Djibouti Defends Move to Terminate Contract with Dubai’s DP World as Country Shifts Focus to Other International Investment Projects

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The Republic of Djibouti has once again defended a move to terminate a contract with DP world, a Dubai-base ports company which recently had operations at the tiny nation’s Doraleh Container Terminal, (DCT).

According to the office of Rwanda’s President, Ismaïl Omar Guelleh, the country, which is located in the Horn of Africa, will now shift its focus to other ongoing international investment projects.

On 22 February, Djibouti terminated its Doraleh Container Terminal business, in which DP World is a shareholder and operator. Government officials stated that the decision was taken after numerous unsuccessful attempts to get DP World to renegotiate a contract that was “clearly contrary to the fundamental interests of the nation.”

“This termination is a sovereign decision, part of a legal procedure, and executed at the end of a transparent process,” the President’s office said in a statement issued this week.

It was instigated by what Djibouti’s government described as an unfair and unbalanced contract, the clauses of which imposed “unacceptable limits on Djibouti’s development policy.”

“The decision is linked to an exceptional and aberrant situation that by no means calls into question the strength or credibility of the signature of the Republic of Djibouti,” the office said in its statement.

“Djibouti’s scope and ambition goes way beyond the success of Doraleh port,” President Guelleh affirmed.

His office listed a number of major ongoing investments affirming Djibouti’s commitment to economic growth and confidence of international partners. The Head of State listed the Djibouti-Addis-Ababa railway line, Tadjourah mineral port, Goubet port, Doraleh multipurpose port, the start of construction work on the new Djibouti mega free zone in Khor Ambado and the launch of the Damerjog industrial development free zone, among investment projects that the country is working on.

President Guelleh’s office stated that one of the more recent agreements is for an ambitious energy sector project. The first phase provides for the commissioning of a gas pipeline between Ethiopia’s Ogaden Basin natural gas fields and the coast of Djibouti. The second phase concerns the construction and operation of a natural gas liquefaction plant and a gas terminal in the Damerjog area, all privately financed by the mega project’s developer, China’s POLY-GCL Petroleum Group Holdings Limited, to the tune of $4 billion.

“These major projects are being undertaken within a particularly attractive macroeconomic and regulatory framework. Economic growth is expected to remain at high levels – around 7% for 2018 and 2019 – making Djibouti one of Africa’s top ten economies in terms of growth,” President Guelleh explained.

He stated that the Djiboutian Franc is a stable currency, pegged to the US dollar, freely convertible, adding that its exchange rate has remained unchanged since 1973.

His office argued that the sustainability of these investments is buoyed by the Republic of Djibouti’s ambition and by excellent medium- and long-term prospects, since Djibouti is strategically located at the crossroads of one of the busiest shipping routes in the world, linking Europe, the Far East, the Horn of Africa and the Persian Gulf.

“Quite naturally, Djibouti positions itself as the main gateway to East Africa, and particularly Ethiopia, an emerging nation of 100 million people and the Republic of Djibouti’s leading strategic partner,” the statement read in part.

While maintaining very close relations with its other traditional partners, Djibouti is linked to China’s big New Silk Road development strategy.

“In reality, Djibouti is the entry point to a formidable logistics corridor designed to serve an emerging African continent,” Guelleh said.

It has since emerged that Djibouti’s investment ambitions are being rolled out in a context of optimal security.

“Djibouti is an essential partner for peace, and a stalwart in the fight against terrorism and piracy, hosting on its territory American, Chinese, French, Japanese, European and Saudi military bases. Thus Djibouti ensures the de facto safety of the world’s main shipping route through which 70% of international traffic passes,” the President said.

 

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