How government abandoned Port Bell revival for Shs800b Bukasa port

Early last year, a meeting was convened in one of the ministry of Works’ boardrooms, attended by top ministry officials and those from both the World Bank and European Union (EU).
The agenda of the meeting was the Lake Victoria Transport Programme (LVTP), a project meant to foster marine transport on Lake Victoria by rehabilitating three to six ports on the lake and introducing a fleet of modern and purpose built freight vessels, to be owned and operated by private sector investors and operators.
Sources familiar with the project say the Works ministry technocrats told World Bank/EU team that after consultations, the government decided to prioritise the construction of Bukasa Inland Port in Wakiso District.

The officials indicated, however, this does not deter the World Bank from proceeding with renovation of Port Bell/Jinja pier. The Works officials, sources added, further told the meeting that President Museveni had endorsed the Bukasa inland project.
Disconcerted by the revelation, as the meeting came to a close, the donors requested the ministry to communicate officially—in writing—that the Ugandan government was no longer interested in the LVTP project to inform their next course of action.

It remains unclear whether the ministry has since communicated officially, at a meeting where the hosts treated the matter at hand in a cavalier attitude, which jolted the donors.
The World Bank and EU declined to comment on the matter, but Works and Transport minister Monica Azuba told Daily Monitor “they have not notified us that they have abandoned the project.”
“When we met, I told them that government had decided to fast-track the Bukasa project but they could not hear none of this, “Ms Azuba said adding, “They told us not to develop Bukasa, and if we insisted then they would have a rethink.”

Ms Azuba said: “What I can tell you is that I consulted widely, including with the President, but as a country we had to make a decision that is good for us after all for both projects, we were going to borrow.”
“We are already doing Bukasa port so we cannot expand Port Bell. It is a matter of looking at the economics of the two ports (Bukasa and Port Bell) closely,” Ms Azuba said.
“Yes, the World Bank, as far as I know, has expressed some concerns but have not written to state that they have withdrawn.”

The project that never was
The Lake Victoria Transport Programme was initially conceived as an East African Community project, to benefit all the four countries: Uganda, Kenya, Tanzania and Rwanda, sharing the lake’s basin.
According to one the World Bank’s conceptual studies, the Lake Victoria catchment is responsible for an approximate Gross Domestic Product of some Shs123 trillion ($30b) or 40 per cent of the total GDP of four countries, with great potential in, among others, inland water transportation whose demand declined as a result of a combination of factors from broken rail connections and maritime ports, and unreliable ferry operations across the lake.

The project, was conceived to “facilitate the sustainable movement of goods and people around the lake “whilst strengthening the institutional framework for maritime transport safety.”
It was meant to serve as an alternative multi-model route to the sea via the central and southern corridors in Tanzania. In Uganda, the plan was to redevelop Port Bell and the Jinja pier: in Tanzania Mwanza and Bukoba ports: and in Kenya; Kisumu port.

The World Bank committed $475m (Shs1.7trillion) for the implementation of the Lake Victoria transport program; $125m (Shs461b) for Uganda: $200m (Shs739b) for Tanzania: and $81m (Shs299b) for Rwanda.
For the Uganda project, the EU committed a $25m (Shs92b), specifically for the refurbishment of the dilapidated rail link connecting Port Bell to the Jinja pier, and widening access roads to the two ports.
Ms Azuba said they are “still engaging” the World Bank about the possibility of continuing with the Port Bell/Jinja pier redevelopments as options for the Bukasa Inland Port “which is now government’s main priority after a decision was taken.”

She revealed further that ‘the advantages of doing Bukasa were huge compared to doing Port Bell, and that is why we took that decision.’ Port Bell will remain for mainly tourism and for traffic to the island as Bukasa will be the port for intermodal transport; moving cargo from Mwanza/Bukoba and Kisumu, since it is right next to the Namanve Industrial Park.”

The German and Belgian governments are bankrolling the Bukasa port project expected to cost ‎€uros200m (approx. Shs820b), which will be undertaken in phases. For the first phase, the government has already borrowed €48m (Shs196b).
In 2015, government signed a general framework agreement for development of the port with a German engineering firm, GAUFF GmbH & Co. Engineering.

The contract requires Gauff to act as the technical consultant, project manager, procurement agent, and technical assistant for operation, to develop a shipyard, container port, and other attendant infrastructure on the 500-acre area gazetted for the port. A sizeable area of the land has been encroached but government has committed to compensate project-affected persons, regardless.

Sources familiar with the matter told this newspaper that the decision to fast-track Bukasa, and ditch Port Bell/Jinja pier redevelopment, was taken amid excitement and high expectation that the much-hyped Standard Gauge Railway (SGR) project was coming on board soon.
As a result, the Engineering, Procurement and Construction (EPC) tender signed earlier in 2015 with the Chinese contractor, China Harbour Engineering Company Ltd (CHEC), was renegotiated, besides reducing on the contract price, to include among others, a 4.5km link to the Bukasa port.

Hurdles have beset the SGR project, since its conception a decade ago, as it vacillates from one crisis to another.
The Chinese funders—EXIM Bank—remain reluctant to fund the costly SGR as Uganda’s debt continues to rise after it hedged its bet on oil revenues to pay off loans. But the date when Uganda will produce its first barrel of oil continues to be pushed forward.
However, the project coordinator, Mr Perez Wamburu says the SGR remains on course and they are “currently reviewing the bankable feasibility study (BFS) and fiscal analysis in line with the requirements of the funders” which will lead to the loan application process, and perhaps the funds will be released.

Sources told Daily Monitor that several officials in the ministry “deliberately frustrated” the World Bank funded project to allow room for the Bukasa project, which besides being expensive in terms of financing, will cost an estimated Shs29b to compensate encroachers on the port land/project affected persons.

Until 1977, in the wake of the first collapse of the East African Community, the East African Railways and Harbours Corporation operated the railway and ports across the three countries, and subsequently split into three—from which the Uganda Railways Corporation (URC) was hatched. A journey between Kisumu port in Kenya and Port Bell at most lasted 13 hours and 19 hours between Port Bell and Mwanza when vessels were still operational.
In Uganda, Port Bell served as the main port handling passengers and goods and the Jinja pier as an offshoot. Between 1930 and 1950, Port Bell was a landing point on the Imperial Airways flying boat passenger and mail route from Southampton to Johannesburg’s Vaal Dam. Port Bell linked Khartoum and Kisumu.

Today, the windswept Port Bell at the edge of Lake Victoria is a junkyard with heaps of debris and relics acting as the lasting vestiges of its commercial success.
The port is choking on heavy siltation, and general neglect.
Until 2004, freight handled at Port Bell by the Uganda Railway Corporation (URC) ferry wagons was estimated at 435,617 tonnes for both imports and export via the ports in Kenya and Tanzania. However, following the accident of MV Kabalega, cargo handled at the port drastically fell from an average of 126,000 tonnes in 2005 to 8, 100 tonnes in 2014.

The renovation of Port Bell, which also included restoring the existing rail link (meter-gauge) from Port Bell to Kampala or expansion of the access—Nakawa-Luzira road (9km) Luzira-Nakawa access road—but only a section to the proposed Kampala Southern Bypass, an 18 km stretch at Butabika, was thus envisaged a shot in the arm.
“The modest investment of the LVTP is consistent with the current and project demand on the lake for up to 20 years,” according to the World Bank.

Another expensive gamble?

Issue. Sources told this newspaper that World Bank “is not against the development” of Bukasa port but rather “feels the project is being rushed.”
In one report, the World Bank raises several concerns on Bukasa port that; it is being promoted outside a prioritised sectoral investment plan and its commercial projections are exaggerated.

According to a Works ministry brief, ‘the forecast traffic for the anticipated opening year (2020) traffic is 2.37 million tonnes, of which 775,952 tonnes will come via the lake, growing to 9.5 million tonnes by 2040, which is “grossly exaggerated because current volumes of cargo on the lake from the Dar es salaam port amount to less than 88,000 tonnes.”
The brief further reveals that in 2014 only 1,471 containers were handled in Dar es Salaam, which were destined for Uganda. “The demand will grow certainly but it will not grow overnight from the current volumes of 88,000 tonnes to the projected volumes of 3.37 million by 2020.”

“This is very unlikely and therefore it would render the Bukasa port project an ‘over investment’ for almost the first 20 years of its operation. This would represent lost money to the country as the opportunity cost would be high hence the need for a phased implementation of the Bukasa port in line with the growing demand.”
Transport costs. The brief adds that the draft master plan for Bukasa port states that road transport cost for a standard container is between $3,000 and $3,200 (Shs10m and Shs11m) for a one way Kampala-Mombasa, and $3,800 (Shs13m) for a round trip; similar costs for the Kampala-Dar es Salaam route are in the ranges of $4.500 (Shs16m) per one way and $5,500 (Shs20m) for a round trip.

“The [Bukasa] master plan itself acknowledges that Bukasa port will not be able to compete with the cost (and time) benchmark for seaport container between Kampala and Mombasa using the SGR…. acknowledging that Bukasa will contribute little to the government objective to open a second avenue to the sea. Why invest all that money then?”
The brief recommended that “if government is keen” on developing the Bukasa project, it should be done “in a phased manner consistent with the growing demands in transit cargo” to allow co-existence with the earlier planned redevelopment of Port Bell/Jinja pier.

Purpose. The Uganda Railways Corporation (URC) managing director, Charles Kateba, however indicated that Bukasa is being developed as a major terminal largely to concentrate on containerised cargo, mainly to serve the industrial clientele around the Namanve Industrial park.
“The land in Port bell is limited; so it would have been limited in capacity,” Mr Kateba told this newspaper during an interview last Thursday in Jinja. “Redevelopment of Port Bell was an option but remember, it was constructed years ago when industries were concentrated around Kampala; now they have moved to Namanve, so besides having to move the cargo from Port Bell to where they are: it is also helps to decongest Kampala.”

The logic of decongesting Kampala appears flawed in away, because Bukasa port is being developed within a spitting distance from Kampala.
Mr Kateba asked why, if decongesting Kampala was determining factor for development of Bukasa instead of Port Bell, potential sites such as Kibanga Landing Site in Mukono were presumed to be far from the city.
“Most of the businesses targeted are around the city. Kibanga can still be developed, and run concurrently with Bukasa. As the city grows towards Mukono, integrating industries in Jinja, Mukono and surrounding areas; it is a good candidate.”