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DP World warns competitors over Djibouti facilities   12/04/2018
DP World said it started proceedings at the London Court of International Arbitration in a bid to settle an ongoing dispute over its Doraleh Container Terminal (DCT) with the government of Djibouti.

DP World is going to pursue all legal recourse necessary to protect its interest against the government of Djibouti. Credit: DP World

The Dubai-based global port and free zone operator warned other port and terminal operating companies that its agreement to operate DCT “remains in full force and effect” and said it would pursue all legal recourse necessary to protect its interests.

The warning followed reports that Djibouti was working with other parties to build and operate port facilities in the country, a move that DP World said would violate its exclusivity rights under the original agreement.

“Take notice that DP World and DCT are the lawful holders of rights in respect of the ownership and operation of the container shipping terminal at Doraleh, Djibouti, and will pursue all available legal recourse, including claims for damages, against any other entities that tortiously interfere or otherwise violate their rights with respect to the concession agreement,” it said.

In addition to the rights to manage and operate the port, the DCT concession agreement gives DP World and its DCT subsidiary exclusive rights to build and operate any other container ports and free zones in Djibouti.

The DCT concession was unilaterally terminated by the government of Djibouti in February in the middle of a protracted dispute over the operation of the facility that started in 2012.  

DP World said the move amounted to an “illegal seizure” that was part of a campaign to force the company to renegotiate the terms of the original concession agreement. 

Djibouti has sought to assure DCT customers that the facility will continue to be operated to the highest standards.

A March statement from the office of president Ismail Omar Guelleh said the terminal “will once again be the leading port in the Red Sea region in terms of productivity, particularly in terms of transhipment, with a capacity of 1.6 million teu containers per year and an average unloading rate of 35 per hour”.

In a March country risk report, IHS Markit said economic growth in Djibouti continues at a favourable pace strongly driven by trade and commerce and foreign-financed infrastructure development. 

However, the report noted high levels of risk in the cargo and transport sectors and that changes in bilateral relations with Djibouti can create issues for commercial contracts.

Real GDP is expected to grow by 5% in 2018 before dropping to about 4% from 2019–21, IHS Markit said.

The port of Djibouti is currently a major regional hub for Ethiopia’s seaborne trade, with about 70% of its total throughput moving to or from Ethiopia.

DP World handled 70.1 million teu in gross container volumes in 2017, a rise of more than 10% on the 2016 figure. Consolidated volumes – or volumes through terminals controlled by DP World – expanded by close to 25% to 36.5 million teu.

Growth was strong in each of the company’s three administrative and operational regions. Gross volumes in Asia and India – the region that contributes the largest share of total throughput – rose by 6.8%, while volumes through facilities in the Europe, Middle East, and Africa region expanded by 13.4%.

The company said it expects to continue to grow ahead of the market in 2018.

Elsewhere in Africa, DP World recently announced an agreement with the Suez Canal Authority to build the first phase of an industrial and residential zone close to Sokhna in Egypt. DP World will build and manage the zone, which is planned to eventually cover 75 km².  The capacity of Sokhna port will also be increased.


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