Tuesday, March 6, 2018

Port and Logistics Group Runs Into More Government Troubles in Africa

Neighbouring Administration Declares Recent Deal Illegal
Shipping News Feature
SOMALIA – ETHIOPIA – UAE – Global port management group and provider of freight and logistics facilities, DP World, has received a second blow to its operations in Africa, after announcing last week a deal with the government of Ethiopia for the country to acquire a 19% in the port of Berbera, based in the self-declared Republic of Somaliland, the Somali government has taken issue with the decision, declaring the deal to be 'non-existent, null and void'.

The Somali Ministry of Ports and Marine Transport has reportedly denied the agreement on the basis that:

  1. The Federal Government of Somalia is not party to this so-called investment agreement
  2. This so-called agreement is both defective and detrimental to the sovereignty of the Federal Republic of Somalia and the unity of the country
  3. The terms of this deal contravene procedure and are in blatant breach of the Provisional Constitution Somalia.

The Ministry declared this deal as non-existent, null and void, stating further that the Federal Government of Somalia welcomes investment and development of trade and infrastructure, but always with strict adherence to the rule of law and procedures set by the government’s institutions, and with oversight from the federal parliament.

Somaliland’s parliament approved the partnership with DP World in 2016, allowing the port operator to invest $442 million to rebuild the Port of Berbera and manage it through a 30-year concession. In response to the objection, Somaliland said:

“[The oppositional stance is] not helpful in creating a conducive environment for dialogue between Somaliland and Somalia, and has no bearing, whatsoever, on the commercial and investment agreement between the Republic of Somaliland, the Federal Democratic Republic of Ethiopia and DP World, which we expect the international community and the neighbouring countries to support.”

As part of the agreement, signed on March 1 with Ethiopia taking a 19% stake, DP World a controlling 51% share and Somaliland the remaining 30%, the Ethiopian government announced plans to invest in infrastructure to develop the Berbera Corridor as a trade gateway for the landlocked country.

At the end of February, DP World also saw the government of Djibouti seize the Doraleh Container Terminal in which the port operator holds a 33% stake. Djibouti, also bordering Ethiopia and just north-west of Somaliland