optimal investment costs. Financial results in indicators Error! Reference source not found. below shows the financial results for the calculated fees in terms of RoE, minimum and average DSCR and NPV.

Table 6.10 Financial results applying the calculated fee structure

Required Results Base Case (A1)

Return on Equity 17.6% 19.1%

DSCR minimum 1.00 1.00

DSCR average 1.3 1.31

Project Net Present Value 0 45,447,606

Source: ECORYS

For illustration the below figure shows the revenues resulting from the application of the calculated fees in the base case (A1).


Figure 6.6 Total revenues for the calculated tariff structure - base case (A)

-

50

100

150

200

250

2010 2015 2020 2025 2030 2035

x U

SD

mln

Source: ECORYS

6.12 Sensitivity analysis

A sensitivity analysis is carried out for the recommended base case scenario (A1) that applies optimal rail access investment and handling equipment costs. A sensitivity analysis is carried out for higher CAPEX in KFS infrastructure and for lower traffic forecasts. Sensitivity analysis on investment costs When 20% higher investment costs are assumed for KFS infrastructure the calculated fee structure needed to make the project financially feasible is as follows (Error! Reference source not found.). The total fee per TEU at USD 107 is still significantly lower than the ICD benchmark of USD 125.

Table 6.11 Fees that need to be charged when investment costs are 20% higher

A. Base case fee (USD real)

Transport fee per TEU 77.94

Transport fee per car 102.56

Handling fee TEU or car 8.50

Wharfage fee TEU or car 20.34

Total fee per TEU 106.78

Total fee per car 131.40

Sensitivity analysis on forecast volume When a 20% lower forecast is assumed for the KFS volume the calculated fee structure needed to make the project financially feasible is as follows (Error! Reference source not found.). If volumes are 20% lower, the total fee per TEU at USD 123 is still slightly lower than the ICD benchmark of USD 125. With 40% lower volumes the required fee comes at USD 167 per TEU, far above the ICD benchmark.


Table 6.12 Fees that need to be charged when forecast volumes are 20% and 40% lower

A. Base case fee (USD real)

Volume -20% Volume -40%

Transport fee per TEU 92.16 125.14

Transport fee per car 107.32 122.99

Handling fee TEU or car 10.06 13.65

Wharfage fee TEU or car 20.61 27.98

Total fee per TEU 122.82 166.77

Total fee per car 137.98 164.62


7 Conclusions and Recommendations

7.1 Conclusions

The plan to establish a freight station at Kisarawe was verified and compared in a multi-criteria analysis with other potential locations. The criterion of available space in the vicinity of the Freight Station is considered of high importance in view of industrial development near the freight station. Based on this assumption Kisarawe was considered a preferential area.

Of the two locations near Kisarawe, Kisarawe North was considered the best location

for the freight station due to its vicinity to the A7 and the terrain structure which, though still far from flat, is much better geo-technically structured than any other location in Kisarawe region (South or North). The planned industrial development area at Kisarawe South is both unattractive from a logistical point of view as well as terrain structure (narrowly shaped and hilly) point of view.

The Kisarawe North site offers ample space for development for both the freight station and adjacent industrial activity. The weak points of the location are its relatively remote distance to the port and subsequently the rail infrastructure requirements that include a rail crossing to link both TRL and TAZARA railway lines to the freight station. On the positive site, a huge volume of road haulage in and through the city will be eliminated, reducing traffic congestion on main roads, road accidents and air and noise pollution.

The KFS will be connected by road to the T1 (Morogoro Road) and by rail to both the

TRL and TAZARA lines. A dedicated rail shuttle concept is to be developed for the transport of containers and cars from the port to the KFS and vice versa.

The financial feasibility of KFS can be reached at an integrated fee that is competitive with the integrated fees charged by the existing ICDs. This assumes development by a private operator with private funds.

It would be logical if the rail infrastructure will be developed and paid for by the railway authorities. Since both railway line systems need to be connected to the KFS, a joint vehicle may be established to design, plan and invest in the railway infrastructure for the shuttle service. Finance may however become a major bottleneck and it would be recommended to include the funding with the funding mechanism for the KFS itself, in other words under the wings of TPA.

The rail shuttle service is recommended to be conceded to a third party on the basis of a Service Level Agreement. This third party consists preferably of private party that may lease rolling stock and staff from either railway operator (TRL or TAZARA).


If TPA would establish a multi-storey car park at DSM port, the car rail shuttle service and KFS use for cars will most likely no longer be attractive. Based on 206,000 cars arriving at DSM port in 2017 with an average dwell time of 10 days per car, the 8000 parking places would provide sufficient capacity. It is however not recommended to store cars in a vacant port area that can be used for other (ship-shore related) activities.

7.2 Recommendations

Based on the above conclusions the consultants recommend to:

Start and proceed with investigations (cadastral survey) on land ownership at Kisarawe North to define the exact plot. At the same time District and Ward boundaries should be analysed as it may occur that (parts of) the plot are under Kibaha District.

Investigate further the geo-technical features of the site and the potential bottlenecks for development of the area. This should be done for the areas between the TAZARA and TRL line and for the area just North of the TRL line (near Tondoroni).

Execute an economic feasibility study to assess the wider economic effects of the KFS in view of securing loans from financial institutions.

Review the rail shuttle track routing options in more detail in view of local terrain conditions and track construction cost

Review the rail shuttle operations in more detail by assessing the port handling platforms and rail operations (including the TICTS and berth 13/14 developments).

Agree on a Public Sector Agreement Agree on a Financial Support Plan with the Development Partners Design and implement Land Acquisition Strategy Assess the affordability to TPA of proposed PPP options Prepare the necessary legal and institutional concession framework for PPP after a

full economic feasibility study has been undertaken.


Annexes


Annex A: staffing requirements KFS


Staffing requirements reach stacker operations

Staffing req KFS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

General Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Personal assistant 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Admin assistant 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4 4 4 4 4 4

KFS Manager 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Gang Supervisor 4 6 6 7 7 7 7 8 8 10 10 14 14 15 15 16 16 16 17 18 19 20 21

Labour* 16 30 32 58 56 58 56 57 56 58 57 61 64 66 68 69 71 72 76 80 84 89 93

Railhead Manager 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Shunting operator 2 3 5 6 6 6 7 7 8 8 8 8 8 9 9 9 9 9 10 10 11 12 12

Yard Manager 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Reach stacker drivers 8 18 29 44 45 50 54 60 65 69 67 71 76 78 80 82 83 85 90 94 99 104 109

Term Tractor drivers 8 15 24 34 36 41 45 49 50 55 54 57 60 62 64 65 66 68 71 75 79 83 87

Vehicle Term Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Asst Term Managers 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Security Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Shift Supervisor 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Rail gate 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Main gate 4 5 7 9 9 11 10 10 12 11 11 12 12 13 13 13 14 14 15 15 16 17 18

Roving/relief 4 4 4 4 4 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8

Engineering Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Workshop Manager 0 0 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Mechanic 2 3 4 6 6 6 7 7 8 8 8 8 8 9 9 9 9 9 10 10 11 12 12

Mechanic assistant 3 5 7 11 12 13 14 14 15 16 16 17 18 18 19 19 20 20 21 22 23 24 26

Yard maintenance 2 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Accounts/Adm Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1


Staffing req KFS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

Systems operator 4 6 6 11 10 11 11 12 12 13 12 13 14 14 15 15 15 15 16 17 18 19 20

Accounts 1 2 3 4 5 5 5 6 5 6 6 6 6 7 7 7 7 7 8 8 8 9 9

Human Resources 1 2 2 3 3 3 3 4 4 4 4 4 4 5 5 5 5 5 5 5 6 6 6

Marketing Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Marketing assistant 1 1 1 1 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Totals 114 159 191 227 239 260 269 284 294 310 305 323 336 348 357 362 368 373 392 407 427 448 466

* These posts could be filled on a casual basis as and when required


Staffing requirements RTG/RMG operations

Staffing req KFS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

General Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Personal assistant 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Admin assistant 1 1 1 1 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3

CFS Manager 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Gang Supervisor 8 12 12 15 15 15 15 18 18 21 21 21 21 21 21 21 21 21 21 21 21 21 21

Labour* 36 54 54 78 78 84 84 90 90 96 96 96 96 96 96 96 96 96 96 96 96 96 96

Railhead Manager 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Shunting operator 4 4 8 8 8 8 10 10 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12

Yard Manager 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

RMG Operators 9 9 9 9 14 14 14 14 14 18 18 18 18 18 18 18 18 18 18 18 18 18 18

RTG Operators 5 9 14 18 18 18 23 23 23 27 27 27 27 27 27 27 27 27 27 27 27 27 27

Terminal Tractor drivers 9 18 27 36 41 45 50 50 54 59 63 63 63 63 63 63 63 63 63 63 63 63 63

Security Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Shift Supervisor 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Rail gate 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Main gate 8 8 12 12 12 15 15 15 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18

Roving/relief 4 4 4 4 4 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8

Engineering Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Workshop Manager 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Mechanic 3 4 6 7 8 8 10 10 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12

Mechanic assistant 6 8 12 14 16 18 20 22 24 26 26 26 26 26 26 26 26 26 26 26 26 26 26

Yard maintenance 2 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

Accounts/Admin

Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1


Staffing req KFS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

Systems operator 8 10 10 14 14 16 16 18 18 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Accounts 2 3 4 5 6 7 7 8 8 9 9 9 9 9 9 9 9 9 9 9 9 9 9

Human Recources 1 2 2 3 3 4 4 5 5 6 6 6 6 6 6 6 6 6 6 6 6 6 6

Marketing Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Marketing assistant 1 1 1 1 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Totals 114 159 191 227 239 296 313 328 342 371 375 375 375 375 375 375 375 375 375 375 375 375 375

* These posts could be filled on a casual basis as and when required


Annex B: Capital expenditure KFS – full development


Capital Expenditure - full development

Description Unit Quantity Rate Sum

A: Kisarawe Freight Station Terminal Site

1 Purchase of land Ha 100 $1000.00 $100,000

2 Demolitions and relocations $80,000

3 Bulk earthworks (Cut to fill) m³ 2,000,000 $9.97 $19,940,000

4 Drainage sum 1 $30,000.00 $30,000

5 Segmental block paving m² 734,000 $55.97 $41,081,980

6 Asphalt paving m² 10,800 $63.63 $687,204

7 Formation for yard track m² 5,720 $31.05 $177,606

8 Terminal track

a Rails & sleepers m 5,400 $244.89 $1,322,406

b Points & crossings ea 8 $57,500.00 $460,000

c Stopblocks ea 2 $3,795.00 $7,590

9 Entrance/exit gates ea 7 $23,500.00 $164,500

10 Buildings

a Administration building m² 160 $521.33 $83,413

b freight station Shed m² 32,000 $210.00 $6,720,000

c Staff facilities m² 200 $521.33 $104,266

d Control offices m² 20 $486.30 $9,726

e Workshop m² 1,600 $260.00 $416,000

11 Stack marking m² 744,800 $1.50 $1,117,200

12 High mast lighting sum 1 $7,000,000.00 $7,000,000

13 Services

a Water supply sum 1 $80,000.00 $80,000

b Electricity supply sum 1 $490,667.00 $490,667

c Communications sum 1 $30,000.00 $30,000

d Fire protection ring main m 3,770 $37.95 $143,072

e Sewerage treatment plant sum 1 $150,000.00 $150,000

14 Perimeter security m 4,620 $100.55 $464,541

Subtotal Terminal Site $80,860,171

B: Access Road to A7 (Mogorogoro Road)

1 Right refuge intersection at A7 sum 1 $1,200,000.00 $1,200,000

2 Road bulk earthworks m³ 25,575 $9.97 $254,983

3 Construct 7.4m wide asphalt road m 2,750 $707.28 $1,945,020

4 Intersection at Terminal sum 1 $100,000.00 $100,000

Subtotal Road Infra $3,500,003




C: Rail Accesses

1 Purchase of land - - - -

2 Demolitions/relocation - - - -

3 Bulk earthworks

a Tazara line Port to Yombo yard m³ 107,500 $29.91 $3,215,325

b Tazara line Yombo yard to TRL m³ 137,500 $29.91 $4,112,625

c Tazara/TRL formation Pugu to FS m³ 425,000 $29.91 $12,711,750

4 Prepare formation

a Tazara line Port to Yombo yard m² 43000 $62.10 $2,670,300

b Tazara line Yombo yard to TRL m² 55000 $62.10 $3,415,500

c Tazara/TRL formation Pugu to FS m² 170000 $62.10 $10,557,000

5 Provide and lay track

a Tazara line Port to Yombo yard m 8,600 $364.00 $3,130,400

b Tazara line Yombo yard to TRL m 11,000 $364.00 $4,004,000

c Tazara/TRL formation Pugu to FS m 34,000 $364.00 $12,376,000

6 Structures

a Rail bridge, 20m spans ea 8 $305,900.00 $2,447,200

b Road over rail bridge, Pugu road sum 1 $2,500,000.00 $2,500,000

c Rail over rail bridge, Tazara/TRL sum 1 $2,500,000.00 $2,500,000

Subtotal Rail Infra $63,640,100

D: Terminal Management System

1 Container terminal sum 1 $800,000.00 $800,000

2 Imported vehicles terminal sum 1 $600,000.00 $600,000

3 Human resource sum 1 $200,000.00 $200,000

4 Financial sum 1 $200,000.00 $200,000

Sub-total Terminal Management System $1,800,000

SUB-TOTAL A+B+C+D $149,800,274

E: General costs

Contractors Preliminary and General (on A+B+C) 15.0% $22,200,041

Consultant fees (on A+B+C+D) 7.5% $11,235,021

Sub-total general costs $33,435,062

GENERAL TOTAL (A+B+C+D+E) $183,235,336


Annex C: Annual maintenance costs – full development


Annual maintenance costs - full development First 5 years Thereafter

Expected

life

(years)

Description % Sum % Sum


1 Purchase of land

2 Demolitions and relocations

3 Bulk earthworks

4 Drainage 0.1% $30 0.2% $60 50

5 Segmental block paving 0.3% $123,246 1.0% $410,820 30

6 Asphalt paving 0.4% $2,749 1.5% $10,308 25

7 Formation for yard track

8 Terminal track

a Rails & sleepers 0.7% $9,257 1.4% $18,514 25

b Points & crossings 0.7% $3,220 1.4% $6,440 20

c Stopblocks

9 Entrance/exit gates 2.0% $3,290 4.0% $6,580 30

10 Buildings

a Administration building 2.0% $1,668 4.0% $3,337 30

b freight station Shed 1.5% $100,800 3.0% $201,600 30

c Staff facilities 2.0% $2,085 4.0% $4,171 30

d Control offices 2.0% $195 4.0% $389 30

e Workshop 1.5% $6,240 3.0% $12,480 30

11 Stack marking 1.5% $16,758 3.0% $33,516 15

12 High mast lighting 1.0% $70,000 3.0% $210,000 25

13 Services

a Water supply

b Electricity supply 4.0% $19,627 5.0% $24,533 20

c Telecommunications 1.0% $300 2.0% $600 20

d Fire protection ring main 1.5% $2,146 3.0% $4,292 30

e Sewerage treatment plant 3.0% $4,500 6.0% $9,000 20

14 Perimeter security 0.5% $2,323 1.0% $4,645 25

Sub-total Terminal Site $368,434 $961,285

B: Access Road to A7 (Morogoro Road)

1 Right refuge intersection at A7 0.4% $4,800 0.8% $9,600 30

2 Road bulk earthworks

3 Construct 7.4m wide asphalt road 0.4% $7,780 0.8% $15,560 30

4 Intersection at Terminal 0.4% $400 0.8% $800 30

Sub-total Road Access $12,980 $25,960


C: Rail Accesses

1 Purchase of land

2 Demolitions/relocation

3 Bulk earthworks

a Tazara line Port to Yombo yard

b Tazara line Yombo yard to TRL

c Tazara/TRL formation Pugu to FS

4 Prepare formation





a Tazara line Port to Yombo yard 1.0% $31,304 3.0% $93,912 25

b Tazara line Yombo yard to TRL 1.0% $40,040 3.0% $120,120 25

c Tazara/TRL formation Pugu to FS 1.0% $123,760 3.0% $371,280 25

6 Structures

a Rail bridge, 20m spans 1.0% $24,472 40

b Road over rail bridge, Pugu road 1.0% $25,000 40

c Rail over rail bridge, Tazara/TRL 1.0% $25,000 40

Sub-total Rail Access $195,104 $659,784


1 Container terminal 1.0% 3.0% 10

2 Imported vehicles terminal 1.0% 3.0% 10

3 Human resource 1.0% 3.0% 10

4 Financial 1.0% 3.0% 10

SUB-TOTAL (A+B+C+D) $576,518 $1,647,029

E: General costs

Contractors Prelim and General (on A+B+C)

Consultant fees (on A+B+C+D) 7.5% $43,239 7.5% $123.527

GENERAL TOTAL (A+B+C+D+E) $619,757 $1,770,556


Annex D: Capital expenditure – phase 1


Capital Expenditure - Phase 1





3 Bulk earthworks m³ 1,400,000 $9.97 $13,958,000

4 Drainage sum 1 $30,000.00 $30,000


6 Asphalt paving m² 10,800 $63.63 $687,204


8 Terminal track

a Rails & sleepers m 3,240 $244.89 $793,444


c Stopblocks ea 2 $3,795.00 $7,590


10 Buildings





e Workshop m² 800 $260.00 $208,000

11 Stack marking m² 446,880 $1.50 $670,320


13 Services







Sub-total Terminal Site $48,523,612






Sub-total Road Access $3,500,003


C: Rail Accesses

1 Purchase of land


3 Bulk earthworks




4 Prepare formation








6 Structures




Sub-total Rail Access $63,640,100





4 Financial sum 1 $200,000.00 $200,000


SUB-TOTAL (A+B+C+D) $117,463,715

E: General Costs





Annex E: Annual maintenance costs – phase 1


Annual maintenance costs - phase 1 First 5 years Thereafter

Expected

life (years)



1 Purchase of land


3 Bulk earthworks

4 Drainage 0.1% $30 0.2% $60 50


6 Asphalt paving 0.4% $2,749 1.5% $10,308 25


8 Terminal track

a Rails & sleepers 0.7% $5,554 1.4% $11,108 25


c Stopblocks


10 Buildings





e Workshop 1.5% $3,120 3.0% $6,240 30

11 Stack marking 1.5% $10,055 3.0% $20,110 15


13 Services

a Water supply














C: Rail Accesses

1 Purchase of land


3 Bulk earthworks




4 Prepare formation








6 Structures






1 Container terminal 1.0% 3.0% 10

2 Imported vehicles terminal 1.0% 3.0% 10

3 Human resource 1.0% 3.0% 10

4 Financial 1.0% 3.0% 10

SUB-TOTAL (A+B+C+D) $424,380 $1,238,808

E: General costs

Contractors Preliminary and General (on A+B+C)

Consultant fees (on A+B+C+D) 7.5% $31,829 7.5% $92,911

GENERAL TOTAL (A+B+C+D+E) $456,209 $1,331,719


Annex F: Capital Expenditure – Phase 2


Capital Expenditure – Phase 2



1 Purchase of land


3 Bulk earthworks m³ 600,000 $9.97 $5,982,000

4 Drainage sum


6 Asphalt paving m²


8 Terminal track

a Rails & sleepers m 2,160 $244.89 $528,962

b Points & crossings ea

c Stopblocks ea


10 Buildings

a Administration building m²


c Staff facilities m²

d Control offices m²

e Workshop m² 800 $260.00 $208,000

11 Stack marking m² 297,920 $1.50 $446,880


13 Services

a Water supply sum

b Electricity supply sum

c Communications sum


e Sewerage treatment plant sum


Sub-total Terminal Site $32,336,558


1 Right refuge intersection at A7 sum

2 Road bulk earthworks m³

3 Construct 7.4m wide asphalt road m

4 Intersection at Terminal sum


C: Rail Accesses

1 Purchase of land


3 Bulk earthworks

a Tazara line Port to Yombo yard m³

b Tazara line Yombo yard to TRL m³

c Tazara/TRL formation Pugu to FS m³

4 Prepare formation

a Tazara line Port to Yombo yard m²

b Tazara line Yombo yard to TRL m²

c Tazara/TRL formation Pugu to FS m²


a Tazara line Port to Yombo yard m

b Tazara line Yombo yard to TRL m

c Tazara/TRL formation Pugu to FS m

6 Structures

a Rail bridge, 20m spans ea

b Road over rail bridge, Pugu road sum

c Rail over rail bridge, Tazara/TRL sum


1 Container terminal sum

2 Imported vehicles terminal sum

3 Human resource sum

4 Financial sum

SUB-TOTAL (A+B+C+D) $32,336,558

E: General costs



TOTAL (A+B+C+D+E) $39,612,284


Annex G: Annual maintenance costs – Phase 2


Annual maintenance costs – Phase 2 First 5 years Thereafter

Expected

life (years)



1 Purchase of land


3 Bulk earthworks

4 Drainage 0.1% $30 0.2% $60 50


6 Asphalt paving 0.4% $2,749 1.5% $10,308 25


8 Terminal track

a Rails & sleepers 0.7% $9,257 1.4% $18,514 25


c Stopblocks


10 Buildings





e Workshop 1.5% $6,240 3.0% $12,480 30

11 Stack marking 1.5% $16,758 3.0% $33,516 15


13 Services

a Water supply












Sub-total Access Road $12,980 $25,960


C: Rail Accesses

1 Purchase of land


3 Bulk earthworks




4 Prepare formation








6 Structures




Sub-total Rail Access $195,104 $659,784


1 Container terminal 1.0% $8,000 3.0% $24,000 10

2 Imported vehicles terminal 1.0% $6,000 3.0% $18,000 10

3 Human resource 1.0% $2,000 3.0% $6,000 10

4 Financial 1.0% $2,000 3.0% $6,000 10

Sub-total Terminal Management System $18,000 $54,000

SUB-TOTAL (A+B+C+D) $594,518 $1,701,029

E: General costs

Contractors Preliminary and General (on A+B+C)

Consultant fees (on A+B+C+D) 7.5% $44,589 7.5 $127,577

TOTAL $639,107 $1,828,606


Annex H: Alternative rail infrastructure capital expenditures for the most direct link to the KFS


Capital expenditure for rail infrastrucure for the most direct link to KFS

Unit Quantity Rate Amount

C: Rail Accesses

1 Purchase of land


3 Bulk earthworks


b Yombo to Vigama m³ 298,750 $29.91 $8,935,613

c Vigama exchange yard m³ 63,000 $29.91 $1,884,330

d Vigama yard to KFS

Normal formation bulk earthworks m³ 101,563 $29.91 $3,037,734

Tunnel m 625 $14,000.00 $8,750,000

Viaduct m 625 $16,000.00 $10,000,000

Deep cuttings m³ 75,000 $29.91 $2,243,250

Deep fills m³ 62,500 $29.91 $1,869,375

e TRL exchange yard m³ 63,000 $29.91 $1,884,330

TRL exchange yard to KFS

Normal formation bulk earthworks m³ 39,813 $29.91 $1,190,792

Tunnel m 245 $14,000.00 $3,430,000

Viaduct m 245 $16,000.00 $3,920,000

Deep cuttings m³ 29,400 $29.91 $879,354

Deep fills m³ 24,500 $29.91 $732,795

4 Formation earthworks

a Vigama yard to KFS m³ 312,500 $29.91 $9,346,875

b TRL exchange yard to KFS m³ 122,500 $29.91 $3,663,975

5 Prepare formation

a Tazara line Port to Vigama yard m² 162500 $62.10 $10,091,250

b Tazara line Vigama yard m² 12600 $62.10 $782,460

c Tazara Vigama to KFS m² 62500 $62.10 $3,881,250

d TRL exchange yard m² 12600 $62.10 $782,460

e TRL exchange yard to KFS m² 24500 $62.10 $1,521,450


a Tazara line Port to Vigama yard m 32,500 $364.00 $11,830,000

b Vigama exchange yard m 2,700 $364.00 $982,800

c Tazara line Vigama yard to KFS m 12,500 $364.00 $4,550,000

d TRL exchange yard m 2,700 $364.00 $982,800

e TRL exchange yard to KFS m 4,900 $364.00 $1,783,600

6 Structures


b Rail over rail bridge, Tazara/TRL sum 1 $2,500,000.00 $2,500,000

SUB-TOTAL $107,119,018

Contractors Prelim and General 15.0% $16,607,853

Consultant fees 7.5% $8,033,926

TOTAL RAIL ACCESS LINES $131,220,797


Annex I: Alternative capital expenditures for RTG operations


Capital Expenditure – development with RTG





3 Bulk earthworks (Cut to fill) m³ 1,680,000 $9.97 $16,497,600

4 Drainage sum 1 $30,000.00 $30,000


6 Asphalt paving m² 8,750 $514.00 $4,497,500


8 Terminal track

a Rails & sleepers m 5,820 $244.89 $1,425,260


c Stopblocks ea 2 $3,795.00 $7,590


10 Buildings





e Workshop m² 1,600 $260.00 $416,000

11 Stack marking m² 439,750 $1.50 $659,625


13 Services







Subtotal Terminal Site $64,967,115






Subtotal Road Infra $3,500,003




C: Rail Accesses

1 Purchase of land - - - -

2 Demolitions/relocation - - - -

3 Bulk earthworks




4 Prepare formation








6 Structures




Subtotal Rail Infra $63,640,100





4 Financial sum 1 $200,000.00 $200,000


SUB-TOTAL A+B+C+D $133,907,217

E: General costs



Sub-total general costs $29,859,123



Annex J: Weighted Average Costs of Capital (WACC) calculations


Cost of Capital

Introduction

In view of constrained government budgets, a key point of departure for this feasibility study is to assume that capital expenditures will be privately financed as part of a PPP (see next chapter). Private capital providers will require a return on the capital provided to finance the investments. The required rate of return will reflect their perceived risk of the investment. The required rate of return for capital providers is commonly referred to as Weighted Average Cost of Capital (WACC). The WACC is used to discount all cash flows over the lifecycle of the investment (e.g. incoming cash flows or revenues and outgoing cash flows such as capital and operational expenditures). The consequent net present value (NPV) of these cash flows is to be considered as the value of the project. A negative NPV implies that the project is not financially feasible (i.e. the cash flows are insufficient to provide the capital providers a fair rate of return). Essentially there are 2 basic forms of capital; equity and debt. Debt is commonly provided through bank loans (alternatively through issuance of

bonds). The cost of debt is reflected by the interest rate charged by banks. These interest expenses are tax deductible (i.e. operating income is reduced by interest expenses before the income or profit tax is calculated).

Equity is provided by the shareholders. They are most at risk. Any incoming cash is first used to pay operational expenditures, service the debt and settle the tax liabilities. Any remaining cash can be distributed as dividend to the shareholders. If cash is insufficient, the paid-in capital from the shareholders will be used to meet the financial obligations. The required rate of return on equity will consequently be higher than the required rate of return on debt.

The WACC can be summarized as follows:

t = corporate tax rate

D = debt

E = equity

ke = cost of equity

kd = cost of debt

E

D+E

WACC= ke

+ (1-t) D

D+Ekd


It is to be noted that assessing a WACC is not an exact science. Although most practitioners agree on the principles of the methodology, it is subject to interpretation. This sections aims to present a realistic cost of capital taking into account generally accepted principles and project specific characteristics. It will firstly address the cost of debt, secondly the cost of equity, thirdly the leverage being the ratio debt to equity followed by a concluding summary of the WACC.

Capital Structure

PPPs will be financed with equity and debt. Equity represents an ownership claim on the earnings and assets of a project. That is, after debt holders’ claims are paid, the management of the company can either pay out the remaining earnings to equity holders (project sponsors) in the form of dividends, or reinvest the earnings back into the project. For infrastructure projects sponsors can be both public and private. Typically, leverage (the proportion of debt in the total financing package) for infrastructure projects is high because debt is cheaper than equity. The reason for this is twofold:

Debt providers have less risk than equity providers. Return on equity is based on dividends and capital gain (increase in value of the shares). Equity providers will receive dividends only after operating expenditures, debt service and taxes are paid. When income is insufficient they will not receive any dividend. As for capital gains this will depend on the ability to return dividends based on the future cash flows. This is uncertain and this risk will be priced accordingly by the equity providers;

Interest costs are tax deductable. The net cost of interest to a company is equal to the interest payable minus the income tax percentage times the interest payable.

Having a proxy of the capital structure is essential in determining the cost of capital. It enables the weighing of the respective costs of acquiring debt and equity capital, combining them into a weighted average cost of capital. The contribution of debt financing vs. equity financing to the company's capital structure is also known as gearing, finance mix or leverage. Based on international practices and taking into account the risk profile of the project and the current circumstances in the financial sector, debt to capital is proposed to be 30 percent and equity to capital is proposed to be 70 percent.

Cost of Debt

The cost of debt is the interest rate the project company (or special purpose vehicle will have to pay for its bank loans). Conventionally, the cost of debt is measured as the risk free rate plus the debt premium; the latter being obtained as the credit spread over the credit risk free security / reference rate:


kd = rf + debt premium kd = cost of debt

rf = risk free rate of return

To calculate the cost of debt for developing countries, the parameter country risk premium, which varies by the country’s credit rating, is added to reflect the additional return required to invest in these inherently riskier countries. The equation becomes:2

kd = [(1 + rf ) * (1 + CRM) – 1 ] + debt premium kd = cost of debt


CRM = country risk premium

Accordingly, the cost of debt is a function of the risk free rate of return, the country risk premium, and the debt premium. Risk free rate of return The risk-free rate is a theoretical construct defined as the rate of interest that can be obtained by investing in financial instruments with no default risk. Since a truly risk-free asset does not exist in practice, the yield on long-term government securities is usually used as proxy for the risk free rate; US Treasury Bond rates are commonly chosen. These securities are considered to be risk-free because the likelihood of this government defaulting is extremely low. In estimating the discount rate for Tanzania, the long-term yield on US Treasury Bonds, is regarded as the representative approximation of the risk free rate of return. The concession for the freight station is assumed to be approximately 25 years. For the purpose the average yield for 20 and 30 year US Treasury Bonds is calculated3.

Average yield 20 year US Treasury Bond in January 2010 4,53%

Average yield 30 year US Treasury Bond in January 2010 4,62% Hence, the assumed risk free rate for a long term concession in Tanzania is 4,6% Country risk premium Normally the country risk premium is assessed by the credit rating agencies in relation to to a sovereign bond issuance of the respective country. Such a rating is not available for Tanzania. In order to approximate the country risk premium for Tanzania, the country risk premium of countries with a comparable credit risk rating can be used. For this purpose two listings have been used:

2 The real cost of capital. Chapter 6: International WACC and country risk on http://www.costofcapital.net/Chapter6%20-

%20Country%20Risk%20(25-07-04).doc 3 As published by the US Treasury Department.


1. The AON Political & Economic Risk Map4, see Figure J.7.1. This Map provides an indication of overall levels and types of Political Risk in more than 200 territories worldwide.

2. OECD Country Risk rating5. This rating is based the Country Risk Classification Method which measures the country credit risk, i.e. the likelihood that a country will service its external debt.

Figure J.7.1 Political risk map of Sub-Saharan Africa

Source: Aon Group 2009 - Political risk map

Based on these listings a peer group has been defined as countries that have a similar classification in both the AON and the OECD ranking as Tanzania. Of the resulting group of countries only a few have sovereign credit ratings from the major credit rating agencies as indicated in Table J.7.1 (next page).

4 http://www.aon.com/risk-services/political-risk-map/images/2009_PE_Risk_Map_Small.pdf 5 http://www.oecd.org/document/49/0,3343,en_2649_34169_1901105_1_1_1_37431,00.html


Table J.7.1 Peer group country risk premiums

Parameter Risk Classification

as per AON

Risk Classification

as per OECD

Credit rating

as per Moody 6

Country Risk

premium

Albania Medium - high 6 B1 6,75%

Cambodia Medium – high 6 B2 8,25%

Jamaica Medium – high 6 Caa1 11,25%

Mongolia Medium – high 6 B1 6,75%

Montenegro Medium – high 6 Ba3 5,25%

Belize Medium – high 6 B3 9,75%

Tanzania (proxy) Medium - high 6 8,00%

The average country risk premium of the peer group is 8%, which may be considered a fair proxy for country risk profile of Tanzania. Debt premium The debt premium consists partly of a compensation of the systematic risk (debt beta) that can be allocated to the funding on part of the lender. It forms a compensation for the possibility of default and is, hence, determined by the creditworthiness of the issuer. As the credit spread is directly related to the credit rating, the premium can be close to zero for organizations with a high credit rating. However, the spread can be substantial for organizations with a poor credit rating. The systematic risk for the debt providers is defined by the risk profile of the issuer or in case of project finance by the project. To approximate the risk profile of the project, the credits rating of companies acting in comparable businesses have been used, most notably the port and rail industry as being most relevant for a freight station.

Table J.7.2 Peer group sector credit spreads

Company Credit rating S&P

Southern Pacific Rail BBB

BNSF BBB

Canadian Pacific Rail BBB

Hungarian State Railways BB

Indian Railway Finance BBB-

Kowloon Cantoon Railway AA+

Old Spanish Trail/Alameda Corridor BBB

Panama Canal Railway B+

Port St. Lucie A

Hutchison A-

Dominion Terminal Virginia BBB

DP World BBB+

Alabama Port Authority BBB+

Source: Standard & Poor’s

6 http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html, last updated January 2010


In order to assess an appropriate credit spread based on the credit ratings in the industry, the most recent credit spreads per rating category as set indicated by Standard& Poor’s have been offset against the credit ratings in the industry.

Table J.7.3 Average credit spread

Credit Rating Spread No ratings Score

AAA

AA 1.35 1 1.35

A 1.57 2 3.14

BBB 2.24 8 17.92

BB 4.43 1 4.43

B 6.1 1 6.1

CCC 9.26

Total 13 32.94

Average 2.53

Source: Standard& Poors

Consequently the credit spread or debt premium for the CSF is approximated at 2,5%, which is comparable to a BBB- rating, or the lowest investment grade though considered adequate to meet financial commitments albeit subject to adverse economic conditions.

Figure J.7.2 Understanding credit ratings


Taxation The cost of debt as described is measured in before-tax terms. However, because interest expense is deductible, the after-tax cost of debt should be used in calculating the discount rate. The after-tax cost can, simply, be obtained by multiplying the before-tax cost by one minus the corporate tax rate:

kd (1 – t)


kd = cost of debt

The corporate tax rate for Tanzania is 30%.7 Nominal cost of debt Based on the aforementioned parameters the nominal cost of debt can be calculated as 10.6% with the following breakdown (Table J.7.4).

Table J.7.4 Nominal cost of debt

Parameter

Nominal Risk Free Rate 4.6%

Country Risk Premium 8.0%

Spread 2.5%

Nominal Cost of Debt (pre-tax) 15.1%

Corporate Tax Rate 30.0%

Nominal Cost of Debt 10.6%

Source: ECORYS calculations

Cost of Equity

The cost of equity is the minimum rate of return a company must offer shareholders as compensation for waiting for returns and for bearing risk. It reflects the shareholders’ opportunity cost of investment. The required rate of return on equity can be approximated by the so-called Capital Asset Pricing Model (CAPM) as defined by Modigliani and Miller. CAPM is based on the following formula.

ke =rf + βEx ERMP

ke = cost of equity


βE = equity beta

ERMP = equity market risk premium (= rm – rf = market rate of return – risk free rate of return)

7 Tanzania Investment Guide 2008 and Beyond


Accordingly, the cost of equity is a function of the risk free rate (as described) and a risk premium. The core of the risk premium is the equity risk premium. The latter is a function of the market risk premium and a company's equity beta (βE), which, in turn, is a function of both asset risk (βA) and leverage. The further substantiate the risk premium for equity providers the cost of equity also includes a country risk premium (as already described upon assessing the cost of debt) and a size premium. The concept of a size premium is based on empirical evidence suggesting that smaller size companies are riskier and, therefore, should have a higher cost of equity. This phenomenon, that to some degree contradicts the CAPM, relies on the notion that smaller companies’ risk is not entirely captured in their betas given limited trading volumes of their stocks, making covariance calculations incorrect. The equation becomes:8

ke =rf + βEx ERMP + CRP + SRP ke = cost of equity


βE = equity beta

ERMP = equity market risk premium (= rm – rf = market rate of return– risk free rate of return)

CRM = country risk premium

SRP – Size Risk Premium

Equity market risk premium The equity market risk premium (EMRP) reflects the return that must be provided over and above the risk free rate to compensate equity suppliers for bearing market risk (i.e. systematic risk). In other words, it is the difference between the risk-free rate and the stock market rate. The EMRP derives from the volatility in the stock market, measured as the standard deviation. The global EMRP is, in accordance with long term expectations,9 set to 4.%.

Systematic risk Unsystematic risk affects a very specific group of securities or assets or even an individual security or asset; can be eliminated by holding a diversified portfolio; and is also know as “idiosyncratic risk” or “diversifiable risk”. Because this risk can be diversified away, it is not priced in the market (i.e. investors do not receive compensation for bearing it).

8 The real cost of capital. Chapter 6: International WACC and country risk on http://www.costofcapital.net/Chapter6%20-

%20Country%20Risk%20(25-07-04).doc 9 In accordance with finance expert Prof. Damoadaran (NYU) who states the expectation that ‘risk premiums will revert back to

lower values (4 to 4.5 percent) in the long term’. - http://pages.stern.nyu.edu/~adamodar/


Systematic risk affects a broad range of securities and assets; refers to the movement of the entire economy; cannot be avoided by diversification; and is, as such, also known as “market risk” or “un-diversifiable risk”. Because this risk cannot be diversified away, it is priced in the market (i.e. investors receive a premium for bearing it). Systematic risk is not the same for all securities or assets though, different companies respond differently to, for instance, a recession. An often-used measure of the sensitivity of a stock or asset to systematic risk is the equity beta (βE). For a publicly traded company, βE is measured by regressing its historical returns (i.e. movements of its share price) on stock market index historical returns (representing for market movements). The slope of the resulting regression line is the beta. For a company that is not publicly traded, however, only an approximate beta can be obtained, by relying on information from publicly listed peers. Rather than simply averaging the equity betas of the peer companies, the following steps are taken:

Selection of peer group companies; Calculation of each peer company’s asset beta (βA) by unlevering its equity beta; Using either the average or the median value of the unlevered betas of the peer

companies to obtain an estimate of the industry asset beta; Relevering the industry asset beta to account for capital structure.

The logic of this procedure is as follows. Companies that compete in the same industry are expected to face similar business risks. However, given that most firms are levered, the estimates of equity betas that are publicly available reflect the combined effects of business risk and financial risk. Asset betas only reflect the business risk, which is expected to be common to all companies in the industry. So, when using information on betas from a peer group, the business risk should be separated from the financial risk, which will be specific to each company given its financial leverage. This can be done by converting the equity betas (levered betas) into asset betas (unlevered betas) through the following equation:

βE = βA [1 + (1-T) (D/E)]


D/E = debt-equity ratio

βE = equity beta

βA = asset beta

For this study, companies from emerging markets that operate in the port, logistics, engineering and rail transport sector are selected as comparables. Data on beta, debt-equity ratio, and corporate tax rate for this peer group are derived from a publicly available dataset.10 The consequent average asset beta reflecting the systematic risk for a freight station is 0.44.

10 Produced and updated annually by Prof. Aswath Damodaran of NYU.


Table J.7.5 Equity and Asset Beta Sector Emerging Markets

Company Name Country Equity

Beta

Market Debt to

Equity ratio

Effective

Tax Rate

Asset

Beta

Complete Logistic Services Bhd

(KLSE:COMPLET)

Malaysia 0.74 19.79% 8.93% 0.63

Xiamen International Port Co., Ltd.

(SEHK:3378)

China 1.43 15.81% 8.00% 1.25

Jinzhou Port Co. Ltd.

(SHSE:900952)

China 0.32 21.50% 25.53% 0.27

Asian Terminals Inc. (PSE:ATI) Philippines 0.30 22.46% 28.99% 0.26

Tianjin Port Development Holdings

Ltd. (SEHK:3382)

Hong Kong 1.59 23.90% 0.00% 1.28

Xiamen Port Development Co., Ltd.

(SZSE:000905)

China 0.04 11.98% 23.29% 0.04

Jiangsu Lianyungang Port Co., Ltd.

(SHSE:601008)

China 0.31 14.30% 0.00% 0.27

Dalian Port (PDA) Company

Limited (SEHK:2880)

China 1.73 36.96% 25.22% 1.36

Egyptian Transport and

Commercial Services Company

(CASE:ETRS)

Egypt 0.95 16.21% 5.03% 0.83

Shanghai International Port Group

Co. Ltd. (SHSE:600018)

China 0.35 12.08% 12.64% 0.32

Tianjin Port Company Limited

(SHSE:600717)

China 0.25 29.83% 15.14% 0.20

Bangpakong Terminal Public

Company Ltd. (SET:BTC)

Thailand 0.90 282.43% 0.00% 0.23

International Container Terminal

Services Inc. (PSE:ICT)

Philippines 0.60 45.88% 42.76% 0.47

Pakistan International Container

Terminal Ltd (KASE:PICT)

Pakistan 0.61 32.22% 21.78% 0.48

DP World Limited (DIFX:DPW) United Arab

Emirates

1.49 109.93% 1.89% 0.72

Cig Yangtze Ports Plc

(SEHK:8233)

Hong Kong 1.05 115.49% 0.00% 0.49

Log-In Logistica Intermodal S.A

(BOVESPA:LOGN3)

Brazil 0.65 15.92% 34.16% 0.59

Konsortium Logistik Bhd

(KLSE:KONSORT)

Malaysia 0.41 35.92% 25.29% 0.32

The Public Warehousing Company

K.S.C. (KWSE:AGLTY)

Kuwait 0.30 67.34% 3.25% 0.18

Century Logistics Holdings Bhd

(KLSE:CENTURY)

Malaysia 0.40 47.79% 22.44% 0.29

Freight Links Express Holdings Ltd.

(SGX:F01)

Singapore 1.08 81.84% 10.14% 0.62

Integrated Logistics Bhd

(KLSE:ILB)

Malaysia 0.47 135.22% 36.16% 0.25


Company Name Country Equity

Beta

Market Debt to

Equity ratio

Effective

Tax Rate

Asset

Beta

Tamadam Bonded Warehouse Bhd

(KLSE:TAMADAM)

Malaysia 0.21 116.96% 50.00% 0.13

Poh Tiong Choon Logistics Ltd.

(SGX:P01)

Singapore 0.39 48.39% 15.34% 0.28

Onelogix Group Ltd. (JSE:OLG) South Africa 0.32 104.48% 30.94% 0.19

Grand Power Logistics Group Inc.

(TSXV:GPW)

Hong Kong 0.81 131.91% 0.00% 0.35

Farglory Free Trade Zone

Investment Holding Co., Ltd

(TSEC:5607)

Taiwan 0.08 58.77% 0.00% 0.05

Guangdong Nan Yue Logistics Co.

Ltd (SEHK:3399)

Hong Kong 0.88 226.86% 22.41% 0.32

Santova Logistics Limited

(JSE:SNV)

South Africa 0.49 189.55% 39.04% 0.23

Average 0.66 0.44

Source: Damodaron

Based on these figures, and given the assumed project debt-equity ratio of 30:70 and the corporate tax rate of 30% in Tanzania, the equity beta for the KFS is calculated as 1.2. Size premium Because the total value of the investments for the CSF is relatively small in comparison to the peer group and because the KFS is not publicly listed while the peers are, it is chosen to add a size premium to the CAPM-based cost of equity. Ibbotson provides size premia for companies based on their market capitalization (in USD)11.

Table J.7.6 Size premia

Market cap. lower limit Market cap. upper limit Size premium

Mid-cap 840,000 4,144,000 0.6%

Low-cap 192,000 840,000 1.1%

Micro-cap 0 192,000 2.6%

Source: M.W. Barad, Ibbotson Associates. Ibbotson Risk Premia: Under the Microscope.

It is reasonable to add a 2.6% to the risk premium to reflect the limited size of the project and the fact that is not publicly listed. Nominal Cost of Equity Based on the various parameters as assessed the nominal cost of equity approximates the following figure (see Table J.7.7)

11 J. Rosenbaum, J. Pearl (2009). Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions.


Table J.7.7 Nominal cost of equity

Parameter Average

Nominal Risk Free Rate 4.6%

Equity Market Risk Premium 4.0%

Equity Beta 1.2

Country Risk Premium 8.0%

Size Risk Premium 2.6%

Nominal Cost of Equity 20.0%

Source: ECORYS calculations

Real WACC

Based on the capital structure and the nominal costs of debt and equity the nominal WACC can be calculated. As the cash flow analysis is in real terms, i.e. unadjusted for inflation, the real WACC has also been calculated as being the WACC to discount the real cash flows. To obtain the real cost of debt the inflation component has to be stripped out of the nominal cost of debt:

k (real) = [(1 + k (nominal)) / (1 + Iexpected)] – 1

kd (nominal) = nominal cost of respective capital kd (real) = real cost of respective capital Iexpected = expected inflation

As cash flows are in USD and as the risk free rate is based on US Treasury bonds the expected LT US inflation rate is to be used. This is commonly estimated by economists or US government. The most recent estimate that reflects the latest thinking on the US economy reveals that the currently expected US inflation rate is 2.0%12. Aforementioned inputs lead to the following calculation of the real WACC being 11.2%.

Table J.7.8 Weighted Average Cost of Capital

Cost of Equity Cost of Debt WACC

In Nominal terms 20.0% 10.6%

Relative share 30% 70%

Relative nominal costs 6% 7.4% 13.4%

In real terms 17.6% 8,4%

Relative real costs 5.3% 5.9% 11.2%

12 http://www.usinflationcalculator.com/interest-rates/long-term-inflation-target-of-17-to-2-set-by-fed/1000388/


Annex K: Resettlement legislation and compensation


The legal and institutional framework for the resettlement and compensation of persons to be displaced in Tanzania contains the following Guidelines, Acts and Regulations. 1. Applicable Guidelines The relevant national policies were briefly reviewed to provide guidance to the planning for the project. The Constitution of Tanzania defines the legal context in which all aspects of human development for Tanzanians, including land matters can operate. The Constitution is the dominant law of the land and defines land ownership in Tanzania by placing it under the custodianship of the President. Other matters follow from this main law as defined in specific locations. Overall, the law must ensure that project activities are undertaken in compliance with the policy requirements. 2. Land act No 4.1999 The Land Act (Section 156) requires that with regard to communal right of way in respect of way-leave, compensation shall be paid to any person for use of land, who is in lawful or actual occupation of that land, for any damage caused to crops or buildings and for the land and materials taken or used for the works. Requirements for the assessment of compensation are provided in the Land (Assessment of the Value of Land for Compensation) Regulations of 2001. The valuation of the affected properties must be done by a qualified and authorized valuator. Section 34 of that Act also states that where a right of occupancy includes land which is occupied by persons under customary law, and those persons are to be moved or relocated, they must be compensated for loss of interest in the land and for other losses. They also have the right to reap crops that are sown before any notice for vacating that land is given. 3. The Village Land Act No 5, 1999 The Village Land Act of 1999 confers the management and administration of village lands to Village Councils, under the approval of the Village Assemblies, although the Minister of Lands is entitled to decide on the amount of land which can be owned by a single person or commercial entity. Any person who wrongfully obstructs or encroaches on the public right of way and who does not within the time specified in any notice served on him remove that obstruction or cease that encroachment commits an offence and upon conviction is liable to a fine. 4. Land Acquisition Act 1967 Under the Land Acquisition Act, 1967, the President may, subject to the provisions of this Act, acquire any land for any estate or term where such land is required for any public purpose. Land shall be deemed to be acquired for a public purpose where it is required, for example, for exclusive Government use, for general public use, for any Government scheme, for the development of agricultural land or for the provision of sites for industrial, agricultural or commercial development, social services, or housing or; where the President is satisfied that a corporation requires any land for the purposes of construction of any work which in his opinion would be of public utility or in the public interest or in the interest of the national economy, he may, with the approval, to be signified by resolution of the National Assembly and by order published in the Gazette,


declare the purpose for which such land is required to be a public purpose and upon such order being made such purpose shall be deemed to be a public purpose; or in connection with the laying out of any new city, municipality, township or minor settlement or the extension or improvement of any existing city, municipality, township or minor settlement; etc. Upon such acquisition of any Land, the President is compelled on behalf of the Government to pay in respect thereof, out of moneys provided for the purpose by Parliament, such compensation, as may be agreed upon or determined in accordance with the provisions of the Land Acquisition Act, 1967. The President may also revoke a right of occupancy if in his opinion it is in public interest to do so. Accordingly, the land for which a right of occupancy has been revoked reverts to the Government for re-allocation pursuant to the existing need(s). It should also be noted here that, though the land belong to the government some changes on the land act has taken place. Land has value to the owner; therefore, any land taken from the user has to be compensated. Based on this act the villagers affected by the project are claiming that they should be compensated for the lost farms and land used for residential purposes. 5. National Land Use Planning Commission Act 3/ 1984 The act established a National Land Use Commission (NLUC) as the principal advisory organ of the government on all matters related to land use. Among other things, it recommends measures to ensure that the government policies, including those for development and conservation of land, take adequate account of their effects on land use, seek the advancement of scientific knowledge of changes in land use and encourage development of technology to prevent, or minimize adverse effects that endanger human man’s health and welfare. The act also specifies standards, norms and criteria for the protection of beneficial uses and the maintenance of the quality of the land. 6. The Grave Removal Act No 1968 Graveyard Removal Act of 1968 refers directly to grave removal and requirement for compensation. The act says the owners of graves should be compensated and the remains reburied else to pave way for development interventions. 7. The Land Assessment of the Value Compensation, Regulations 2001 These regulations provide criteria for the assessment of compensation on land, as per market value for real property; disturbance allowance is calculated as a percentage of market value of the acquired assets over twelve months; and transport allowance calculated at the cost of 12 tons hauled over a distance not exceeding 20 km. The other criteria includes loss of profit on accommodation based on business audited accounts and accommodation allowance equivalent to the rent of the acquired property per month over a 36 month period. Regulations made under S 179, (the Land Assessment of the value of land for Compensation) Regulations, 2001 and which became operational in May 2001 provide assessment of compensation on land to be based on the following: Market value of the real property; Disturbance allowance which is a percentage of market value of the acquired over 12

months;


Transport allowance calculated as the cost of 12 tons hauled over a distance not exceeding 20 km;

Loss of profit or accommodation based on business audited accounts; Accommodation allowance which is equivalent to the rent of the acquired property

per month over 36 month’s period; Methodology of valuation of the lost assets, mode of payment, dispute resolution

mechanisms; Agencies responsible for expropriation and implementing resettlement (including an

assessment of their institutional capacity to conduct those activities); Gaps, if any, between national laws and other donor agencies and the mechanisms to

bridge those gaps. 8. Involuntary Settlement (World Bank OP 4.12) 2001 The World Bank operational Policy on Involuntary resettlement acknowledges that development projects that displace people generally gives rise to economic, social and environmental problems. The Bank guidelines prescribe measures to minimize the negative impacts and ensure that the displaced community benefits from the project. Therefore the policy requires that displaced people should be: Compensated for their losses at full replacement costs prior to the actual move; Assisted with the move and supported during the transition period in the resettlement

site; Assisted in their effort to improve their former living standards, income earning

capacity and production levels or at least restore them; Integrated socially and economically in the host communities so that adverse impacts

in the hoist communities are minimized. The best way of achieving this integration is for resettlement to be planned through consultation involving affected people.

In addition, land, housing, infrastructure and other compensation should be provided to the adversely affected population, indigenous groups, ethnic minorities, and pastoral people who may have usufruct or customary rights to the land and other resources taken for the project. The absence of legal title to land by such groups should not be a bar to compensation. The existing policies, land laws and regulations regarding land acquisition and compensation in Tanzania are consistent with the World Bank Operational Guidelines. Therefore, compensation issues could still be handled within the existing regulations without contradicting the World Bank Policy requirements. However, since the road construction works for this project will be confined within the existing right-of-way and no significant damage to properties will be expected from the rehabilitation works. 9. The National Land Policy 1995 The land policy stipulates that all land is public land, vested in the president as a trustee, and that this should be entrenched in the constitutions. The National Land Policy (1995) provides that a dual system of tenure, which recognizes both customary and statutory right of occupancy as being equal in law be established. The policy further establishes that the land has value, which right and interests of citizens in land shall not be taken without due process of law and that full, fair and prompt compensation shall be paid, when land is acquired. The compensation should be paid to any person whose right of


occupancy or recognized long standing occupation or customary use of land is revoked or otherwise interfered with to their detriment by the State under the Land Act of 1999. According to the policy, the administration of village land is vested in the village councils. Village councils have to consent before any alienation of village land is effected. In case of land allocations, village councils shall report to respective village assemblies. The land in the towns is governed the either by City, Municipal or Town Council. In principle the Minister responsible for land matters is the sole authority in land issues. But the policy involves the public and private institutions whose functions are associated with lands i.e. local authorities, communities, non-governmental organizations and community based development organizations to participate and co-operate with the minister at different levels during the implementation of the policy and utilization of land. To address the problem of multiple land allocation, and its resultant disputes, the Commissioner for Lands, is the delegated sole authority for administration of land. He may appoint officers to administer on behalf. 10. National Human Settlement Policy Among others, the policy objectives that touch the road sector are to improve the level of the provision of infrastructure and social services for sustainable human settlements development and to make serviced land available for shelter and human settlements development in general to all sections of the communities. The infrastructure and services constitute the backbone of urban/rural economic activities. All weather roads, reliable and efficient transport system are essential to increase productivity and establishment of manufacturing industries. The policy promotes the development of human settlement that is sustainable. It also geared to improve the provision of infrastructure and social services for sustainable human settlement development.


11. Other resettlement compensation guidelines, treaties and conventions

Table J.1 World Bank OP 4.12/M CC, Tanzanian Law

PAP Category World Bank OP 4.12/M CC Tanzanian Law

Land Owner Recommends land-for-land

compensation. Other compensation

is at replacement cost.

Cash compensation is based upon market value of

the real property, disturbance allowance, transport

allowance, loss of profits or accommodation, cost of

acquiring or getting the subject land, any other

immediate costs or capital expenditure incurred to

the development of the subject land and

compensation should be paid promptly, and if not

paid in time, interest at market rate will be charged.

Tenant Entitled to some form of

compensation whatever the legal

recognition of their occupancy

Entitled to compensation based on the amount of

rights they hold upon the land.

Land user Entitles to compensation for crops

and labour, may be entitled to

replacement land and as a minimum

standard, incomes must be reported

to pre-project levels.

Not entitled to compensation for land, entitled to

compensation for crops. This category of PAP is

also sometimes provided with other land of equal

size and quality.

Owners of “non-

permanent”

buildings

Entitled to in-kind compensation or

cash compensation at full

replacement cost including labour

and relocation expenses, prior to

displacement.

Valuation and disturbance allowance. Cost of

putting up an equivalent structure as the one

existing at the time of valuation, based on price of

the open market.

Owners of

“permanent

buildings”

Entitled to in-kind compensation or

cash compensation at full

replacement cost including labour

and relocation expenses, prior to

displacement.

Valuation and disturbance allowance. Cost of

putting up an equivalent structure as the one

existing at the time of valuation, based on the price

on the open market.


Table J.2 Entitlement Matrix (World Bank OP 4.12)

PAP Category Entitlement

Individuals who have formal legal rights to land

(including customary and traditional rights recognized

under the laws of Tanzania

Compensation for loss in land and assets at full

replacement cost.

In case of physical relocation, provide assistance during

relocation (i.e. moving allowance) and residential

housing and/or agricultural sites with productive and

location advantages equivalent to the lost sites.

Support after displacement, until livelihoods and

standards of living are restored to pre-displacement

levels.

Development assistance in addition to compensation

measures (i.e. land preparation, credit facilities, training,

job opportunities.

Individuals who do not have formal legal rights to

land, but have a claim to such land or assets

(provided that such claims are recognized under

Tanzanian laws or become recognized through a

process identified in the resettlement plan)

Compensation for loss of assets at full replacement

cost, but not for land because they are encroachers

along the road reserve

In case of physical relocation, provide assistance during

relocation (i.e. moving allowances) and residential

housing and/or agricultural sites with productive and

location advantages equivalent to the lost sites.

Support after displacement, until livelihoods and

standards of living are restored to pre-displacement

levels.

Development assistance in addition to compensation

measures (i.e. land preparation, credit facilities, training,

job opportunities.

Individuals who have no recognizable legal right or

claim to the land they are occupying (i.e. squatter

settlements, disputed ownership)

Resettlement assistance and the replacement values for

structures/assets.


Annex L: Valuation of assets


1. Valuation of assets The affected property need to be inspected value provided. Objective of valuation of the properties will to determine replacement cost and market value for compensation purposes. Local government authorities informed local communities of the intended RAP activities and the possibility of relocating residents. In carrying out field surveys the Valuer will at all times accompanied by a local leader i.e. Executive Officer (VEO) and or Village Chairperson who identified the property owners, confirm the boundaries shown by the owner and certified on the field sheets of the count of property. In brief, the following will be done: Identification of assets affected by the project and their respective owners; Survey team also compiled a detailed inventory of the types, sizes and conditions of

the land and assets of each affected households, business or entity and determined the value of compensation to be paid to each household for affected land, assets and loss of income sources;

Assigning Reference Number to each of the identified case in a pink card; Taking notes of the identified properties (buildings) and other assets on a pre-

prepared inspection sheet; Taking measurements of the land and inspection of the buildings with help of the land

surveying team; Ensuring that all entries on the inspection sheets are counter checked and signed by

the local leaders and the property owners in the respective location results of survey and valuation exercise will be presented to Ministry of Land and Urban development in valuation report, therefore, provided the principal sources of information on the number and location of affected properties, the number and categories of the affected households, the nature and magnitudes of losses and displacement, the methods used for valuing land, assets and loss of income and assessing compensation and the amount of compensation to be paid.

2. Basis of Valuation Valuation Methods to adopt was guided by provisions of the Land Act No. 4 of 1999 and financer terms of reference, e.g. The Replacement Cost Method and market valuer was used. As indicated before, in valuing properties along the Songea-Namtumbo Road, the Replacement Cost Method of Valuation has been adopted, this method is sometimes known as the Contractors Test Method of Valuation. In this method, the value of an asset is determined by reference to the cost of replacing or reinstating it (as new) or that of its substitute. Where the asset/property is not new the replacement cost is then depreciated to derive at depreciated replacement cost which is equivalent to a market Value. However, for the purpose of this exercise we have also adopted the MCC and World Bank requirements as detailed in the Terms of Reference (ToR) that the compensation


value is obtained from the Replacement Cost added with allowances. A rate of construction per meter square was obtained from the office of respective District Valuer. In the case of crops, a list of prices was obtained from Songea municipal council which was updated. Land measurements were in square meters. 3 Computation of the Various Allowances Disturbance Allowance Disturbance Allowance is payable as a percentage of real property value in compliance to the provisions of Act No. 4 of 1999. The percentage is the average commercial bank rates offered on fixed deposits. From data obtained from the various financial institutions in Tanzania the average rate on fixed deposits is 4% per annum. Loss of profit In accordance with section 9 of the 2001 Regulations of land act no. 4 of 1999 the net monthly profit obtained from the business associated with the affected properties is assessed (for high incomes), evidenced by audited accounts where necessary and applicable, and multiplied by 36 months in order to arrive at the loss of profit payable. This calculation applies also for such businesses that are only temporarily affected during the project’s construction phase. In case PAP fail to produce the audited account, then there is no loss of profit can be paid. Loss of accommodation The Tanzanian law requires an accommodation allowance to be paid to the claimants to support them to afford to pay monthly market rent for an alternative accommodation during the period of constructing an alternative accommodation. In accordance with section 8 of the 2001 Regulations of Land Act 4 of 1999, accommodation allowance is calculated on the basis of monthly rent multiply by 36. Replacement costs are categorized separately from houses, structures, crops and trees. Sites for relocation are to be identified. In most cases this will involve “stepping back” within the same plot, rather than total relocation. Assistance to vulnerable groups like aged people, widow, orphans, single mothers are provided form of assistance. Additional to the above the affected people are required to be paid transport allowances as well as money to transport their luggage.


Annex M: Tanzanian Customs Act - CFS/ICD


Source: Tanzanian Customs Act 2003


Annex N: calculations for Terminal Ground Slots and car parking spaces


Container Stack Ground Slot Calculation

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Total Total volume CFS 1000 TEU 82 181 301 438 479 523 572 625 673 725 781 841 907 974 1045 1122 1204 1292 1387 1489 1598 1715 1841

of which import Tanzanian containers 1000 TEU 22 49 83 123 136 150 167 185 201 219 239 261 284 306 328 353 380 408 439 472 507 545 586

of which import transit containers 1000 TEU 17 38 64 95 104 115 127 140 152 165 179 194 211 226 242 260 278 298 320 342 367 393 422

of which export Tanzanian containers 1000 TEU 9 21 36 53 58 64 71 79 86 94 103 112 122 131 141 151 163 175 188 202 217 234 251

of which export transit containers 1000 TEU 7 15 26 38 42 46 51 56 61 66 72 78 84 90 96 103 110 118 126 135 145 155 166

of which empties 1000 TEU 26 57 92 130 138 147 156 165 173 180 189 197 206 221 237 254 273 293 314 337 362 389 417

reefers volume reefers 1000 TEU 0 1 2 3 3 3 4 4 5 5 6 7 7 8 9 10 11 12 13 14 15 17 18

Tanzanian imports days 9 8 7 6 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

Transit imports days 6 5 4 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Tanzanian exports days 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

Transit exports days 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

Reefers days 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

empties days 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

Peak factor 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2

Stack height fulls 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

Stack height empties 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

No. of days 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365

Stack density fulls 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675 0,675

Stack density empties 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95 0,95

Tanzanian imports 190 383 566 716 661 733 812 900 981 1069 1165 1270 1384 1488 1600 1720 1849 1988 2137 2297 2469 2654 2853

Transit imports 101 187 251 277 305 336 371 409 444 482 523 568 617 661 708 759 813 871 934 1001 1073 1150 1232

Tanzanian exports 45 103 173 256 283 314 348 386 420 458 499 544 593 638 686 737 792 852 916 984 1058 1138 1223

Transit exports 34 75 127 186 205 225 248 273 296 321 348 378 409 438 469 502 537 575 616 659 705 755 808

Reefers 2 5 9 13 15 17 19 21 24 26 29 32 35 39 43 47 52 57 62 68 75 82 90

empties 183 396 639 903 958 1016 1078 1144 1196 1249 1305 1364 1425 1529 1641 1761 1890 2028 2176 2335 2506 2689 2886

Total Required terminal Ground Slots 555 1.149 1.764 2.351 2.428 2.642 2.876 3.133 3.360 3.605 3.870 4.156 4.464 4.793 5.146 5.526 5.933 6.370 6.840 7.344 7.886 8.468 9.092

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Import Vehicle Park Area Calculation

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Vehicles through Freight Station 1000 units 36 39 44 48 53 59 65 72 79 86 94 103 112 122 133 145 158 172 188 205 223 243 265 289 315 343

of which passenger cars/pickups 1000 units 34 37 41 46 51 56 62 68 75 82 90 98 106 116 126 138 150 164 178 194 212 231 252 274 299 326

of which trucks/buses 1000 units 2 2 2 2 3 3 3 4 4 4 5 5 6 6 7 7 8 9 9 10 11 12 13 14 16 17

average dwell time days 10 10 10 10 9 9 9 9 8 8 8 8 7 7 7 7 6 6 6 6 6 5 5 5 5 5

Peak factor 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2 1,2

No. of days 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365

Stack density 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85 0,85

passenger cars/pickups slots slots 1311 1449 1601 1769 1759 1944 2148 2373 2331 2541 2770 3019 2879 3139 3421 3729 3484 3797 4139 4512 4918 4467 4869 5307 5785 6305

bus/truck slots slots 69 76 84 93 93 102 113 125 123 134 146 159 152 165 180 196 183 200 218 237 259 235 256 279 304 332

Total Required land excl roads Hectares 1,885 2,082 2,301 2,543 2,529 2,794 3,088 3,412 3,351 3,653 3,981 4,340 4,139 4,512 4,918 5,360 5,008 5,459 5,950 6,485 7,069 6,421 6,999 7,629 8,316 9,064

Total Required land incl roads (+10%) Hectares 2,073 2,291 2,531 2,797 2,782 3,074 3,396 3,753 3,686 4,018 4,380 4,774 4,553 4,963 5,409 5,896 5,509 6,005 6,545 7,134 7,776 7,063 7,699 8,392 9,147 9,970

Net area reqd by car/pickup (m²) 12,48Net area reqd by bus/truck (m²) 36,00

Kisarawe Final Report

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