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The official visit of local and international journalists from Ethiopia to Djibouti, organized by the Djibouti embassy here, aims to strengthen the long standing Ethio-Djibouti relations and political trust and exchange suggestions for boosting trade and cooperation on all levels. The media from Ethiopia had the opportunity to visit the various projects undertaken by the government of Djibouti including the Port of Djibouti and Doraleh Container Terminal, and meet several ministers before concluding the visit with a meeting with President Ismael Omar Guelleh. Excerpts;
Djibouti is expanding coastal investment by using six times more, its current GDP to become the continent’s major port player. The wealthy city state of Singapore is Djibouti’s role model for development over the coming two decades, according to Youssouf Moussa Dawaleh, president of the Djibouti Chamber of Commerce, who commented on the country’s new “Djibouti Vision 2035”, a roadmap that has been drafted with the assistance of the World Bank.
The small country at the Horn of Africa with a population of 873,000, likens itself to Singapore because it occupies a similar strategic position along one of the world’s busiest shipping lanes and now wants to transform itself into an important maritime port and establish the foundations of a burgeoning commercial hub for the region.
To meet the fast growing demand of port services not only in Ethiopia but in the region too, Djibouti is undertaking several seaport projects that will increase its port capacity 15 times than its current capacity, by 2017. The construction of new ports, as well as LNG (Liquefied Natural Gas) and crude oil terminals is planned with an investment worth USD five billion.
The whole plan however for Djibouti’s port and other infrastructure projects is to be undertaken with a total investment of over USD nine billion, which has already attracted investors and financers, according to Aboubaker Omar Hadi, Chairman of Djibouti Ports and Free Zones Authority (DPFZA).
The projects that mainly focus on the new ports will be completed by 2017 coinciding with the commemoration of Djibouti’s 40 years independence anniversary.
“In the coming 3 years, we are planning to invest over USD 9.803 billion in the development of ports and maritime related business activities,” Aboubaker, told journalists from Ethiopia who visited the mega projects in Djibouti from December 6 to 12.
The ambitious projects that are currently being undertaken by different international contractors will make the country one of preferable port facilities, not only for Ethiopia, the most populated state without a sea port, but for other landlocked countries that are part of the Eastern Africa region.
Djibouti that has recently been expanding its port capacity with the addition of two ports (container and oil terminals at Doraleh) is currently undertaking four new port projects mainly constructed for specific and multipurpose cargos, in different parts of the country, according to Aboubaker.
He further added that the country is offering a wide variety of reasonably priced services. “Djibouti offers cost effective solution,” the chairman explained.
The government of Djibouti is also engaged with mega projects not only with regards to port building but with other facilities as well. The government disclosed that it has decided to invest a huge amount of money to expand the country’s service and light industry sectors that are directly related with the port’s activity and confirmed that it has already secured 58 percent of the necessary investment needed.
One of the major challenges that the government wants to tackle is the high unemployment rate. “Investment in the industrial sector is expected to reduce this rate by creating the much needed jobs for our youth”, said Ilyas Moussa Dawaleh, Minister of Finance and Economy, briefing the journalists on Djibouti’s 2035 vision.
Currently, the country is using three ports for the import/export of cargo to the region; the oldest and historical port, the Port of Djibouti S.A, which is a multipurpose port, Doraleh Container Terminal (DTC) inaugurated in 2009, and Doraleh Oil Terminal, a port that is exclusively reserved for oil and oil products.
Most of the terminals are currently working at their full capacity due to the growth of cargo shipments to the region. Now, the country by itself and other international financers are realizing the expansion of ports not only in new areas but at the existing port sites as well.
Aboubaker told Capital that projects that have already begun would be fully completed as scheduled.
“We have secured the money that we needed for all the projects and as a result, we will succeed in completing every project by 2017,” he confidently said.
Doraleh Multipurpose Port (DMP)
The construction of DMP, a new port facility that will boost the country’s port handling capacity at a significant rate, officially commenced construction in August this year.
This port, which should be open for service by the end of 2016, will handle twice the amount of cargo, from the current capacity. The project will consume USD 525 million. The Djibouti government and China Merchant Holding International (CMHI) that bought a 23.5 percent share from Port of Djibouti in January 2013 at a cost of USD 183 million, will own the project jointly.
According to officials, when this port is finalized it will also handle most of the service that currently is provided at the historical Port of Djibouti, a multipurpose port located in the center of the capital.
Mohamed Aref, Marketing Head of the Ports Authority and Free Zones (PAFZ 5), says that during the initial phase, the port will have five berths.
The Chinese Construction Company is building the port, which is located on the North Eastern outskirts of Djibouti.
The port will also have access to the railway that is being constructed from Addis Ababa. Upon completion, this will be the biggest port in Djibouti.
Damerjog Livestock Port
Damerjog, another exclusive port targeted to boost the regional livestock market, is also under construction on the southern outskirts of the capital.
The port that has a quay 655 meters long will handle the export of 10 million heads of livestock per year. The port will also be able to deal with up to five livestock ships at a time. It will have a substantial transit area of five hectares to hold arriving cattle before they are loaded.
This port that commenced at a similar period as DMP will start operation in the fourth quarter of 2016.
The total investment of the project will consume USD 70 million. China Merchant Holding International is a source of finance for this project that is located about eight kilometers from an area called Negad where the new main railway station for the capital is being constructed by another Chinese company. This railway is expected to expedite the transportation of livestock between the two countries.
Port related investments
Djibouti is not only expanding the port facilities in every direction of the country but it is also working on expanding infrastructure everywhere.
Railway and road
The railway project that will connect Djibouti in two directions with Ethiopia is the major infrastructural project. The railway line that will replace the historical railway line installed a century ago will connect Djibouti and its ports with the central part of Ethiopia via Dire Dawa, while the second railway line, which will be the newest line, will connect the northern town of Tadjoura and its new port facilities that are one kilometer from the second biggest town of the country. It will connect the northern and northeastern part of Ethiopia.
The 98km railway construction will stretch from Djibouti to Galilleh (Ethiopian Somali region border). It is being constructed by China Civil Engineering Construction Corporation (CCECC), which is also constructing part of the Sebeta-Djibouti railway. The Chinese EXIM Bank is financing the project that will cost USD 550 million.
The Chinese company officials told Capital that 60 percent of the project is currently accomplished. According to them the 92km railway line, including the 12km that will link the DMP, Oil Terminal and DCT, will be completed by October, 2015.
The project includes the new terminal that will replace the historical one located in the heart of town. The new terminal is being erected at Negad, 7km on the outskirts of Djibouti city center. Two additional terminals at Holhol and Ali Sabieh areas will be in Djibouti. Ethiopia and Djibouti will have a common border station at Galilleh, in the Ethio-Djibouti border. The total length of the project from Sebeta, on the western outskirts of Addis Ababa to Djibouti is 750km.
Arkebe Equbay, board chairman of the Ethiopian Railway Corporation and special adviser to Prime Minister Hailemariam Desalegn, recently told Capital that the project would be completed before the end of the coming year, ie. 2015.
The Tadjourah-Galafi railway construction that will link Ethiopia’s Afar region with Djibouti will consume USD 600 million. The total length of this new railway line will be 124km inside Djibouti and that will continue to Mekele, Tigray Regional State.
The construction of roads linking the ports with the main access road are also part of the infrastructural projects.
The country has also a plan to make air cargo transportation more efficient. To meet this ambitious goal the government of Djibouti would expand the air business with a new and wide airport.
The Bicidley International Airport and Cargo Village will be constructed 20km outside the capital city.
The project that will consume USD 530 million is targeted to expand the cargo business of the country. According to the plan, the government wants to use the current airport that is close to the city for military purposes and the new airport for travelers and cargo.
According to Mohamed Aref, Marketing Head of DPFZA, the sea-cargo businesses will be effective for land locked countries in central and west Africa the east coast of the Americas and western Europe to transport cargo from the Far East and Asia via air from Djibouti ports.
He said that doing this will significantly reduce transit times for cargo coming from Asia.
The authority also wants to establish two free zones along the outskirts of the capital.
Recently the country established the first free zone around the historical port area. The other new free zone, Jabanas Free Zone will be built at the cost of USD 70 million and will be located in PK 12 on an area of 57 hectares.
The other port that is called Damerjog Free Zone will be the first industrial free zone with 3,500 hectares of land. This free zone that also includes a livestock free zone will be the first in the world to include an animal free zone.
The chairman of Djibouti Ports and Free Zones Authority, Aboubaker, said that the first phase construction of the industry free zone in Damerjog will commence in 2015. He said that a lot of interest has already been shown by international companies who want to establish their business in the free zone because the new facility will accelerate trading, import and export for the region and it will contribute to saving time and hard currency for Ethiopia.
Houssein Ahmed Houssein, general manager of Horizon Djibouti Terminals told Capital that the oil Terminal (Horizon Terminals, a subsidiary of Emirates National Oil Company (ENOC)) located at Doraleh is also targeted for expansion. Its storage capacity will increase by over 30 percent when the USD 140 million project is completed.
Established in 2006 on the outskirts of Djibouti, the oil terminal operated by ENOC, the state oil company in Dubai, should see its storage capacity increase to nearly 500,000 meters cube against 400,000 meters cube currently. The only terminal of its kind in the Horn, it stores and distributes nearly 3 million cubic meters of refined products each year.
Nawaf Nassir Abdullah, CEO of Doralhe Container Terminal (DCT), said that the container terminal also has a plan to undertake an expansion from the current 1.6 million TEU capacity to three million TEU. The expansion project is also expected to commence in the middle of the coming year.
The existing container terminal was built at a cost of USD 400 million and the second phase is expected to consume a similar investment amount, according to Warsama Hassan Ali, Commercial Manager of DCT.
According to officials at DPFZA, the historical port will be a Central Business District that also includes residential areas and recreation centers.
Djibouti has signed a tripartite agreement with Ethiopia and South Sudan to transport South Sudan’s crude oil.
To realize this plan Djibouti has concluded a study to construct a crude oil terminal at the port area. According to the study, the country will build a crude oil terminal at a cost of USD 200 million.
Aboubaker, Chairman of DPFZA told Capital that several companies have already show interest in constructing the pipeline that will connect the newly born oil rich country South Sudan with Djibouti via Ethiopia.
Aboubaker told Capital that UK companies like Tullow Oil have shown an interest in becoming involved in this huge project that will consume about USD three billion. Toyota and another US based company have also shown their interest in constructing the pipeline.
Similarly, the Chinese oil firm GCL Poly has agreed with the Djibouti government to construct LNG Terminal in Djibouti and construct an oil pipeline from Calub and Hilala of the Ethiopian Somali region to the port, to transport natural gas for export.
The company will construct a refinery at the port. According to the plan, the project will consume USD two billion in Djibouti and USD one billion in Ethiopia.
The port authority also has a plan to establish a ship repair and drydocks at a cost of USD 220 million at Obock, north east of the country. This plan is expected to reduce the lack of ship repair yards in the region.
According to the authority chairman, dry ports have to be established in some regions of Ethiopia. “We will not only establish ports but also roads linking to Ethiopia,” the chairman said.
According to this plan, Great Horn Development Company, a new company established through a 51 percent share of Djibouti Government and China Merchant Group will erect three ports in Mogadishu, Chimayo and Bossaso in Somalia.
The company will work to expand ports in South Sudan and Somalia to accelerate the cargo business. It will develop ports and roads in Somalia and South Sudan.
The chairman said that the authority has already secured a 70 percent share on the newly formed road company established under the Ministry of Transport. He said that the company will engage on expanding and modernizing asphalt roads that link Djibouti with Ethiopia. “We have a plan to construct toll roads to accelerate the transport system and to save money that the two nations spend on tyres and spare parts,” he explained.
Djibouti is a country that registered five percent GDP growth in the past five years. Seventy eight percent of the GDP comes from the port and port related activities. According to the 2014 forecast the GDP is expected to grow by 6% and 6.5% in 2015.