Kagina, Mukwaya disagree over Tororo Inland Port

Feb 19, 2009

THE trade ministry is determined to push ahead with establishment of the Tororo Inland Port despite concerns raised by the Uganda Revenue Authority (URA) and the Uganda Freight Forwarders Association (UFFA) about the legality and viability of the project.

By Paul Busharizi, Mikaili Sseppuya and David Muwanga

THE trade ministry is determined to push ahead with establishment of the Tororo Inland Port despite concerns raised by the Uganda Revenue Authority (URA) and the Uganda Freight Forwarders Association (UFFA) about the legality and viability of the project.

Submission of bids for the running of the inland port closed on February 2 with only Great Lakes Ltd – a consortium of local and regional businessmen, submitting.

The idea behind the inland port is that goods will come straight through Mombasa without suffering any custom checks at the border. The promoters say URA will have a post at the port to handle custom issues, which will speed up the process of getting goods from Mombasa where congestion has slowed down cargo-processing.

The promoters add that a 300-acre inland port will also lower the cost of doing business for importers and exporters. The proposed inland point is less than a kilometre from Malaba border post.

Under a memorandum of understanding signed between Great Lakes and the Government, the inland port will have a monopoly on transiting all goods to and from Uganda to Mombasa for 10 years.

In a letter responding to concerns raised by URA, former trade minister Janat Mukwaya said URA “did not appreciate” the objectives of the project, was out of touch with concerns of the trading community and sought “to perpetuate the status quo, where the Uganda business community would continue to suffer untold losses at the hands of shipping lines, Inland Container Depots and multi-national forwarders.”

“The ministry is convinced the port will reduce costs and also make Uganda the focal point for remanufacturing and redistribution into the Great Lakes region and further to the west,” Mukwaya observed.

But URA maintains that their concerns need to be taken into consideration in planning the dry port.

URA points out that goods being cleared through Malaba and Kampala are done for free, while the dry port will charge an additional fee.

“Introducing an additional business cost contradicts the primary objective of reducing business costs,” URA commissioner general Allen Kagina said in a letter to the trade minister.

Mukwaya was unable to counter the argument, only assuring URA that the any tariffs to be administered would be monitored.

“The gazetted tariff will be the subject of wide consultations within the industry before inclusion in the contract,” Mukwaya wrote in response.

In the letter, Kagina also questioned the claim that the inland port would ease congestion at Mombasa.

“Congestion at Mombasa is caused by the increase in the volume of cargo handled at the port, which is above the capacity of the port. Cargo handling equipment at the port is also inadequate… we believe this inland port will not solve the problem of congestion at Mombasa,” Kagina stressed.

URA also questioned the legality of the proposal, saying there were no laws that would allow a dry port in Uganda.

“An inland port is an extension of a port and is normally in the same country, can we have an extension of Mombasa in Uganda? There is currently no law that can allow it,” Kagina observed in a recent interview.

Kagina also pointed out that with the Kenya Revenue Authority, the URA had invested $14m (about sh27.7b) in developing Malaba as a one-stop, 24-hour customs clearance post and the dry port would add no value to existing mechanisms.

“This will only make business more expensive because traders would have to still go back to Malaba to clear their goods,” she said.

One of the key promoters of the project, Kassim Omar, the chairman of the Uganda Clearing and Forwarding Association – whose membership stands at more than 300, says the issue has been politicised, masking the real advantages of the dry port.

Great Lakes is expected to plough $90m (sh178.2b) into the project, a sum that may not materialise if delays surrounding the wrangling continue, Omar said.

However, other industry players remain skeptical about the viability of the project.

“Our biggest concern is that they are trying to create a monopoly since all cargo to and from Mombasa will have to first pass through them … this will give them pricing power and if we are locked in, we will have no alternative if efficiency becomes a problem,” the UFFA chairperson, Marian Sebunya, said.

Sebunya also argued that with the inland port at Tororo, traders would still have to return to Malaba to have their goods cleared by URA.

“This will only serve to increase rather than decrease the costs of doing business, an added cost that will have to be passed on to the end-users. So, what benefits will the new arrangement bring?” she wondered.

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