Ethiopia and Djibouti Celebrate accomplishment as President Guelleh arrives

President Ismael Omar Guelleh and Prime Minister Hailemariam Desalegn
President Ismael Omar Guelleh and Prime Minister Hailemariam Desalegn

When President Ismael Omar Guelleh visited Ethiopia this week it was the first official state visit for Djibouti’s premier. Surprisingly very few official state visits occurred between the two neighbors. The first official trip to Djibouti by Prime Minister Hailemariam Desalegn occurred in February 2015.

flagsAccording to political leaders of the two countries, even at the height of the two countries’ relations during the late PM of Ethiopia, Meles Zenawi, no official visit had taken place although there have always been various visits between the two heads of state both in Ethiopia and Djibouti to attend or take part in ceremonial events.

When Hailemariam spoke to reporters during his three-day official visit to Djibouti two years ago, he said that Africa has never seen the kind of cooperation and integration that Djibouti and Ethiopia have in all spheres.

“We are integrated socially, politically, economically, in security and infrastructural interconnections including highways and railroads; our relationship is truly an example for the region.”

“The first official visit of an Ethiopian Prime Minister to Djibouti marks a milestone in the relationship between our two nations,” President Ismael Omar Guelleh had said on his part at the time. During his historical visit, Hailemariam added that, “our relations are so natural and brotherly that it never was an issue,” when he was asked why the two countries had not had an official visit in the past.

During this visit of Djibouti’s President further cooperation agreements and economic linkages were strengthened.

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The two countries are an example of peaceful cooperation in the Horn of Africa region. They have worked together in regional security, political relations, economic and social spheres.   Perhaps their most vital symbiotic relationship involves the use of Djibouti’s ports.

Since Ethiopia started using the strategic Port of Djibouti in past couple of decades Djibouti has registered significant economic growth. The country has undertaken several expansions in port activity and other service sectors to meet the growing demand of Ethiopia’s logistics.

In addition to the improvement at the historical Port of Djibouti, a new container terminal and Oil Terminal at Doraleh Port and free zone has been constructed.

Now, as part of a huge economic push Djibouti is revamping its five ports and adding new ones.

The newest and state of the art port will begin operating by the end of this March. It is called Doraleh Multipurpose Port (DMP) and it will dramatically increase the country’s port handling capacity. Construction began on the project in August of 2014 at a cost of USD 480 million.

It will be able to handle twice the amount of cargo of all Djibouti’s other ports combined. The Djibouti government and China Merchant Group (CMG), which bought a 23.5 percent share from the Port of Djibouti SA in January 2013 at a cost of USD 183 million, are jointly managing the project.

DMP, which is located in the north east outskirts of the Djibouti capital, is expected to handle all type of logistic operations in addition to the service that currently is being provided at the historical Port of Djibouti, a multipurpose port located in the center of the capital.

Saad Omar Guelleh, General Manager of Port of Djibouti SA (PDSA), told Capital that after the transfer of activities to DMP, the Djiboutian government has decided to rehabilitate the historic Port by turning it into a commercial and tourist centers. “The government plans to build a city within the port and create a new urban way of life for Djibouti’s people,” the PDSA General Manager said.

“DMP aims to maintain our high performance and accommodate the emerging economy of our main client Ethiopia as well as the development of a Djibouti Free Trade Zone,” he said.

DMP features modern equipment, and will accommodate 100,000 dwt vessels.

The geographical location of Doraleh Multipurpose Port provides a naturally deep area. With a large quay of depth and 6 berths (to reach 15 berths in the second phase) at 16 to 18 meters in the first phase, the DMP will serve any conventional cargo vessels and related services. It will be linked to road and rail transport in order to develop an integrated transport and economic corridor.

In his recent interview Li Xiaopeng, president of CMG told China Daily newspaper that a Hong Kong-based conglomerate with extensive port business, is hoping to replicate the success of Shenzhen’s Shekou Industrial Zone in development of its Djibouti port projects.

Li Xiaopeng said “Making full use of Djibouti’s geographical advantages, we are in the process of making the country the ‘Shekou of East Africa’-a hub for regional shipping, logistics and trade.”

He said: “We will use our experience in Shekou and adjust the model to local conditions. We will put this model into practice in countries such as Djibouti.” The group wants to use model of Shekou, dubbed ‘Port-Park-City’ or PPC as a template to build an industrial park and subsequently a city to supplement the initial development of a port.

Djibouti has not stopped there as other new ports are springing up all over the country.

The Port of Tadjoura is located on the coast of the Gulf of Tadjoura, a historical port area for Ethiopia.  Information from PDSA indicated that the new port located in the northern part of the country 169km north east of the capital will be operational this year.

When the project is completed it will become one of the major access points for the north and northeastern part of Ethiopia.

The project that is constructed by China’s Bao Ye Hubei Construction Group and has consumed USD 69 million is expected to be a major trade hub for Ethiopia’s mining exports in the northern region. Experts said that the major use of the port will be transporting potash minerals that are currently on the process to being mined in Afar regional state.

The Port of Ghoubet is yet another port facility that Djibouti constructed at the west coast of Ghoubet Lake. When it starts operation it will exclusively focus on the shipment of salt from Lake Assal, a salt lake located near the new port. The project that commenced in November 2013 is being constructed by China Harbor Engineering Company Ltd, and consulting is being undertaken by Technical Consulting Engineers Spa.  The salt bulk terminal, EPC project, is being constructed at a cost of USD 64 million through a loan secured from China Exim Bank.  The salt port will have a capacity to transfer six million tons per annum.

Another exclusive port targeted to boost the regional livestock market, is also under construction on the southern outskirts of the capital. Damerjog Livestock Port will boost the region’s livestock trade. Ethiopia, which has one of the biggest livestock populations in the continent, will be the major client for the facility.

The port that has a quay of 655 meters long will handle the export of 10 million heads of livestock per year. It 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.

The total investment of the project will consume USD 70 million. CMG 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 located.

The inauguration of the latest electrified railway line that will connect Djibouti and Ethiopia has received media attention from every corner of the world. The first electrified cross country railway line in the continent is considered a symbol for socio economic and political integration between the two countries. The 756 km railway line that links central Ethiopia to the port hub is also expected to begin operation in the coming few months since the two countries sealed the final establishment process of the joint railway company. The official establishment of the company is expected to be launched in relation to the visit of President Guelleh.

The railway is not the only pillar for linking the two countries; about five years ago Djibouti became the first regional country to receive Ethiopia’s electric power.

Besides the accomplishment of the biggest multipurpose port in the country; PDSA and CMG have also begun building the biggest free trade zone in Africa. Located 23km from historic central Djibouti City the USD 3.5 billion trade center will cover 4,800 hectares, according to the Djibouti government.

China’s state firm, Dalian Port Corporation Limited, is building the free trade zone which will feature manufacturing, transport, electronic trade and regional distribution businesses, conference facilities and international exhibitions, residential housing, hotels and tourist centers as well as a park for the petroleum industry.

The President of Djibouti said he expects the first factories at the site to begin production by October of this year and expects the trade zone to create around 15,000 jobs.

The agreement to build the free trade zone was signed in March 2016 as part of China’s bid to expand trade routes, a series of infrastructure initiatives stretching across 60 countries that the Chinese have dubbed “One Belt, One Road”.

Joint customs and other facilities at the border of the two countries are also expected to be formed by the commencement of the new railway service.

During the state visit to Djibouti in early 2015 the two countries have also signed an agreement on exploration and working on the mining sector. GCL Poly has agreed with the Djibouti and Ethiopian governments to construct LNG Terminal in Djibouti and an oil pipeline from Calub and Hilala of the Ethiopian Somali region to the port, to transport natural gas for export. The project that cost USD 3 billion is another way the two nations are integrating economically. The company will construct a refinery at the port. According to the plan, the project will consume USD 2 billion in Djibouti and USD 1 billion in Ethiopia.

The new 700 km pipeline will transport up to 12 billion cubic meters of natural gas per annum, from Ethiopia to Djibouti. The liquefaction plant will have the capacity to produce up to 10 million tons of liquefied natural gas (LNG) per year after completion of the project.

Air Djibouti which restarted operation last year should improve tourism sector in both countries. Air Djibouti has a flight in Addis Ababa and Dire Dawa and its major flight service is in Ethiopia.The countries recently  formed a joint committee to make their tourism relationship more robust.

The government of Djibouti has agreed to provide a plot for the construction of an Ethiopian Community School in Djibouti. The Djibouti Public Diplomacy delegation is also expected to visit Ethiopia in the coming few weeks.

In another economic tie, the first electric power line connection from Ethiopia has been in operation as of 2012 and the second line project will be commenced in the near future between the two countries.  Internet fiber optics another linkage between the two countries that was addressed by the President of Djibouti when he spoke Thursday at the House of Federation of Ethiopia.

A few years ago the government of Ethiopia also allowed the people of Djibouti to use tap water from the Ethiopian territory. The project to stretch the pipeline from Adi Gala of Ethiopia Somali region to Djibouti will be started in the near future.

Recently  the two countries established a joint company that will manage the operation of the recently completed USD 3.4 billion railway line. The railway line that replaced the century old railway system has amplified the two countries as a symbol for regional integration that the continent should follow to register prosperous achievements.

During  their official meeting two days ago at the National Palace here in Addis Ababa, Hailemariam and Ismael Omar Guelleh called urgently to get the recently inaugurated railway line between the two capitals started.

The railway line that was contributing to transport Ethiopian emergency aid cargo last year is expected to commence official operation this  May when the electrification process is fully finalized.

The electrified railway line that grabbed the attention of the international media is the first of its kind in Africa.