A road linking together the Ethiopian border town of Wajale, and the port of Berbera in Somaliland opened on Thursday February 28, the result of an agreement between three governments.
The Bebera port corridor development is part of the tripartite agreement reached a year ago between one of Somalia’s breakaway regions, Somaliland, which declared independence from Somalia in 1991, the United Arab Emirates (UAE), and neighboring Ethiopia, to develop the port.
The port project is expected to be finalized by 2020. The port facility, which currently has the capacity to handle port traffic of 150,000 containers, is expected to expand into handling one million units.
According to the agreement, the global port operator DP World will take a 51% share, Somaliland will own 30%, and Ethiopia will have 19% of the shares.
The agreement included an infrastructure investment of $442 million to upgrade the existing Berbera port, and to build a new adjacent container port.
The Somaliland port authority has already consolidated port management operations and DP World has positions in the management and operational activities at the existing port facilities.
Close to 10% of the total volume of shipments from the expanded port will be directed to Port Sudan on the Red Sea, the main port city of Sudan. Some 95 % of the Ethiopia’s international trade currently passes through the port of Djibouti, in the Horn of Africa.
However, the project is seen as a threat by the Somalia and Djiboutian authorities. Somalia opposed the project, claiming it has violated its sovereignty, while Djibouti did not like Berbera port becoming a potential contender for its position, as it has considerable financial advantage from its current status as being the port city used by land-locked Ethiopia.