Veron Shipyard

DEVELOPMENT OF SHIPYARD FACILITY IN JINJA ON LAKE VICTORIA

Introduction

VERON Shipyard Ltd (VSL) was awarded a grant by the Logistics Innovation for Trade (LIFT) Challenge Fund in April 2016 to establish and operate a modern shipbuilding, repair and maintenance facility in Masese, Jinja town, on the shores of Lake Victoria in Uganda. Cargo traffic on the Central Corridor has been on the decline from 6.3% in 2001 to 1.9% in 2006 and just 1% by 2013 with the Central Corridor hardly supplementing flows on the Northern Corridor. This situation was occasioned by a continued deterioration of the intermodal rail/maritime infrastructure from 2001.

Establishment of the proposed shipyard is expected to create the unique opportunity to catalyse the sustainable development of modern inland navigation on Lake Victoria by reviving the entire port system which will translate in the lowering of freight costs and improvement in terms of time efficiency for inter and intra-region cargo flows. The modern and innovative ship building and repair capabilities on Lake Victoria is expected to attract the much needed local and international investment in cargo vessels and further commitment to develop the port systems of the three East African countries (Kenya, Tanzania and Uganda) bordering the Lake. The increased investment in cargo vessels and the port system will lead to competition between the Northern and Central Corridors and the overall lowering of transportation costs in the East African region.

The proposed shipyard aims to contribute towards the revival of the traffic flows on the Central Corridor due to dilapidated ports, lack of equipment and an old fleet of large roll-on/roll-off (RoRo) ferries and small cargo ferries. Furthermore, many of the ships plying Lake Victoria are in poor condition and there is limited capability to overhaul the vessels. The proposed shipyard will repair the existing fleet of fifty-two vessels currently plying Lake Victoria and will also build new vessels of different types and sizes to ease cargo transportation and to facilitate development of other sectors such as tourism and fisheries.

The project on its own will create direct full-time employment for 49 highly skilled technical personnel in modern shipbuilding techniques but will also be creating many indirect jobs through the new vessels that will be built over the life of the project. The sponsors of the Shipyard also intend to establish a vocational training facility to facilitate training of local artisans in the fields of certified welding, steel construction, carpentry, and ship electrical circuitry and engineering amongst others. In this regard, the Shipyard targets to provide intern opportunities for students from vocational training centers across the region.

The project implementation is structured into 6 milestones:

  • Milestone 1 – project plans approved by authorities by month 7 from the project start date

  • Milestone 2 – civil works for the vessel repair and maintenance facility including dredging of the shoreline (to a maximum depth of 5 metres), building of the cofferdam, backfilling, road access, and excavation works by month 10 from the project start dateback-end systems developed and tested

  • Milestone 3 – 3 existing vessel operators to sign maintenance contracts by month 10 from the project start date

  • Milestone 4 – 3 vessels undergo maintenance and repairs at the shipyard by month 13 from the project start date

  • Milestone 5 – at least one order for a vessel with load capacity of at least 2,200 tons (90 TEUs) by month 16 from the project start date

  • Milestone 6 – increase in annual Lake Victoria cargo traffic from 70,000 tons per year to at least 100,000 tons per year by June 2017 (pro-rated measurement at mid-2017)

Project Objectives

  • The project’s objective is to catalyze development of a sustainable maritime and logistics industry on Lake Victoria. At its location in Masese, Jinja, the Shipyard will have the capacity to build many custom sized vessel types such as container and cargo vessels, double hulled chemical tankers, palm oil tanker vessels, pushed barges, push and tug boats, crane ships, pontoons, self-drive working barges, passenger vessel container vessels, dry cargo vessels, gas tankers, push barges, pontoons, passenger vessels, tourism vessels and deep lake fishing boats.

  • The shipbuilding, repair and maintenance facility will attract investment towards the entire maritime, port and logistics industry on Lake Victoria. The result will lead to a pipeline of vessel orders for cargo transportation and other purposes including fishing and tourism.

  • The development of shipping capacity to scale on Lake Victoria will introduce multi-modal transport and logistics links between ports on Lake Victoria which will lower the overall transportation costs in the region.

  • VERON Shipyard will also build the first multi-purpose Landing Craft vessel on Lake Victoria with a load carrying capacity of 90 twenty-foot equivalent unit (TEUs) containers. This innovative vessel will serve as a showcase for other investors and will also open up reliable and scheduled transportation of containers along various routes connecting the ports of Kisumu, Mwanza and Portbell.

  • The shipyard intends to make efficient use of local supplies and labour and as such the vessels will be delivered at competitive prices, with the region gaining substantially from the local presence of shipbuilding expertise and enhanced cheaper transportation possibilities, reduced road congestion and pollution, and diversified trade routes.

Conclusion

Overall, the project will lead to the attraction of investors and investments towards revival of water transport infrastructure on Lake Victoria and the development of additional multi-modal routes to facilitate cheaper and reliable cargo transportation and connectivity.

“The opening up of the water transport on Lake Victoria will increase business for the two regional ports of Mombasa and Dar es Salaam. It will also enhance the reliability of water transportation on Lake Victoria which will inherently promote increased economic integration and intra-trade among the countries of the East African region. By establishing this facility, VERON will re-introduce lake shipping and navigation routes for further development by the EAC Member states. With increased maritime investment, it is expected that the facility will result into a genuine, competitively priced and reliable supplement to the road-borne transportation along the Northern Corridor. By creating a ‘one-stop shop’ for vessel and boat building on Lake Victoria there will be local capacity to produce a variety of bespoke vessels to accommodate a wide range of lake-based logistics needs.”

– Roy Baguma, Director, VERON Shipyard Ltd