Disagreement is brewing between officials in the marine sector in Ethiopia and Djibouti over the use of the Port of Djibouti, and whether or not Ethiopia’s flagship carrier should continue to pay security fees, reliable sources disclosed to Fortune.
The management of the Port of Djibouti, DP World, has rejected a request made three months ago by the Ethiopian Shipping Lines (ESL) to be granted a dedicated access to two of the 15 berths at the Port. The two berths ESL showed strong interest in are berths number one and two, which were handling containers, fitted with two gantry cranes.
Signed by Jerome M. Oliveira, chief executive officer (CEO) of the Port of Djibouti, the letter DP World wrote on June 21, 2009, says it “would not be possible for Djibouti Port to honour� ESL’s request.
Ambachew Abraha, managing director of the ESL, first made his request when he met Aden Ahmed Douale, chairman of the Djibouti Ports and Free Zones Authority, in March 2009; he had expressed his company’s desire to lease the container terminal at the Port of Djibouti, these sources disclosed. He subsequently wrote a letter to Douale three days after their meeting in Djibouti, including a request to be waived from security fees ESL pays per container, which is close to six dollars, according to these sources.
ESL request is followed the completion of a brand new port at Doraleh, which incorporates both oil and container terminals. Consuming a total investment of 400 million dollars, the investment raised from the Dubai based DP World, Doraleh is built 13Km east of the Port of Djibouti to earn a reputation as the largest in East Africa; it can handle 1.2 million containers (20ft) annually.
DP World Djibouti has made a decision to move all operations related to container handling to the terminal at Doraleh, leaving the old port to the operations of general cargoes. Nevertheless, ESL managers argue that their vessels are multipurpose in character, including Ro/Ro (carrying vehicles), general as well as bulk cargoes. They claim that going back and forth between the new and old port facilities would subject them to additional costs.
Of Ethiopia’s 4.8 million tonnes import and exports of goods in 2008, up from 3.9 million tonnes in 2006, ESL brings an average of 20,000 containers.
“Ethiopian Shipping Lines container handling activities will be done in Doraleh Container Terminal (DCT) as from July 1, 2009,� says the letter. “The General Cargo/Roro will be discharged and loaded in Djibouti Port without prejudice of shifting cost when ESL’s containers will be discharged previously at DCT.�
The management of DP World says allowing ESL to have berths dedicated to its container operations would deny Djibouti Port the “flexibility� for further development and investments; and the contract signed between the management firm, lenders and the government of Djibouti, requires all “container activities must be transferred� to the new container terminal at Doraleh.
Although inaugurated in February 2009, it was at the beginning of this month vessel operators were told to discharge all their containers at Doraleh. One of the largest ship operators, Messina Liner, was told to use the new container terminal as of July 1, 2009. This notice has not been made to ESL yet, sources disclosed. Nor have any of the nine vessels owned by ESL arrived at the Port; there was only Shebelle, with 5,000tns of cement bought from Pakistan, that has called Djibouti last week.
“But the bulk cargo it carries couldn’t tell us whether the new notice applies on us,� said a senior manager at the ESL.
Oliveir has also informed ESL in his letter that the Port Authority of Djibouti will continue to check incoming containers for security purposes. ESL had argued that since all the containers are certified for having gone through security checks upon departure, subjecting containers it brings to searches incurs it to double charges.
But ESL managers are infuriated more with the form of the exchange of letters than the substance, reliable sources disclosed. Although their letter was addressed to officials of the Djibouti government, the response came from the CEO installed by DP World, a foreign firm awarded a management concessions.
“This makes us question who responsible in Djibouti is to discuss with Ethiopia,� said one senior manager.
Managers of DP World Djibouti have not responded to questions emailed from Fortune.