The Djibouti Damerjog Industrial Development Free Trade Zone (DDID FTZ) receives an injection of financial boost in the form of another accelerating fund for its multiple development projects to which also Ethiopia has eyes on investing.
The lucrative venture that is led by Djibouti’s Great Horn Investment Holding (GHIH), and newly formed Djiboutian sovereign wealth fund (SWF), has secured USD 120 million in financing from the continental trade and project financing body, the African Export-Import Bank (Afreximbank) for projects being undertaken around Damerjog area, the southern outskirt of the capital Djibouti for Damerjog Liquid Bulk Port’s (DLBP) related projects, which is part of the wider USD 4 billion project of DDID.
As the statement of the continental bank which has its based in Cairo, Egypt disclosed, the agreement came to fruition following the meeting between Afreximbank’s President, Benedict Oramah (Prof) and Ismail Omar Guelleh, President of Djibouti, at the heads of state of the African Union summit held in Nairobi.
The deal, which is Afreximbank’s first in Djibouti in collaboration with GHIH and the government, is targeted at supporting the development of a trade-enabling infrastructure to assist Djibouti in achieving its plan to become a regional trans-shipment and logistics hub.
As the document further details, the financing is part of a total facility amount of USD 155 million for work on the free trade zone.
According to the statement, the balance, USD 35 million is being financed through Banque pour le Commerce etl’IndustrieMer Rouge (BCIMR) of Djibouti.
Proceeds of the facility will be used for the completion of the Damerjog Oil Jetty, which will provide marine connectivity to the free trade zone, and for the construction of a 150,000 cubic meter first storage depot as well as for other costs related to the projects.
The project is stated as a promotive agent to intra-African trade, given that Djibouti’s economy is largely based on the provision of marine services to neighboring nations Ethiopia and Somalia, by offering them a gateway for ocean-borne freight.
As Prof. Oramah indicates, the establishment of a jetty and bulk port in the Djibouti Free Trade Zone will add significant value to Djibouti’s role as a trans-shipment hub for neighboring landlocked countries.
Commenting on the transaction, GHIH’s Chairman Aboubaker Omar Hadi stated, “We are very proud of our collaboration with Afreximbank, a dynamic African multilateral and transaction driven institution, and the continuous valuable technical support of the EPC SOMAGEC.
The DLBP project which is officially being constructed by SOMAGEC, a Moroccan firm specializing in the construction of port infrastructure, will consume USD 350 million.
Regarding the project, Omar Hadi, recently told Capital that the new facility will be able to accommodate Ethiopia’s demand for the coming years as its new facility is colossal in comparison to the Horizon Djibouti Terminal (HDT) which was established in 2003 with operations being commenced in 2005 with a capacity of 4.5 million tons per annum.
“The concepts are not even similar as the oldest oil terminal is operating in a single jetty and one terminal, whilst the new one will have different terminals, while using one jetty. Regarding capacity, the new one will have 13 million tons,” the Chairman explained.
The DLBP structure consists of an offshore jetty that is connected to onshore storage facilities. This will serve multiple end users, enabling them to load and unload a wide variety of products to and from inland storage facilities. The jetty is located around 3km from land, with a causeway that provides access for vehicles and pipeline services. It is designed for the berthing of two ships – one capable of accommodating vessels of up to 100,000 DWT and the second for vessels up to 30,000 DWT.
DDID FTZ will be Djibouti’s first heavy industrial and petrochemical base, and East Africa’s only industrial complex with a road-port-air-railway network. The new liquid bulk port will enable Djibouti to become a leading oil product trading hub for East Africa’s petrochemical sector.
The entire DDID FTZ project which is scheduled to be built in different phases in ten years time, also includes a multipurpose port, a liquefied natural gas terminal, a livestock terminal, dry docks and a ship repair yard, a power plant and a factory that will produce construction materials. The development of the complex will help Djibouti to better meet the region’s hydrocarbon needs-especially for landlocked Ethiopia.
The oil port project is financed by different foreign sources.
The Ethiopian SWF, Ethiopian Investment Holding (EIH), is also interested to take stake on the infrastructure.
Founding and former CEO of EIH Mamo Mihretu, recently told Capital that the investment holding has primary focus areas to which the logistics sector is among the priority list, “It is vital to boost regional integration with neighboring countries including Djibouti.”
“We also have an objective of insuring Ethiopia’s energy sector. Cognizant of this, we are exploring the potential of co-investing in the oil terminal in Djibouti,” the former CEO said, adding, “We are in advanced conversations with the Djibouti Port Authority.”