DP World plans to expand the Port of Berbera of Somaliland in the Horn of the Africa
The completion of Phase 1 of the port’s redevelopment, which was completed in 2021, provided annual handling capacity of 500,000 TEU/year, although there are reports in the region that it now stands at 600,000 TEU/year because of more efficient operation. However, the UAE-based operator now plans to increase that to 2M TEU/year in Phase 2. This will require extending the quay from 400m to 1,000m and buying seven more STS gantry cranes.
DP World has also just signed an agreement to upgrade the Port of Bosaso in neighbouring Puntland, although it appears that this project will be on a much smaller scale than Berbera, at least for now. Taken together, the two projects demonstrate the company’s determination to maintain a strong presence at the southern end of the Red Sea, now that it has been frozen out of Doraleh Container Terminal in Djibouti.
DP World has invested US$442M in the port, which it operates under a 30 year concession, and is also developing a free trade zone a few kilometres from the port. Somaliland has been a de facto sovereign state since 1991, breaking away from Somalia as a result of civil war in the latter.
Given the limited size of Somaliland’s economy and its population of just 5.7M, most of its business will be generated through the movement of cargo to and from Ethiopia, which has had one of the world’s fastest growing economies over the past decade and which has a population of 114M. At present, Djibouti is the main port serving Ethiopia, putting Berbera in direct competition with it.
The government of Ethiopia had an option to take a 19% stake in Berbera in 2017 when the concession was signed, but it was reported in the region last June that it had failed to take up that option. The Dubai firm took a 51% stake and the government of Somaliland 17% under the original deal, but it appears that a division of 65% and 35% has now been agreed. It remains to be seen whether this will have any impact on Addis Ababa’s commitment to improve road connections between Berbera and the Ethiopian border.