A global battle for the Djibouti port of Doraleh

European firms are queuing up to take over Doraleh port from the DP World

A global battle for the port of Doraleh

Doraleh container terminal

Djibouti men and women dance during the opening ceremony of DP World’s Doraleh container terminal in Djibouti port in February 2009. Adam Schreck / AP Photo

March 02, 2018 – The unilateral cancellation of DP World’s contract to manage the Doraleh Container Terminal (DCT) on 22 February has prompted a scramble among the world’s major logistics companies to take over the running of the port from the Emirates firm. The Indian Ocean Newsletter has delved behind the scenes of this battle in which France, China and the United Arab Emirates are deploying all of their political and financial resources.

A meticulously planned offensive

According to our information, the adoption of a law by the Djiboutian parliament on 8 November 2017 allowing the government to unilaterally terminate contracts pertaining to strategic infrastructure was the last phase in the offensive to drive DP World out of the DCT. Well before the contract was cancelled, Ismail Omar Guelleh (IOG) and the Djibouti Port & Free Zone Authority (DPFZA) run by Aboubaker Omar Hadi, the uncle of IOG’s brother Saad Omar Guelleh, sought expert advice from the international corporate law firm Clifford Chance. The firm then spent several months gathering evidence to demonstrate that DP World had turned down requests from companies wanting to use the Doraleh Container Terminal (DCT).

Some of this evidence reportedly indicates that DP World made a habit of claiming that logistical capacity at the Doraleh Container Terminal (DCT) had been exceeded and then suggesting to interested parties that they reroute their maritime freight to the Emirates via Jebel Ali Port and Port Khalid in Sharjah. Djibouti is understood to have obtained confirmation of some of the elements provided by Clifford Chance from European intelligence agencies, who were only too willing to share their information with the Djiboutian government since the European countries in question are keen to see the management of the Doraleh Container Terminal (DCT) entrusted to their own national operators.

A tricky hand for the Chinese to play

Djibouti does not seem overly concerned by DP World’s decision to seek international arbitration, since the state has apparently taken out insurance to cover the financial risk of a unilateral contract termination. In cancelling a contract deemed to be too favourable to DP World, it is invoking the national interest, but China is not taking the prospect of arbitration so lightly. As revealed by the Indian Ocean Newsletter, Djibouti is heavily in debt to Exim Bank of China, is struggling to meet the repayments and is being pressured by Beijing to provide some guarantees. As a result, it seems that China Merchants Holdings (CMH), the constructor and operator of the Doraleh Multipurpose Port, which is an extension of the DCT, has agreed to guarantee late payment penalties to Exim Bank of China (for want of a guarantee from the state), as has Bank of China Hong Kong, whose vice chairman Yue Yi visited Djibouti in December for talks with the governor of the Banque centrale de Djibouti, Ahmed Osman Ali. Since the announcement of 22 February, the government has therefore been playing the national sovereignty card and insisting that it will assume 100% responsibility for the management of Doraleh Container Terminal (DCT), but it is reasonable to doubt its ability to do so.

Doraleh container terminal

Do you know that Doraleh container terminal in Djibouti is the deepest port in Africa?

European operators get ready to pounce

Now that DP World has been ejected and Warsama Hassan Ali has been appointed as the managing director of a newly created state body, the Societe de gestion du Terminal a conteneurs de Doraleh (SGTCD), other firms are already queuing up for a piece of this lucrative pie. According to our information, the maritime company CMA CGM – which is already represented in Djibouti by Thierry Marill’s firm Agence maritime Marill – and another French operator, Bollore Africa Logistics (BAL), have let it be known that they are keen to work in partnership with the Djiboutian government and the Chinese at the Doraleh Multipurpose Port. And why not at the Doraleh Container Terminal (DCT)?
Source: ION, March 02, 2018
Source Description: Since 1981, ION investigates within the power spheres of the Eastern coast of Africa, from Karthoum to the Cape and the islands. Country of origin: France
© Copyrights 2018 Indigo Publications All Rights Reserved

Stand-off between the EU and the UAE over Berbera?

Might the deal on the Berbera military base be revised?

February 16, 2018 – According to our information, the Somaliland president has received an invitation from the crown prince of Abu Dhabi, Mohammed bin Zayed al-Nahyan, to visit the United Arab Emirates in mid-March for further discussions on the military base that the Emirates wants to establish in Berbera. Several infrastructure projects are associated with this military base, including the planned road linking the port of Berbera to Ethiopia (the Emirates firm DP World is set to manage the harbour). After a visit to Abu Dhabi on 3 February, the Somaliland foreign minister, Saad Ali Shire, informed the government that the Emirates was only willing to pay $80 million for the right to establish a military base and that Somaliland could put this windfall towards the costs of building the road – a disappointing offer in the eyes of President Musa Bihi Abdi, given that the European Union (EU) has put the cost of the project at $250 million. His foreign minister has already signed an accord with Abu Dhabi, since he assumed that Musa Bihi Abdi would make up the shortfall by requesting assistance from the EU and Addis Ababa. However, in order to secure EU support, it will be necessary to cancel the contract with the UAE because its terms and conditions are not compatible with European legislation. This puts Musa Bihi Abdi in a very delicate position, not least because Abu Dhabi contributed $4 million to his election campaign. However, he has recently been in more regular touch with the EU ambassador in Mogadishu, Veronique Lorenzo.
Source: ION, February 16, 2018
Source Description: Since 1981, ION investigates within the power spheres of the Eastern coast of Africa, from Karthoum to the Cape and the islands. Country of origin: France
© Copyrights 2018 Indigo Publications All Rights Reserved

The consequences of losing the DP World trial

February 24, 2017 – The axe of British justice fell on Feb. 21 in the case between Djibouti’s government and the Emirati port operator DP World. According to our sources, following the exoneration all bribery charges against DP World in connection with the granting of a fifty-year concession for the Doraleh Container Terminal (DCT), the company’s management intends to claim before the London Court of International Arbitration damages and interest which could cost the Djibouti government several hundred million dollars in compensation for the loss of DP World’s income in the operation of the DCT. Add that to legal fees of $65 million, around $18 which judge Julian Martin Flaux ordered in April 2016 be payed to cover businessman Abdourahman Mahamoud Boreh’s legal costs, a further $870,000 to ensure Boreh’s abandons all over law suits, and some $236,300 in interest and the cost of President Ismail Omar Guelleh’s judicial forays is quite steep indeed.
Source: ION, February 24, 2017
Source Description: Since 1981, ION investigates within the power spheres of the Eastern coast of Africa, from Karthoum to the Cape and the islands. Country of origin: France
© Copyrights 2017 Indigo Publications All Rights Reserved

Storm warning over DP World Berbera contract

June 03, 2016 – For DP World (DPW), the contract it signed on 9 May to run Berbera Port is primarily a $442 million industrial operation. But in the Horn of Africa, it is a veritable tsunami upsetting the delicate political-clan balance. In developing Berbera, DP World will deprive Djibouti of its port annuity and favour the ruling clan in Somaliland to the detriment of the others.

Djibouti strangled, Addis emancipated

Up to now, Djibouti has enjoyed a virtual monopoly of Ethiopian freight via the Doraleh Container Terminal, on which Djibouti’s fragile economy depends. However in late April, all changed, much to the consternation of President Ismaïl Omar Guelleh: Somaliland and Ethiopia stuck an agreement to develop the Berbera Corridor. Addis Ababa had grown fed up with the Djibouti authorities’ being unable to deal with the logjam of unloading freight. Ethiopia was in dire need of raw materials to fight against the drought in Ethiopia. In mid-May it unilaterally decided to channel 39 % of humanitarian aid and almost 50 % of its exports via Berbera. Just as IOG had just accepted to lower transit tariffs by 50 % after bitter negotiations with Ethiopian Prime Minister Hailemariam Desalegn, the latter insisted and obtained the dismissal of the chairman of the Autorité des ports et des zones franches de Djibouti (APZFD), Aboubaker Omar Hadi. Also, the award of the Berbera Port concession to DPW on 9 May was the final straw for the Djibouti government. So, IOG used his inauguration to take revenge on his Somaliland counterpart, Ahmed Mohamed Mahamoud known as Silanyo, belonging to the Issaq/Habar Jelo clan. He deliberately seated him next to the Ougas (religious leader) of the Issa, Moustapha Robleh with whom his relations are frosty, and at the edge of the VIP tribune. A furious Silanyo hurriedly left the ceremony.

DPW stirs clan hornets’ nest

In Somaliland, Berbera Port is one of the State’s few sources of finance. Moreover, being self-proclaimed it receives very little international aid. Also, the government in the hands of Issaq/Habar Jelo intends to control the infrastructure DPW operates at the expense of the Issaq/Haber Awal clan which is dominant in the Berbera region and refuses to grant Hargeisa the exclusive rights to this source of finance. But, two branches of Habar Awal are influential in this area: the Issa Moussa and the Saad Moussa. The former are already at work: they can count on Amina Mohamed Jirde, the minister for foreign affairs, Saad Ali Shireh, and the former commander of the Habar Awal forces, Ibrahim Dega Weyne, all three from the same clan. Ibrahim Dega Weyne, after threatening to “wage war” on the government if the Issa Moussa were excluded from the DPW project, went to a secret meeting in Hargeisa with members of the government from his own clan.

Among the Saad Moussa, the Kulmiye presidential candidate Moussa Bihi Abdi, and current director of the port and advisor to DPW, Ali Hoor Hoor, have to contend with the wealthy merchant Mohamed Aw Said who is threatening to set up a militia if the Saad Moussa are not taken on board DPW in the adventure. The coup de grace was when the Issa Odhagob businessman Abdourahman Mahamoud Boreh, the Djibouti President’s nemesis, is to invest in Berbera alongside DPW. To counter him, IOG contacted the Sultan of Awdar, living in exile in Ethiopia, Sultan Wabar, to convince him to resume fighting against Hargeisa with his People’s Liberation Front. The latter had led a revolt against Hargeisa in 2014 and was defeated through the help of intervention by the Ethiopian army.
Source: ION, June 03, 2016
Source Description: Since 1981, ION investigates within the power spheres of the Eastern coast of Africa, from Karthoum to the Cape and the islands. Country of origin: France
© Copyrights 2016 Indigo Publications All Rights Reserved

Behind the scenes of the DP World contract on Berbera Port

May 20, 2016 – After dilly-dallying for years, Silanyo finally awarded the concession to run Berbera Port to the UAE. We take a look behind the scenes.

9 May will be a date that goes down in history! President Ahmed Mohamed Mahamud of Somalia, generally known as Silanyo, brought an end to the eight-year long saga on the award of the concession to operate the port of Berbera. The winner was DP World (DPW), while the loser was the French company Bolloré Africa Logistics. The prize: a thirty year concession to develop and operate the port.

According to information obtained by The Indian Ocean Newsletter, DPW will invest $200 million of its own money in the project and open the door to other investors for a second tranche of $242 million. If no revenue sharing agreement is reached, the Somaliland government will receive a signature bonus of $15 million. In addition, the Somaliland representative in Dubai, Silanyo’s son-in-law Bashe Awil Omar, has already received a sub-contracting agreement as part of the deal.

Bashe Awil Omar, with the agreement of First Lady Amina Mohamed Jirde, has always pushed in favour of the UAE bid over BAL’s. Another compensation, Silanyo has been given permission to build a villa in Dubai, which he will use after the 2017 presidential election. Silanyo, who will not run for re-election in 2017 for health reasons, will also have access to the Dubai health service. As for the present Somaliland director of the port authority, Ali Hoor Hoor, he will be employed by DPW as advisor in the field.

However, the man behind the deal is the Djibouti businessman Abdourahman Mahamoud Boreh. He was DPW’s advisor in the award of the Doraleh Container Terminal contract. He too wants to invest in the development of Berbera. Naturally, this tie-up between Hargeisa, Dubai and Boreh will do nothing to reassure Djibouti President Ismaïl Omar Guelleh whose aim is to turn Djibouti into an African Singapore.
Source: ION, May 20, 2016
Source Description: Since 1981, ION investigates within the power spheres of the Eastern coast of Africa, from Karthoum to the Cape and the islands. Country of origin: France
© Copyrights 2016 Indigo Publications All Rights Reserved

Comments are closed.