The government of landlocked Ethiopia has secured rights to access and use Somaliland’s Red Sea port of Berbera, where Dubai-based DP World has just started a 30-year concession, according to a spokesman for the president of Somaliland.
The Dubai-based global terminal operator, which started its concession to manage the development and operation of the port in March, has allocated close to a fifth of the port’s capacity to Ethiopia shipments, the spokesman told media at a press conference in Hargeisa.
“We have not decided on our side. It is DP World that gave the Ethiopian Government 19% of access and usage of the port,” said Hussein Ige Dayr at a briefing after a ceremony to celebrate the start of the DP World concession.
DP World said investment in the port could reach USD442 million as it pushes on with its strategy to develop infrastructure to enable trade on the continent, including improved trade access for landlocked countries.
The Horn of Africa is strategically important to Gulf nations to protect shipping interests in the Red Sea and Gulf of Aden and because of ongoing military operations in Yemen. Somaliland’s parliament voted unanimously in February to allow the United Arab Emirates (UAE) to establish a military base at Berbera.
With 100 million inhabitants, Ethiopia is the most populous landlocked country in the world. It borders Kenya to the south, Djibouti and Somalia to the east, Eritrea to the north, and Sudan and South Sudan to the west.
The awarding of the concession last year sparked controversy in Somaliland, a breakaway province of Somalia. Some politicians asked why the concession had been given to the same company that operates the container terminal in nearby Djibouti, a major hub for Ethiopia’s trade.
Seventy percent of the cargo at Djibouti is shipped to or from Ethiopia, accounting for over 95% of Ethiopia’s foreign trade. DP World has operated Djibouti’s Doraleh Container Terminal since 2006.
DP World said Berbera Port would complement its investment in Djibouti and also serve landlocked countries in the Horn of Africa.
The ceremony last week was attended by the president of Somaliland, Ahmed Mohamed Mohamoud, and DP World chairman and CEO Sultan Ahmed bin Sulayem.
“These are exciting times for our industry and for Africa, and we’re grateful for the opportunity to be an integral part of Somaliland’s development,” said bin Sulayem. “Investment in this natural deep-water port and free zone will act as a catalyst for the growth of the country and the region’s economy.”
The first phase of the development will involve constructing a 400 m quay and 250,000 sq m container yard, as well as a free trade zone designed to become a new regional trading hub.
President Mohamoud said the port would revive Berbera as a major trade hub on the Red Sea.
“This DP World investment in the Port of Berbera will strengthen the relationship between the Republic of Somaliland and the UAE which existed for many centuries in the past,” he said. “Additionally, it will bring back and highlight the commercial position and importance of the Port of Berbera as a Red Sea gateway for the Middle East and Africa.”
Turloch Mooney, senior editor, Global Ports