Gautam Adani Led Adani Ports Shares Soar 10% On 30-Year Concession Deal With Tanzania Ports Authority

The shares of Adani Ports and Special Economic Zone (APSEZ) saw a boost on June 3, surging 10%, following an agreement by its wholly-owned subsidiary Adani International Ports Holdings Pte Ltd (AIPH). The subsidiary has inked a 30-year concession agreement with the Tanzania Ports Authority to operate and manage Container Terminal 2 (CT2) at the Dar es Salaam Port in Tanzania.

The Dar es Salaam Port, a crucial gateway port with extensive connectivity through roadways and railways, represents a strategic expansion for Adani Ports into the East African region. This move is part of APSEZ's broader ambition to become one of the largest port operators globally by 2030.

The agreement involves East Africa Gateway Ltd (EAGL), which has signed a Share Purchase Agreement to acquire a 95% stake in Tanzania International Container Terminal Services Limited (TICTS). The stake is being purchased from Hutchison Port Holdings Limited, Hutchison Port Investments Limited, and Harbours Investment Limited for $39.5 million.

According to the company's statement, TICTS currently owns all port handling equipment and employs the necessary manpower. The operational control of CT2 will be managed by Adani through TICTS. EAGL has been established as a joint venture comprising AIPH, AD Ports Group, and East Harbour Terminals Ltd (EHTL). In this consortium, APSEZ will be the controlling shareholder and will consolidate EAGL's operations within its financial records.

CT2 is equipped with four berths and boasts an annual cargo handling capacity of 1 million TEUs (twenty-foot equivalent units). In 2023, it handled 0.82 million TEUs, accounting for approximately 83% of Tanzania's total container volumes. The turnover of TICTS was reported at $43.7 million in 2023.

The market responded positively to this development. By 11 am on June 3, Adani Ports' shares were trading at Rs 1,575 per share on the National Stock Exchange (NSE), reflecting a nearly 10% increase. Over the past 12 months, the stock has surged by almost 115%, effectively doubling investors' wealth.

Karan Adani, Managing Director of APSEZ, emphasized that the agreement for Container Terminal 2 at Dar es Salaam Port aligns with the company's vision. "The signing of the concession for Container Terminal 2 at Dar es Salaam Port is in line with APSEZ's ambition of becoming one of the largest port operators globally by 2030," he stated.

This move not only solidifies Adani Ports' presence in the African continent but also enhances its global footprint. The acquisition and operational control of CT2 in Tanzania is expected to boost APSEZ's capacity and efficiency in handling substantial cargo volumes.

The development has broader implications for the port sector and regional trade dynamics in East Africa. Dar es Salaam Port serves as a vital trade hub, facilitating cargo movements to and from landlocked countries such as Zambia, the Democratic Republic of Congo, and Malawi. Improved management and operational efficiency at CT2, driven by Adani's expertise, are likely to enhance the port's capacity and service quality, thereby boosting regional trade and economic development.

In the long term, the deal is expected to generate significant economic benefits for Tanzania and the broader East African region. Enhanced port operations could lead to reduced logistics costs, increased trade volumes, and improved competitiveness of local businesses in global markets.