Spat between Somalia and Somaliland worsens over DP World tripartite deal

Somalia's lower house of parliament rejects agreement giving Ethiopia stake in port project

The lower house of parliament in Somalia a deal by Somaliland and DP World granting Ethiopia a stake in the Port of Berbera in Somaliland. Getty Images

Somalia's lower house of parliament voted to reject a deal by Somaliland and UAE ports operator DP World to grant a stake in the Port of Berbera to Ethiopia, aggravating the spat between the central government in Mogadishu and the country’s semi-autonomous northern region.

The parliamentary vote comes about a week after Somaliland hit back against the Somalian prime minister's March 2 statement declaring "null and void" a deal by the region and DP World to grant a stake in the Port development to Ethiopia.

Local media reported the resolution rejecting the deal passed in the lower house by an overwhelming majority. If approved by the upper legislative house, it will pave the way for the Somalian president to sign it into law, nullifying all agreements between DP World and Somaliland, the reports added.

A spokesman for DP World, the world’s fourth biggest port operator, on Tuesday declined to comment on the vote.

According to the original deal announced on March 1, Ethiopia will become a 19 per cent shareholder in the Port of Berbera, with DP World controlling 51 per cent stake in the project. Somaliland will hold the remaining 30 per cent.

The government of landlocked Ethiopia will also invest in infrastructure to develop the Berbera Corridor as a trade gateway to the port, according to the agreement.

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Mogadishu however is contesting the manner in which the deal was reached between. The Somalian Ministry of Ports and Marine Transport dismissed the agreement as “defective” in a statement in the first week of March, saying the Somalian government was not party to the agreement.

Somaliland countered that it had a right enter such deals.

“The present agreement is nothing new,” a statement from the office of the president of Somaliland, Muse Bihi Abdi, said. “It is an extension of the agreement entered into between the Republic of Somaliland and DP World and approved by the parliament."

Somaliland said Mogadishu’s oppositional stance is “not helpful in creating a conducive environment for dialogue between Somaliland and Somalia, and has no bearing, whatsoever, on the commercial and investment agreement between the Republic of Somaliland, the Federal Democratic Republic of Ethiopia and DP World, which we expect the international community and the neighbouring countries to support,” according to its statement.

Somaliland’s parliament approved the partnership with DP World in 2016, paving the way for the port operator to invest $442 million to rebuild the Port of Berbera and manage it through a 30-year concession.

Development of the Berbera corridor is expected to address some of the region’s most pressing employment and investment issues. DP World plans to build an additional berth in line with the Berbera masterplan as part of its concession agreement, and earlier this month said it had signed the final agreement with the Government of Dubai to develop a 12 square kilometre greenfield economic free zone in Somaliland to complement growth of the port.

DP World is embroiled in a separate dispute over its operations at the Port of Djibouti, to the northwest of Somalia. The company said last month Djiboutian authorities took control of the Doraleh Container Terminal from a DP World-owned entity that designed, built and operated the terminal after winning the concession in 2006.