A tug of war between the government of Djibouti and the Sheikhs of Dubai…

Despite a tug of war between the government of Djibouti and the Sheikhs of Dubai, a senior official of the latter, Ahmed Bin Sulayem (Sultan), believes DP World – an Emirati marine terminal operator – will have its operations in Djibouti normalised “very soon”. How soon is yet to remain clear, in light of DP World fighting a legal battle against the government of Djibouti which sets out to annul a 30-year concession the Dubai-based company won to manage the Port of Doraleh.

Sulayem spoke of his unlikely but optimistic hope at an Africa Global Business Forum held last week, and attended by Ethiopia’s President Mulatu Teshome (PhD) and Rwanda’s President Paul Kagame. Gossip sees his remarks that, “operations in Djibouti will go back to normal; I am positive about that”, as an underestimation of the sour relations the company he chairs and the Sultans in Dubai have with the government of Djibouti. The fact that Ismael Omar Guelleh was not in attendance at such a meeting reveals the two sides’ inability to see eye to eye, gossip observed.

Ever since the departure of Abdourahiman Boreh – a Dubai-based businessman and former chairman of the Djibouti Ports & Free Zones Authority – from Djibouti in self exile, Geulleh’s relations with a company that owns 30pc of the Doraleh Container Terminal remains toxic, gossip disclosed. Since the early 2000s, when DP World first entered into Djibouti, taking its sole port in a 20-year concessions deal, the relationship has worsened, claims gossip.

Not only does Djibouti’s government accuse Abdurahiman of abusing his position to enrich himself, the gun has turned around now and pointed at Dubai. Its lawyers opened arbitration proceedings in London back in July 2014, accusing DP World for locking the tiny nation into an agreement that “unfairly favours the company and accusing it of bribes”, according to gossip.

Those in Djibouti are now bitter that their own, Abdourahiman, betrayed them in putting their country into an odd deal they would like to see repealed, gossip disclosed. The concession in managing the container terminal at Duraleh was given to DP World in exchange for a management fee of 25pc, gossip revealed. The trouble is not only related to this management fee, which is deemed quite unreasonable and high in the eyes of the very government that signed it few years ago, but how it was determined is in itself a rather stormy issue, claims gossip.

While the government of Djibouti strongly argues that management fee should be paid after all expenses are deducted, DP World has been collecting its fees, and continues to do so, from the total turnover, disregarding the cost of business the port incurs to raise an estimated 200 million dollars a year, disclosed gossip. This arrangement means that Dubai claims more in return on investment than the very country which owns the asset, according to gossip. In total, DP World gets over 55pc of return on its investment, for legally held shares of less than one third.

Several other issues, such as the employment of senior staff to run the port and who decides on their compensation, as well as the right to carry out procurement, necessary to run the port, are among the sticky points between the two parties, according to gossip.

Djiboutians are of the view that DP World has a free-raid whenever its managers conduct procurement, without the consultation of the owner, which inevitably affects the bottom-line of the port, claims gossip. With DP World’s management refusing to disclose the procurement volume and expenditures amount, the dividend Djibouti gets at the end of the year is a subject of worry to its leaders, gossip claims.

For all these matters, Djibouti feels skinned alive by a company whose root is a super rich Gulf nation, according to gossip.

Published on October 05, 2014 [ Vol 15 ,No 753]



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