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(Bloomberg) The Red Sea state of Eritrea may play a key role in DP World Ltd.’s plans in the Horn of Africa

Posted by: Semere Asmelash

Date: Friday, 19 October 2018

Bloomberg
Markets

DP World Sees Key Role for Once-Isolated State in Port Strategy

October 19, 2018, 12:00 AM EDT
  • -Eritrea may provide trade route amid dispute with Djibouti
  • -Company sees as many as 12 ports needed in Horn of Africa

Photographer: Maheder Haileselassie Tadese/AFP via Getty Images

The Red Sea state of Eritrea may play a key role in DP World Ltd.’s plans in the Horn of Africa, where a dozen ports could be needed to service the region, Chief Executive Officer Sultan Ahmed bin Sulayem said.

The Dubai-based state-controlled harbor operator is evaluating its strategy in the region after having its stake in a port in Djibouti -- the main trade route for Ethiopia, Africa’s fastest-growing economy -- nationalized by the government. Developing more ports in the Horn, including one it’s already building at Berbera in the self-declared republic of Somaliland, will help boost trade flows to Dubai, Bin Sulayem said in an interview.

Sultan Ahmed Bin Sulayem

Photographer: Razan Alzayani/Bloomberg
Eritrea’s strategic location near the Bab el-Mandeb Strait, a key shipping lane used by oil tankers and other cargo vessels en route to the Suez Canal, makes it an attractive investment destination for logistics companies. It’s also a gateway to other nations in the region, the CEO said.

“Eritrea is going to have a major role,” Bin Sulayem said. “We believe that the way we should look at the Horn of Africa is not at Eritrea alone, but add to the equation South Sudan, other parts of Sudan, and Eritrea’s needs, and then the Ethiopian population.”

The company has been carrying out assessments throughout the region, Bin Sulayem said. He declined to specify how many harbors is targeting of the 10 to 12 it estimates the region requires.

Click here to read a related article about Eritrea

Eritrea is normalizing its foreign relations after signing a historic peace deal in July with neighboring Ethiopia, Africa’s second-most populous nation with 105 million people. The two countries fought a border war two decades ago that claimed as many as 100,000 lives.

DP World will consider what the government’s plans are at the port city of Assab and “will be there like everybody else” if asked to invest, Bin Sulayem said. Eritrean Information Minister Yemane Gebremeskel said he couldn’t comment on whether the ports of Assab and Massawa will be opened for tender.

Eritrea may provide an alternative trade route for the region instead of Djibouti, where DP World is in a legal dispute with the government after it nationalized the Doraleh Container Terminal last month. That followed a U.K. tribunal ruling that Djibouti’s cancellation in February of DP World’s contract to run DCT was unlawful.

Dispute Resolution

Djibouti’s government hasn’t approached DP World directly or indirectly with an offer of a settlement, Bin Sulayem said. Djibouti’s ports authority chairman, Aboubaker Omar Hadi, said in an emailed response to questions that the only way to resolve the dispute would be through compensation, though details of that have yet to be worked out.

DP World is also in arbitration with China Merchants Port Holdings Co. at the Hong Kong International Arbitration Centre over the alleged infringement of DP World’s 50-year concession to run the Djibouti terminal, Bin Sulayem said. China Merchants bought a stake in DCT in 2012.

Elsewhere in the region, DP World is interested in helping develop Kenya’s Mombasa port, and in helping Ethiopia establish a logistics facility, he said. Somaliland hosts a United Arab Emirates military facility at Berbera, though Bin Sulayem said the base won’t have a bearing on its investment plans.

“Whatever the U.A.E. does is to improve trade relations because that is our bread and butter,” Bin Sulayem said. “There is no political agenda of the U.A.E. in Africa. Our agenda is trade.”

DP World Sees Key Role for Once-Isolated State in Port Strategy ...



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