Djibouti Port proposal put on ice

Ethiopia negotiates win-win solution

The government of Djibouti has agreed to postpone an earlier decision forcing transitors in Djibouti to produce payment receipts from their Ethiopian clients before they transport their cargo from the port.

Djibouti will in the next four to six months be evaluating the performance of Ethiopian importers to determine if they are meeting the terms agreed upon in the Port Utilization Treaty that the two countries signed in 2002. The 2002 treaty states that all port payment by Ethiopian importers should be settled within 15 days after their cargo is cleared from the port of Djibouti.
Saad Omar Guelleh, general director of the Port of Djibouti, had indicated in a letter dated November 20, 2013, that Djiboutian transitors had to collect all necessary port charges in foreign currency before collecting or transporting cargo for themselves or their clients. The port authority set December 7, 2013 to apply the new procedure, which was later extended to January 15, 2014.
This meant that the new port rules would have gone into effect this Wednesday.
Ethiopians involved in the transit and transportation as well as importers were unhappy with the decision as they did not want the system to change.
The major users of the Port of Djibouti, Ethiopian transitors were already having difficulty moving their goods quickly enough to not be strapped with high storage fees at the Port. With the system requiring advance payment in hard currency, their job would become even more challenging due to the shortage of foreign currency locally. “With so many goods coming from Djibouti the Ethiopian economy would be affected,” said observers.
“Even if the financing is available on time, the banking system and the SWIFT system might cause a delay,” transport authority officials told Capital.
However, a high level delegation led by Workneh Gebeyehu Minister of Transport, that included Mekonnen Abera, director general of the Ethiopian Maritime Affairs Authority went to Djibouti early last week to negotiate with Port of Djibouti officials about the modality of the new payment arrangement.
Mekonnen told Capital that the delegation held talks with Djibouti Ports and Free Zones Authority chairman, Aboubaker Omar Hadi about the new scheme, introduced by the Port of Djibouti management that required Ethiopian clients to pay their fees in advance.
According to him, the high level delegation from Ethiopia managed to achieve a win-win solution that resolved the current situation.
Ethiopia may not be out of the woods yet though as sources told Capital that the new scheme might be applied after six months if the performance of Ethiopian importers in terms of respecting the 2002 treaty of effecting payment within 15 days of clearing their goods from the Port of Djibouti is poor
Freight forwarding companies in Djibouti had been paying on behalf of their Ethiopian partners in order to secure the release of cargo destined to Ethiopia. They then send original receipts, including invoices claiming service and commission fees. They can access their payment in foreign exchange only after they produce these receipts and invoices to commercial banks.
The circular also indicated that in addition to the usual documents required, transitors had to present documents containing the names of the transitors, the names of the importers or exporters, their identification number, a way bill (for export) or name of the ship and mode of payments.
Previously, transitors based in Djibouti who worked jointly with their Ethiopian partners used a credit system to pay fees to transport imported cargo from the port to Ethiopia, which meant that their Ethiopian clients had a fair amount of time to settle their charges, which is way more than the 15 days required in the treaty.