Djibouti: DCT Move Prompted by Terminal’s Poor Performance
The Government of Djibouti cancelled its concession contract with Dubai-based terminal operator DP World on February 22 due to the recent poor performance of the Doraleh Container Terminal (DCT).
According to a statement released by the Djibouti Ports and Free Zones Authority (DPFZA), since 2008, DCT has achieved only 57% of its total volume, despite operating in a favourable import/export environment.
“In the meantime, DP World developed other ports in the countries close to Djibouti and used aggressive tactics such as the deliberate slowing of the development of DCT in favour of their main asset at Jebel Ali,” DPFZA said.
The authority added that the operations agreement for the terminal, awarded in 2006, was not for DP World to design, build and operate DCT, but a joint venture between DP World (with 33.33% of the shares) and Port Autonome International de Djibouti (with 66.66% of the shares). The original agreement excluded Djibouti from decision-making processes and the management of the company.
Last month, the authority launched negotiations with DP World in an effort to reach a settlement deal which included the purchase of DP World’s stake. The port operator declared its intention to sell the shares in DCT, but subsequently added a restriction on Djibouti developing new ports on its territory.
“This condition, which poses a serious threat to Djibouti’s national sovereignty, was rejected by the Government of Djibouti,” DPFZA informed.
Djibouti has therefore asserted its legal right to assume management of DCT, which has now been placed under the authority of the Doraleh Container Terminal Management Company (DCTMC).
Following the decision, UAE’s Minister of State for Foreign Affairs Anwar Gargash informed via social media that “Djibouti government’s seizure of the Doraleh port is regrettable.”
DP World has launched new arbitration proceedings in London against the Government of Djibouti over the decision. DP World dubbed the move “illegal seizure of control” and a culmination of the government’s campaign to force the company to renegotiate the terms of the concession.