Douala doldrums

Strange Fact No 1: The Government of Cameroon decides not to automatically renew the concession with Bollore/APMT, the original concession holder, but to go for an open tender. The open tender, however, proved not to be so open with an unusual result regarding the qualification to submit a detailed bid – with operators such as Bollore and APM Terminals not making it past the qualification stage while a port operator with little proven track record and no international experience (Red Sea Gateway Terminal from Saudi Arabia) was qualified.

A non-transparent and flawed qualification process is a very bad starting point to a tender and generally risks ruining the final outcome, both in terms of the competitiveness of the bids as well as the credibility of the process.

This was borne out by subsequent developments. Finally, only two companies submitted bids: Terminal Investments Limited (TIL), the terminal operating arm of the liner organisation Mediterranean Shipping Company (MSC) and DP World, the Dubai-based terminal operator.

Practically speaking, this boiled down to one neutral multi-user port operator (DP World) since TIL openly acknowledges it exists first and foremost to serve the needs of its parent, MSC. To be fair, however, TIL did submit an extremely attractive financial proposal which it is hard to imagine will be repeated in case another tender round is carried out.

And subsequently Bollore was able to effectively derail the process by questioning the credibility of the entire tender process. If the process had been better run, there is a good chance that Douala Port Authority could have avoided the suspension of the award of the contract to TIL.

The irony is that Bollore – despite claiming to be the injured party – is now the primary beneficiary of this debacle. With Douala in chaos and run by an inexperienced team, an exodus of shipping lines from Douala can be expected, shifting their volumes down to Kribi where Bollore is a partner in the new container terminal operation there together with CMA CGM and China Harbour Engineering.

Strange Fact No 2: After enjoying what to all intents and purposes was a close relationship with Bollore for many years – the Government appears to have markedly down-scaled this relationship. What lies behind this we can only guess – it doesn’t appear to be a question of port efficiency, the usual measure for curtailing a concession, as while the Douala Container Terminal was widely recognised for not being the most efficient entity this did not appear to be an issue throughout the lifetime of the previous 15-year concession held by Bollore in partnership with APMT.

The relationship with Bollore has clearly deteriorated with the recent chain of events indicative of this:

• In September 2019 ,TIL was announced as the winner of the bid for the new concession for the Douala Container Terminal.
• This result was, and continues to be vigorously, contested in the courts by Bollore. The action undertaken by Bollore led to the Secretary- General of the Presidency requesting the Director-General of Douala port “to suspend works to finalise the terms of the (TIL) contract …until the final conclusion of the case.”
• At the end of December 2019, the Douala International Terminal, comprising Bollore-APMT, obtained a court judgement that over-ruled the December 6 resolution by the Board of Directors of the Autonomous Port of Douala (PAD) which sought to take back control of the container terminal.
• Despite this ruling, PAD proceeded to takeover the container terminal – ignoring the court ruling – and in a post on its Facebook page on 8 January, confirmed that the terminal was operating with “over a 1000 containers delivered and quayside operations achieving a gross productivity of 18 movements per hour.”

All this is a long way from a clear and transparent concession process – which is essential to get the best result for the country. The situation is a mess – it is clear that TIL is the winner in financial terms, it came in with a whacking offer of USD41 million upfront with USD15.5 million annually thereafter (much higher, for example, than the Bollore offer of USD1 million and USD5.2 million respectively). It is not clear, however, indeed quite to the contrary, that financial criteria alone, based on what is plainly a flawed bidding process, offers the optimum solution.