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Viewing cable 06DJIBOUTI102, BERBERA CORRIDOR SHIPPING

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Reference ID Created Released Classification Origin
06DJIBOUTI102 2006-01-25 11:06 2011-08-24 01:00 UNCLASSIFIED Embassy Djibouti
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 DJIBOUTI 000102 
 
SIPDIS 
 
STATE FOR AF AND AF/E; 
LONDON, PARIS FOR AFRICA WATCHER 
 
E.O. 12958: N/A 
TAGS: PREL ETRD ECON EWWT ELTN DJ ET SO
SUBJECT: BERBERA CORRIDOR SHIPPING 
 
1.  Summary: The port of Berbera in Northern Somalia (the self- 
declared autonomous region also known as Somaliland) recently 
signed an agreement with Ethiopia, allowing Ethiopia to use 
Berbera for its import and export needs.  The first shipments of 
cargo successfully transited through Berbera in November 2005. 
End Summary. 
 
-------- 
The Port 
-------- 
 
2.  The port of Berbera, which plays a major role in 
Somaliland's economy, was developed by the Soviet Union in the 
1970s.  (Note: The town of Berbera has also an airport with a 
long runaway, which could be developed to enhance the port's 
competitiveness.  END NOTE).  The port has a berth of 650 meters 
long that can accommodate 3 medium size ships or four small 
ships.  It has a sea depth of 11 m, which could be improved to 
13 meters with dredging.  It was last dredged more than 20 years 
ago.  Berbera is also equipped with an oil jetty that the French 
oil giant Total recently modernized.  While the port was 
renovated a few years ago, it is still poorly equipped and has 
no gantry cranes. 
 
3.  A 250 km long road links Berbera to the Ethiopian border at 
Tug-Wajaalle.  The total distance between Berbera Port and Addis 
is 964 km, comparable to the 910 km between Djibouti Port and 
Addis. The roads within Somaliland are generally in good 
condition because the European Union (EU) funded a project to 
rehabilitate the main road network, with focused specially on 
the road to Berbera. 
 
------- 
History 
------- 
 
4.  The port of Berbera is well known for exporting live sheep, 
goats and camels from the Horn of Africa to the Gulf States.  A 
strict export ban was imposed on the livestock from the Horn of 
Africa by the Gulf States in 2000 after several cases of Rift 
Valley were discovered among herds bound for export.  As a 
result of the ban,  Somaliland, Northeastern Somalia (Puntland), 
Southern Somalia and Ethiopia suffered from the ban with huge 
income losses, with Somaliland's economy hurt worse than the 
other countries.  In 2005, following a request by the government 
of Djibouti (GOD), the government of Kingdom of Saudi Arabia 
(KSA) considered lifting the ban, due in part to GOD plans to 
build a livestock quarantine center.  Livestock from the Horn of 
Africa would be exported through Djibouti once the quarantine 
center is completed and inspected by Saudi experts.  However, 
Somaliland still hopes to negotiate with the Saudis separately 
and export directly through Berbera. 
 
5.  After lengthy negotiations, in May 2005 Somaliland and 
Ethiopia officially signed, the Berbera Corridor Agreement 
(BCA), allowing Ethiopia to import and export goods through the 
port of Berbera.  The new agreement is expected to establish 
formal trade between the two countries.  The agreement also 
calls for the establishments of formal customs offices at key 
border crossings such as Tug-Wajaalle, as well as the 
improvement of road infrastructure.  The Ethiopian Shipping Line 
(ESL) and the Maritime Transit Services (MTS) both appointed 
local agencies in Berbera to handle the clearance and forwarding 
of Ethiopian cargos.  An Ethiopian bank opened its office at the 
Ethiopia-Somaliland border town of Tug-Wajaalle to process 
import and export transactions.  A high level Ethiopian 
delegation was in Berbera in November 2005 to observe the first 
shipment of goods to Ethiopia and discuss the preparation and 
implementation of the BCA.  The new agreement is expected to 
establish formal trade between the two countries.  So far, 
Somaliland has imported khat (a leafy narcotic legal to purchase 
and consume in the Horn of Africa) and vegetables from Ethiopia 
and exported rice, sugar and other commodities in an informal 
trade.    Somaliland is fully supportive of the economic 
cooperation with Ethiopia, which became a safe haven for people 
fleeing from the atrocities of the Somali civil war. 
 
----------------- 
Feasibility Study 
----------------- 
 
6.  To study the impact of the Addis-Hargeisa-Berbera corridor 
on trade and economic development in the Horn of Africa, the 
European Union selected Louis Berger SAS and Afro-Consult to do 
a feasibility study of upgrading the port and transportation 
routes.  The Berger team concluded that the development of the 
Port of Berbera would enhance regional trade.  Its 
recommendations included: 
- Expansions of the quays and yards 
- Development of the "American Quay" to accommodate large ships; 
and 
- Preparation of a port master plan to carefully monitor and 
integrate future developments.  Other recommendations concerned 
the airports of Berbera and Hargeisa, which both needed modern 
runaways to better accommodate jet engine aircraft.  The team 
also assisted customs officials in improving their procedures 
and drafting better enforcement regulations. 
 
-------------------------------------- 
Growing Interest in Port Opportunities 
-------------------------------------- 
 
7.  The "Ethiopian Reporter" indicated that the Ethiopian 
government recommended the use of Berbera port to all state 
enterprises importing goods.  The November 2005 Ethiopian 
shipment belonged to the Ethiopia Electric Power Corporation. 
The cargo consisted of electric goods carried by a Singapore- 
registered liner PIL.  The cargo was later transported by 
Ethiopian trucks to five destinations in Ethiopia, including the 
two major towns of Dire-Dawa and Addis Ababa. Ethiopian trucks 
carried this shipment, consisting of 40 ft containers because 
trucks from Somlaliland are only fit to carry 20 ft containers. 
Future shipments are expected to be in 20 ft containers so that 
Somaliland trucks can compete for a share of the transportation 
business.  However, the Somaliland vehicle owners will have to 
carry Ethiopian insurance to cover the trucks while they are 
driving in Ethiopian territory. 
 
8.  The EU shipped 15,000 tons of relief food supplies to 
Ethiopia through the Port of Berbera in October 2005.  The EU 
used Berbera for the first time in 1999 and then in 2002 for 
shipments of food aid destined to Ethiopia.  The World Food 
Programme (WFP) is also planning to use the Port of Berbera 
after pirates off the cost of South Somalia attacked several of 
its shipments.  WFP has requested quotations for transit 
services from Berbera's shipping agencies, including Integrated 
Shipping Services (ISS), which is Inchcape's representative in 
Berbera.  ISS is the agent for P.I.L and P&O Ned Lloyd, which 
are the only two shipping lines coming to Berbera on a regular 
basis.  The government of Somaliland has authorized the WFP to 
use a vast compound built and owned by the United Nations High 
Commissioner for Refugees (UNHCR) in Berbera, which is currently 
unoccupied.  The WFP negotiated the arrangements with UNHCR. 
 
9. MIDROC Ethiopia, a subsidiary of Al-Amoudi is planning to use 
Berbera Port to import all its goods.   Furthermore, Al-Amoudi 
is currently discussing the management of the Port of Berbera 
with Somaliland officials.  Al-Amoudi has reportedly finalized 
all the necessary feasibility studies and offered to invest more 
than US$ 20 Million to modernize the Port.