Thursday, June 20, 2024
BusinessMaritime authority confident over port service despite DP exit

Maritime authority confident over port service despite DP exit

The Ethiopian Maritime Affairs Authority remains optimistic over the port service in spite of the dispute between the Djiboutian government and its Dubai-based port operator, DP World.

The Government of Djibouti announced on Thursday that it has seized control of a container terminal run by DP, the latest move in a long-running legal dispute between the two.

According to reports that emerged from Dubai, the nationalization of the Doraleh Container Terminal in Djibouti comes as the United Arab Emirates increased its interest across the Horn of Africa, including a series of military bases allowing it to project power into the Red Sea and the crucial Bab el-Mandeb strait.

A statement on behalf of President Ismail Omar Guelleh’s office issued Thursday said the government had “decided to proceed with the unilateral termination of the concession contract…awarded to DP World.”

Port of Djibouti is the main route for Ethiopia’s import and export business.

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Asked whether the latest dispute between Djibouti and the port operator would affect Ethiopia’s import and export service, director general of the authority, Mekonnen Abera, told The Reporter on Thursday that “though it is the decision of the port owner to snatch the service, there is nothing we can do in light of their bilateral agreement.” Furthermore, he added that since Ethiopia has a stake on the port and its facilities, the latest move may raise concerns, as Ethiopia’s import export is mainly dependent of this port.

Mekonen also said: “DP is of course a big company and has a good reputation in port management. During this transition period, if the port management is transferred from DP to Djibouti, there might be slight effect in import and export businesses. But we hope that things would be restored to its normal service in time.”

He went on to say that he is not sure whether the Djiboutian government pursues to run the port by itself or hire another company.

DP World issued a statement late Thursday acknowledging that Djibouti authorities seized the port, which it described as the East African nation’s largest employer. The statement blamed the seizure on DP World’s refusal to “settle amicably.”

“The illegal seizure of the terminal is the culmination the government’s campaign to force DP World to renegotiate the terms of the concession,” DP World said.

DP World won a 30-year concession to operate the port in 2006. The port opened in 2009 and DP World says it has operated with a profit ever since.

DP World added that the seizure would not have a “material financial impact” on the Dubai government-backed company which is publicly traded.

In 2014, however, the government of Djibouti brought a legal challenge against DP World, accusing it of bribing the head of Djibouti’s port authority and calling the overall agreement unfair.

In February 2017, Dubai said a panel operating under London Court of International Arbitration rules fully exonerated DP World, dismissing Djibouti’s claims and ordering it to pay arbitration and other costs. A commercial court in London separately cleared Djibouti port authority head, Abdourahman Boreh of misconduct in 2016.

DP World, one of the world’s largest port operators, said it started a new lawsuit on Thursday, over Djibouti seizing control of the terminal.

“The government’s conduct is particularly oppressive and cynical,” DP World said in its statement, noting Djibouti lost its previous court challenges.

Djibouti’s port is particularly crucial to its landlocked-neighbor Ethiopia. More than 95 percent of Ethiopia’s imports come through Djibouti, authorities say.

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