By Brook Abdu
Thursday, February 12, 2015
In the wake of Ethiopia issuing bonds, it has come to the realization that it may need alternative ports aside that of Djibouti.
Ethiopia is to start using the Port of Berbera this month on an agreement reached between the two countries on January 29, 2015, while the use of Port Sudan has started by the importation of 50,000tn of fertilizer.
Ethiopia had expressed its dependence on Port Djibouti as a concern when it issued a one billion dollar sovereign bond in October 2014. The move towards issuing the bond came after Ethiopia got a ranking of B+ by foreign rating companies namely, Moody's, S&P and Fitch.
It seems that the effort to reverse the full dependence of the country on Djibouti by finding alternative ports is bearing fruit.
"Five to 10pc of the country's imports are planned to come through the port of Berbera, and we will be looking for proper ports for different areas of the country," said Workineh Gebeyehu, minister of Transport when reporting his office's six months' performance to the Parliament. "But the Port of Djibouti continues to be the major one."
Considering the annual average growth rate of Ethiopia, that is 10.1pc through the five years of the Growth and Transformation (GTP) period, Djibouti has started 9.8 billion dollars of expansion of Port Djibouti. The expansion, which is meant to be completed by the end of 2017 is planned to increase the capacity of the port 15 times.
Ethiopia is also undertaking construction of a 98Km railway that will stretch from Somali, a region in eastern Ethiopia, to Djibouti. It is being constructed by a Chinese firm, China Civil Engineering Construction Corporation (CCECC). The 1.98 billion dollars project, according to the CCECC website, is financed by the Chinese Export Import (EXIM) Bank.
The Ethiopian Shipping & Logistics Services Enterprise (ESLSE), which has 15 ships out of which two are for oil, has finished dealing with an agent in the Berbera Port and one of its ships will be deploying 20 to 30 containers to the port this month. The agent is a Member of GSK Group of Djibouti. For now ESLSE will be bringing goods to Berbera from India, Middle East and Saudi Arabia while planning to extend its reaches to China and the Far East, according to Alemu Ambaye, (Chief ENG), Shipping Services Sector deputy chief executive officer.
"In terms of suitability, while Berbera has a slight closeness to our country, the road to it is not suitable," Alemu told Fortune.
The road that extends from Jigjiga-Togo-Wuchale is concrete asphalt but the road within the border of Somalia is not suitable and therefore the Ethiopian government is working with the Somali government to source financing, according to Samson Wondimu, the communications director at the Ethiopian Roads Authority. The port, for the time being is going to be used for importation of coal according to Tesfaye Chanchissa, public relations officer at the Ethiopian Maritime Affairs Authority.
The rate of payment, which is based on loading and unloading of goods is also said to have a slight difference from Djibouti although it is yet to be experienced, according to Alemu.
The service that the Shipping lines will give will be transshipment- which means the ships will come mainly to Djibouti and will go to its place of origin after reaching the Port of Berbera. The ESLSE ship that is coming from Dubai will reach Djibouti then Berbera and finally go to Dubai.
"We will use alternative ports without affecting the benefits of other ports," stated Workineh.
The same as Workineh, Alemu also believes that there is enough load that can suffice all the ports.
The ESLSE will be deploying goods at the newly agreed ports every two weeks. It has also made new customers in the line which is why it started the new route. Ethiopia has been using Port of Sudan for its exports.
Currently, Ethiopian cargo, especially container, delivered to Port of Djibouti is around 10,000 containers a month and 550 - 600 trucks leave Djibouti to Ethiopia every day carrying Ethiopian cargo, according to a data from Ethiopian Maritime Affairs Authority.
Source: Addis Fortune