Country is in talks to acquire a 19% stake in joint venture administering Berbera port
Addis Ababa: Ethiopia is in talks to acquire shares in a joint venture involving DP World Ltd. that will manage a port in northern Somalia, a Somali official said, a move that could give the fast-growing yet landlocked Horn of Africa economy its first stake in foreign docks.
Somaliland, a semi-autonomous territory that aspires to statehood, has agreed “in principle” to give Ethiopia a 19 per cent share in the venture administering Berbera port, according to foreign minister Sa’ad Ali Shire.
Somaliland’s government and Dubai-based DP World, which has a 30-year concession to manage and develop the facility, will be the majority shareholders in Somaliland-registered DPW Berbera, he said in an interview.
If Ethiopia takes its share, Somaliland will hold 30 per cent of the company, while DP World will have 51 per cent, according to Shire. Berbera sits on the Gulf of Aden, a waterway that leads to the Red Sea and Suez Canal.
Ethiopia, Africa’s second most populous nation, is pitching itself as an export-oriented manufacturing hub, with the International Monetary Fund forecasting economic growth of 7.5 per cent this year, the fastest pace on the continent after Ivory Coast. Ethiopia’s transport and information ministers and foreign ministry spokesperson didn’t respond to phone calls and text messages seeking comment on the Berbera share offer.
Shire said the venture is presently 65 per cent owned by DP World, with Somaliland holding the rest, and nothing legally binding has yet been agreed with Ethiopia.
DP World, which operates 78 terminals in 40 countries, announced it would hold 65 per cent in the joint venture in September. The company declined to comment on the share structure “for the time being”, spokesperson Michael Vertigans said by email.
Shire said the Berbera facility will have a container terminal and will be mainly used for container traffic as a transit hub for landlocked nations, particularly Ethiopia. Currently more than 90 per cent of Ethiopia’s trade passes through another Red Sea neighbour, Djibouti, according to that country’s ports authority.
A new $4.2-billion (Dh15.4 billion), Chinese-built railway between Ethiopia and Djibouti is set to cut cargo-journey times to 12 hours, from three days by road.
DP World has a 50-year concession to operate a container terminal in Djibouti.
Ethiopia’s industrial policy strategy sees the railway line providing transport services for 7.5 million metric tonnes of cargo per year by 2020. Somaliland is planning a 260-kilometre road from Berbera port to the Ethiopian border, according to Shire.
“A shareholding doesn’t necessarily mean recognition of Somaliland as a state,” said Mogus Tekle Michael, deputy director of the Ethiopian Foreign Relations Strategic Studies Institute and a former foreign ministry spokesperson. Ethiopia would be “more than willing to grab any opportunity” to play a role in developing any port in the region, including Berbera, he said.