Contract dispute led to DP World DCT loss

Doraleh Container Terminal Since 2008, Doraleh Container Terminal has achieved only 57% of its total volume, according to the Djibouti Ports & Free Zones Authority
Industry Database

DP World’s contract with Doraleh Container Terminal (DCT) was cancelled because of a dispute over terms and poor performance, claims the Djibouti Ports & Free Zones Authority (DPFZA).

Following the Government of Djibouti’s seizure of DCT last week, DPFZA, released a statement on Twitter which said that the original agreement excluded Djibouti from management of the terminal; that the government’s agreement with DP World did not include the company designing, building and operating DCT; that DCT has underperformed on volume since 2008; and that DP World used aggressive tactics to boost its performance elsewhere.

In the statement, DPFZA, which is now managing DCT, controlled by the state-owned Doraleh Container Terminal Management Company (DCTMC), said that “Contrary to the statement released by the Government of Dubai, the agreement was not for DP World to design, build and operate DCT – what is often referred to as BOT’ – but a joint venture between DP World (33.33% of the shares) and Port Autonome International de Djibouti (66.66%) of the shares).”

No external input

It stressed that the original agreement “contained a number of irregularities” and “excluded Djibouti from decision-making processes and the management of the company.”

It added: Since 2008, DCT has achieved only 57% of its total volume, despite operating in a favourable import/export environment.

“In the meantime, DP World developed other ports in countries close to Djibouti and used aggressive tactics such as the deliberate slowing of the development of DCT in favour of their main asset at Jebel Ali.”

Proposed purchase

DPFZA said last month it proposed purchasing DP World’s stake in DCT, but DP World had placed an added restriction on Djibouti developing new ports on its territory with its interest in selling. DPFZA said this was a threat to the country and rejected by the government, which consequently took control of DCT.

Negotiations by the Government of Djibouti, which included discussions about establishing dedicated working groups and the use of international legal assistance, had been ongoing for six years and were rejected by DP World, said DPFZA.

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