Summary: DP World of Dubai has agreed to manage the Somalia'sPort of Berbera, In Somaliland,
A Break Away Federal Part of Somalia, in a landmark deal this month that opens a new point of access to the Red Sea and gives the global ports operator an alternative hub to Djibouti in the Horn of Africa. Under the terms of the concession agreement, according to a person who has seen the document, Somaliland will grant the Dubai-based company the right to manage the Red Sea Port of Berbera for 30 years.
DP World said Sunday that it agreed to the port-management deal earlier this month in Dubai. Under the term sheet —a nonbinding agreement that serves as a precursor to a more formal deal—the company is to set up a joint venture to manage and invest in the port. DP World put a $442 million value on the project, but said it would be a phased investment and depended on port volumes.
The term sheet—which calls for DP World to pay $5 million a year plus 10% on port revenue to Somalia—is a breakthrough in developing access to the sea for landlocked Ethiopia, the region’s largest economy, which until now solely relies on the Port of Djibouti for its exports.
DP World will control 65% of the joint venture and five of seven board seats, with the rest going to Somaliland, an enclave of Somalia, according to the term sheet, Reports says.
It is the biggest single investment agreement in breakaway Somaliland Federal State—and treats the northern Somali region as ade facto independent nation, a position Somalia rejects. The U.N. doesn’t acknowledge Somaliland as independent, and it isn’t recognized by any other country in the world.
Other investment agreements in Somaliland have included fisheries and offshore oil-exploration licenses, but they have mostly been acquired for small sums or on the promise of job creation and development.
A free-trade zone was also planned to support the development of trade through Berbera, DP World said.
Sultan Ahmed Bin Sulayem, DP World’s chairman and chief executive, portrayed the port as a future magnet for shipping to East Africa that would spur regional economic growth.
“Investment in this natural deep-water port will attract more shipping lines to East Africa and its modernization will act as a catalyst for the growth of the country and the region’s economy,” he said.
The ambitions of Dubai, which is a part of the United Arab Emirates, in the Horn of Africa have run into trouble over the past year. The country left an air base it was leasing in Djibouti after a dispute with the government there—opting to lease another base in Assab in neighboring Eritrea, a remote state under U.N. sanctions for supporting armed groups in neighboring Somalia.
“Berbera represents a pragmatic compromise, providing a friendly corridor for Ethiopian markets while signaling that Djibouti—though by far the most developed gateway to the Horn of Africa—will no longer enjoy a de facto monopoly over trade with the region’s landlocked markets,” Reports say
Another driver for the Berbera deal might be a long-running dispute surrounding DP World’s port in Djibouti, the largest container terminal in Africa. The Djibouti government accused DP World in 2014 of paying bribes to the former head of its ports authority, Abdourahman Boreh, to secure a concession to operate the Doraleh Container Terminal in 2000. Djibouti revoked DP World’s 20-year concession and launched an arbitration case in London.
DP World has denied the allegations, and a U.K. court found in March that Mr. Boreh didn’t take bribes. DP World has continued to manage the port as the legal proceedings continue.
A Break Away Federal Part of Somalia, in a landmark deal this month that opens a new point of access to the Red Sea and gives the global ports operator an alternative hub to Djibouti in the Horn of Africa. Under the terms of the concession agreement, according to a person who has seen the document, Somaliland will grant the Dubai-based company the right to manage the Red Sea Port of Berbera for 30 years.
DP World said Sunday that it agreed to the port-management deal earlier this month in Dubai. Under the term sheet —a nonbinding agreement that serves as a precursor to a more formal deal—the company is to set up a joint venture to manage and invest in the port. DP World put a $442 million value on the project, but said it would be a phased investment and depended on port volumes.
The term sheet—which calls for DP World to pay $5 million a year plus 10% on port revenue to Somalia—is a breakthrough in developing access to the sea for landlocked Ethiopia, the region’s largest economy, which until now solely relies on the Port of Djibouti for its exports.
DP World will control 65% of the joint venture and five of seven board seats, with the rest going to Somaliland, an enclave of Somalia, according to the term sheet, Reports says.
It is the biggest single investment agreement in breakaway Somaliland Federal State—and treats the northern Somali region as ade facto independent nation, a position Somalia rejects. The U.N. doesn’t acknowledge Somaliland as independent, and it isn’t recognized by any other country in the world.
Other investment agreements in Somaliland have included fisheries and offshore oil-exploration licenses, but they have mostly been acquired for small sums or on the promise of job creation and development.
A free-trade zone was also planned to support the development of trade through Berbera, DP World said.
Sultan Ahmed Bin Sulayem, DP World’s chairman and chief executive, portrayed the port as a future magnet for shipping to East Africa that would spur regional economic growth.
“Investment in this natural deep-water port will attract more shipping lines to East Africa and its modernization will act as a catalyst for the growth of the country and the region’s economy,” he said.
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| AFRICAN SHIPPING LINE offers Ship and Container Agency at Berbera Port |
The ambitions of Dubai, which is a part of the United Arab Emirates, in the Horn of Africa have run into trouble over the past year. The country left an air base it was leasing in Djibouti after a dispute with the government there—opting to lease another base in Assab in neighboring Eritrea, a remote state under U.N. sanctions for supporting armed groups in neighboring Somalia.
“Berbera represents a pragmatic compromise, providing a friendly corridor for Ethiopian markets while signaling that Djibouti—though by far the most developed gateway to the Horn of Africa—will no longer enjoy a de facto monopoly over trade with the region’s landlocked markets,” Reports say
Another driver for the Berbera deal might be a long-running dispute surrounding DP World’s port in Djibouti, the largest container terminal in Africa. The Djibouti government accused DP World in 2014 of paying bribes to the former head of its ports authority, Abdourahman Boreh, to secure a concession to operate the Doraleh Container Terminal in 2000. Djibouti revoked DP World’s 20-year concession and launched an arbitration case in London.
DP World has denied the allegations, and a U.K. court found in March that Mr. Boreh didn’t take bribes. DP World has continued to manage the port as the legal proceedings continue.
