SPECIAL REPORT: UAE’s DP World breaches controversial port contract in Somaliland

The breach in the port’s contract by the firm will likely ran into immediate opposition in the region, with significant parts of the local population opposed both the port and military base deals with the UAE

By Jamal Ibrahim, jamal.ibrahim@alleastafrica.com

HARGEISA – The international ports operator, DP World which signed a 30-year contract with the breakaway northern Somalia republic of Somaliland to manage its largest port is violating a joint venture contract which was approved by the parliament in February, Alleastafrica has learned.

The controversial UAE firm’s $442 million investment deal which would see the company owned 65% of Joint Venture with Somaliland Government stipulated that DP World takes the task of renovating and overhauling the port, something that the company has so far failed to do.

Instead the company opted to maintain the company’s original and obsolete structure, despite producing over $10 million in revenue from the port per month.

Under the deal, DP World was also supposed to support the port with modern equipment and start the expansion of the port’s capacity with the construction of a 400 meter square area, a responsibility the Emirati firm also failed to fulfill.

The breach in the port’s contract by the firm will likely ran into immediate opposition in the region, with significant parts of the local population opposed both the port and military base deals with the UAE.

Speaking on the port deal, President Ahmed Silanyo pointed out that the base would help create jobs opportunities for thousands of Somali residents.

However, things have not turned in favor of the president as DP World dismissed over 250 local port workers in February, which affected about 25 percent of its 950 port workforce.

Silanyo added that the military base deal would also help protect the 850 kilometer coast line which has been prone to  over exploitation.

The dissident Djiboutian business tycoon Abdourahman Boreh who previously persuaded Dubai to invest in Djibouti is believed to be behind a deal which allowed the UAE to lease Berbera port with the help of Bashe Awil, Somaliland ambassador to UAE as well as the son-in-law of Somaliland’s president.

Mr. Awil who maintains a low profile within the government is arguably the most influential official in Somaliland.

Amid pressure and deepening opposition by neighboring countries including Djibouti and Ethiopia, the UAE government has offered concessions in a bid to the tension, giving 19 percent shares to Ethiopia, leaving out Djibouti which earlier warned Somaliland over the port deal.

Somaliland Presidential Spokesperson Hussein Ige  said that the enclave would play the administration role as a supervisory and manager  of the port while Ethiopia will be the main consumer of the port services.

According to economic analysts, Berbera’s management by UAE is parts of retaliatory measures against Djibouti which annulled the Dubai-based ports operator DP World’s terminal contract followed by arbitration proceedings by the Djiboutian government over alleged corruption by the company.

The United Arab Emirates has since cut diplomatic relations with Djibouti and picked Somaliland as its alternative base other than Somalia which signed multiple agreements with Turkey, a long time strategic rival of UAE to run its key economic hubs including Mogadishu port and the International airport.

Somaliland has also approved a UAE proposal to set up a military base in the region from where the Arab coalition forces would launch attacks against the Shiite Houthi fighters fighting the Yemeni government.

The breakaway northern Somalia republic has declared a unilateral independence from the rest of Somalia in 1991; however, no country has so far recognized it as an independent state. Somali government considers Somaliland as parts of Somalia’s territory, an assertion long dismissed by Somaliland which considers itself as an independent state.

(Editing by Jeff Mwaura)