Dubai-based ports operator DP World has won a concession to manage a port at Berbera in the breakaway republic of Somaliland for 30 years, in an investment of up to $442 million.
“DP World will set up a joint venture with 65 percent control together with the government of Somaliland to manage and invest in the Port of Berbera,” the company said in a statement.
The concession includes an automatic 10-year extension for the management and development of the port.
The port “opens a new point of access to the Red Sea and will complement DP World’s existing port at Djibouti in the Horn of Africa,” the company said.
The project offers an opportunity for the development of Somaliland, which is not recognised by the international community despite 25 years of de facto independence from the rest of war-torn Somalia.
The investment will include a first phase of a quay and yard extension, DP World said, adding that work will start a year after terms and conditions of the agreement are met.
On the southern coast of the Gulf of Aden, Berbera offers an African base at the entrance to the Red Sea and the gateway to the Suez canal.
The investment “will attract more shipping lines to East Africa and its modernisation will act as a catalyst for the growth of the country and the region’s economy,” DP World chairman Sultan Ahmed Bin Sulayem said.
“Berbera will contribute to our continued growth in the developing markets of Africa in the years ahead,” he added.
Somaliland offers another route into neighbouring, landlocked Ethiopia, with a growing market of 96 million inhabitants.
Expanding the Berbera port could help bypass the congested port of Djibouti.
An agreement signed in March with Ethiopia forecasts that almost a third of the country’s cargo traffic might be funnelled through Berbera.
One of the world’s largest port operators, DP World runs 77 marine and inland terminals across six continents, including Dubai’s Jebel Ali port, the largest in the Middle East.